Saks Fifth Avenue bags rival Neiman Marcus for $2.6B to take on luxury’s direct-to-consumer boom
.jpg)
Prestige partners… Saks Fifth Avenue is adding a new chain to its bag: Saks parent HBC said it would buy rival Neiman Marcus for $2.6B. Saks and Neiman (which also owns Bergdorf Goodman) are two of the US’s oldest department-store chains with nearly 80 combined locations across North America. But business hasn’t been as glam as it was in the “Gossip Girl” days: Neiman filed for bankruptcy in 2020, and a year later Saks spun off its website in hope of boosting online sales. Now…
New bag: If the deal’s approved, the new company (dubbed Saks Global) will have more bargaining power to add luxury brands at a lower cost.
Prime time: Amazon (which has expanded into luxury fashion) has taken a stake in the merger, saying it has plans to innovate on behalf of customers and brand partners.
Struggling to find the shoe section… Department stores have lost their luster as Americans pivot to shopping online directly from brands (or from ecomm giants like Amazon and Revolve). Department stores made up about 14% of US retail sales in 1993, but last year that fell to under 3%. Macy’s is closing 150 of its namesake locations this year. Consumers are becoming more brand-centric, with a third of US online adults buying luxury goods directly from brand sites.
Now open: Gucci parent Kering has spent billions on new locations in shopping capitals like Milan and NYC. LVMH and Chanel are also reportedly eyeing new Fifth Avenue storefronts.
Direct to consumer: Ralph Lauren saw its strongest customer growth since the pandemic after it added 1.7M D2C shoppers in Q3 last year.
Sometimes you have to combine to outshine… Saks and Neiman have similar high-end offerings and customers. Instead of competing, they’re choosing to join their shopping bags to snag a bigger share of the luxury market. Luxury sales are expected to grow 3 to 5% this year and are up nearly 30% over the past four years.