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A new luxury retail giant is emerging in the United States as the parent company of Saks Fifth Avenue acquires Neiman Marcus for $2.65 billion.
The deal also includes Amazon, which has long sought to expand its footprint in the luxury market, aiming to create a platform where everything is available for purchase. Additionally, customer service software company Salesforce will acquire a stake. The Amazon-Salesforce duo will support logistics and technology.
The new entity, Saks Global, is projected to generate annual sales of $10 billion, according to the Wall Street Journal. While this is a significant figure, it still pales compared to European luxury conglomerate LVMH Moët Hennessy Louis Vuitton, which reported $94 billion in sales last year.
This acquisition highlights the challenges luxury department stores face. As industry giants like LVMH and Kering grow, mall revenues are declining. For instance, Lord & Taylor filed for bankruptcy in 2020, and Macy’s announced in February that it will close 150 stores over the next three years.
Neiman Marcus filed for bankruptcy during the pandemic, and Saks Fifth Avenue has since struggled to attract wealthy customers, who increasingly seek discounts and lower prices.
Even affluent consumers who can afford luxury items are less likely to make on-the-spot purchases in stores. High-value items often lead shoppers to try them in-store, leave to think it over, and then search online for discounts or home delivery.
Many now wonder why they should visit a mall at all when they can go directly to a luxury brand's store. The service at these boutiques has improved, and the packaging—highly popular on social media—is part of the shopping experience.
These factors are driving more mall chains to collaborate, emphasizing e-commerce. The Saks and Neiman deal gives both companies greater negotiating power with designers, forcing them to relax control over retail channels. With Amazon and Salesforce's contributions, they can cut logistics costs, potentially redirecting savings to marketing or enhancing the in-store shopping experience.
