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HBC, the parent company of luxury retailer Saks Fifth Avenue, has confirmed reports that its long-awaited deal to acquire rival Neiman Marcus Group — owner of Neiman Marcus and Bergdorf Goodman — for $2.65 billion is finally here. And as a pending investor in the merged company, Amazon has found a new path (or underground tunnel) into luxury fashion.
“We’re thrilled to take this step in bringing together these iconic luxury names, Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman,” said Richard Baker, HBC executive chairman and CEO, in a statement. “For years, many in the industry have anticipated this transaction and the benefits it would drive for customers, partners and employees. This is an exciting time in luxury retail, with technological advancements creating new opportunities to redefine the customer experience, and we look forward to unlocking significant value for our customers, brand partners and employees.”
The deal will see Saks Fifth Avenue, Saks Off 5th, Neiman Marcus and Bergdorf Goodman come together under one parent, Saks Global; each retailer will continue to operate under its respective brand names. Current Saks.com CEO Marc Metrick will become CEO of Saks Global.
An interesting development is Amazon’s involvement. Amazon will be an investor in and work with Saks Global “to innovate on behalf of customers and brands partners following the close of the transaction”, a release issued by HBC reads. This will give Amazon discrete access to luxury products, stores, sales associates and data. At the same time, the retailers stand to gain access to more sophisticated technology and logistics; Salesforce, which has been steadily rolling out generative artificial intelligence tools for retailers, will also become an investor.
Amazon, the largest clothing retailer in the US, has for years worked to expand into luxury fashion, which has higher margins but is somewhat at odds with Amazon’s efficiency-over-style ethos. During the pandemic in 2020, it brokered deals with the Council of Fashion Designers of America and the British Fashion Council to start a new luxury stores division, recruiting brands including Oscar de la Renta, Jonathan Cohen and Adam Lippes. In 2022, it expanded that effort to include Europe, with brands including Christopher Kane and Elie Saab. It sponsored the CFDA awards in 2023.
Amazon also tested tech-first physical retail, opening a clothing store concept, called Amazon Style, in Los Angeles in 2022 that sold Amazon brands and others through app integrations, QR codes and personal recommendations. However, it closed the only two existing Amazon Style locations in 2023.
Amazon’s luxury e-commerce play has fared slightly better. During a recent search, the luxury division sold pieces from Prada and Altuzarra, with discounted items from Oscar de la Renta and Rodarte. It’s also added secondhand luxury fashion, offering another potentially murky workaround to selling designer fashion. It has recently signed with Hypebeast’s HBX Archives, which is curated pre-owned fashion; with designer resale website Hardly Ever Worn It (HEWI); and with rental platform Rent the Runway to sell pieces that have already been worn. Still, many of the original brands that signed on are no longer available.
Meanwhile, the luxury fashion landscape has changed a lot in the past four years. Matches was sold to Frasers Group and then put into administration less than three months later; Farfetch, the self-proclaimed “operating system for luxury fashion”, imploded and was sold off to South Korea’s Coupang. Larger luxury brands, no longer dependent on wholesale, prioritise direct-to-consumer sales and their own data. Independent brands that are at the mercy of multibrand physical retailers — some of which are fighting off bankruptcy — can no longer compete through exclusive brands or styles and are instead diversifying their assortments with drop-shipping and diversifying revenue with retail media networks. Nordstrom, for example, just announced a marketplace model, and Saks and Macy’s both sell advertising to the brands they carry on their e-commerce sites.
Now that they offer everything to everyone, these multibrand retailers are left to compete on reputation and loyalty, which is gained through personalisation and convenience. And that’s where the tech comes in. Amazon has set a new standard for sophisticated logistics, and what it can’t offer in style and heritage, it can make up for in practicalities. Combining all of the physical stores and warehouses in the Saks and Neiman Marcus arsenal could be advantageous in terms of shipping alone. Salesforce’s new AI capabilities include the ability to personalise product pages and customer communications using generative AI.
Consolidation and competition
Increasing consolidation could become a point of tension. At the time of the launch of Amazon’s luxury stores, Lippes told Vogue Business that he wondered if trying to sell on Amazon would jeopardise his relationship with Bergdorf Goodman. But Bergdorf Goodman is owned by Neiman Marcus, which will now be owned by the same company as Saks, which just got an investment from Amazon — illustrating just how complicated and consolidated the US luxury department store landscape will become. Saks also owns the licence for Barneys, and HBC also owns Lord & Taylor; meanwhile, Macy’s owns Bloomingdale’s.
This new venture means that Saks Global is primarily left to compete with Macy’s, Inc. This could raise flags with the Federal Trade Commission (FTC) for being anti-competitive. In April, the FTC moved to block a proposed deal for Tapestry Group, which owns Kate Spade, Coach and Stuart Weitzman, to acquire Capri Holdings, which owns Michael Kors, Versace and Jimmy Choo. Some states have already sued Amazon, saying that it has a monopoly in online retail.
The FTC could say that consolidation between Saks and Neiman Marcus creates a monopoly; on the other hand, Amazon’s investment could be an attempt to illustrate that Amazon is not inherently bad for physical department stores.
This deal could also give brands less bargaining power, leaving them at the mercy of just a couple of large luxury retailers. Instead of Saks and Neiman Marcus offering more favourable terms to lure in desirable brands, they might now have the upper hand through a united front. In the statement announcing the deal, Geoffroy van Raemdonck, chief executive officer of Neiman Marcus Group, concluded: “We believe this is a proactive choice in an evolving retail landscape that will create value for our customers and brand partners.”
Correction: A previous version of this article incorrectly stated that Nordstrom is owned by Macy's. (9 July 2024)
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