On July 3, it was announced that HBC, the parent company of U.S. luxury department store Saks, will acquire competitor Neiman Marcus Group for $2.65 billion.
HBC, the parent company that owns Saks and Hudson’s Bay, has agreed to buy Neiman Marcus, the parent company of Bergdorf Goodman. Amazon will also take a stake in the new combined company and provide technology and logistics. Salesforce, its technology partner, will also become a minority shareholder.
Saks Fifth Avenue currently has 39 stores in North America, plus several off-price Saks OFF 5TH stores. Neiman Marcus, on the other hand, has 36 stores and two Bergdorf Goodman stores. The new combined entity will be called Saks Global and will be led by Marc Metrick, currently head of Saks’ e-commerce division.
Saks Global will consist of the real estate assets of Saks Fifth Avenue, Saks Off 5TH Brand, Neiman Marcus and Bergdorf Goodman, and HBC. By combining these assets into one, the company aims to become a new powerhouse in the luxury world by developing a multifaceted strategy that ranges from selling luxury goods through an online marketplace to opening directly managed stores for fashion and accessory brands.
Richard Baker, CEO of HBC, said in a statement, “This is an exciting time in luxury retail, with technological advancements creating new opportunities to redefine the customer experience.” Baker also highlighted plans to leverage artificial intelligence to create personalized shopping experiences online and in-store.
Transition of the Luxury Department Store Industry
Over the past few years, the luxury department store industry has undergone a major transitional period. After the pandemic, many shoppers were once again visiting physical stores, and luxury goods sales were showing a strong recovery. Recently, however, these trends have slowed, and many customers are transitioning to online platforms.
Accordingly, each department store group has begun to emphasize a more seamless integration of physical and online marketing and customer experience. Nordstrom, for example, launched its online marketplace at the end of April this year, curating more attractive brands and implementing solidarity between e-commerce and physical stores. Macy’s, the owner of Bloomingdale’s, is currently closing a significant number of its brick-and-mortar stores and also shifting from its original image as a friendly department store to a more upscale orientation.
In recent years, the luxury industry has seen an acceleration of acquisitions by major conglomerates. Last year, Tapestry, Inc., the parent company of Coach and Kate Spade New York, acquired Capri Holdings, Inc., the owner of fashion brands including Michael Kors, Versace, and Jimmy Choo.
Meanwhile, federal regulators are taking legal action to block large deals between these industry leaders, and the HBC-Neiman Marcus merger may also be subject to intense scrutiny.