No dream, no spend: Where Saks went wrong

The current crisis unfolding at Saks Fifth Avenue is more than a headline about missed payments or restructuring. It is a stark warning of what happens when a retailer prioritizes financial engineering over client value. For too long, the strategy at Saks, and across the broader Hudson’s Bay Company portfolio, has felt like a real estate play masquerading as a retail business. The focus has been on consolidation, acquisitions, and asset leverage rather than on the only thing that truly matters in luxury: the human experience. This approach creates a fatal disconnect. While executives were busy structuring the acquisition of Neiman Marcus to create a retail giant, the actual service on the floor was deteriorating. Stores that should function as temples of inspiration often feel tired and transactional. This is the danger of the financial engineering model. It treats the business as a set of numbers to be optimized rather than a relationship to be nurtured. When you rely on leverage and scale but neglect the client, you build a fragile house of cards. Hence, the current collapse was entirely predictable. The department store crisis Let us look at this issue through the lens of game theory. The luxury ecosystem depends on a delicate equilibrium of trust between retailers, brands, and consumers. For decades, department stores acted as essential aggregators that provided access and traffic. In exchange, brands provided the product. However, Saks broke this equilibrium. By failing to pay vendors on time, it destroyed trust. In game theory terms, the dominant strategy for any top-tier luxury brand now shifts immediately. They must exit. Staying implies a risk of brand dilution and financial loss. We are seeing a mass migration of top brands away from wholesale because they refuse to let their equity be eroded by a partner who treats them like a bank. Importantly, this failure highlights a broader industry delusion. Too many players assumed they could simply raise prices to signal elevation without improving their service. They confused being expensive with being luxury. This was a catastrophic error. The luxury client is discerning. They are willing to pay a premium, but only if the perceived value shifts dramatically in their favor. Over the last three years, prices at department stores have risen while the in-store experience has declined. Consumers sense this disconnect immediately. You cannot expect a client to pay thousands of dollars for a handbag in an environment that feels lackluster and understaffed. Experience winners vs. transactional losers We are now witnessing a massive polarization, with the market splitting into two distinct groups. On one side, we have the top 5% of brands. These houses understand that luxury is not about the product itself but about the story and the emotion it evokes. They are thriving because they create culture. On the other side, we have retailers like Saks that rely on transactional models and real estate value. They are finding out the hard way that, without a distinct point of view, relevancy quickly erodes. The lesson here extends beyond the boardroom of any single department store. It is a mandate for the entire luxury industry: creating value that meets expectations is no longer enough. That is merely survival. To succeed, brands must create value that significantly exceeds expectations. They must create a sense of occasion and a feeling of genuine worth. The future of luxury is about engineering distinct, memorable experiences, not just financial deals. If you cannot make a client dream, you won’t make them pay. This is an opinion piece by Daniel Langer, CEO of Équité, recognized as one of the “Global Top Five Luxury Key Opinion Leaders,” and advisor to some of the most iconic luxury brands in the world. He serves as an executive professor of luxury strategy and pricing at Pepperdine University in Malibu and as a professor of luxury at NYU, New York. Daniel has authored best-selling books on luxury management in English and Chinese, and is a respected global keynote speaker. Daniel conducts in-person masterclasses on various luxury topics across the world. As a luxury expert featured on Bloomberg TV, Forbes, The Economist, and others, Daniel holds an MBA and a Ph.D. in luxury management and has received education from Harvard Business School. Sign up for his online luxury masterclasses at the Jing Academy.

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No dream, no spend: Where Saks went wrong