Saks' Neiman buy is a luxury deal with a tech twist
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Rebecca Zisser/Axios
The world of luxury retail is consolidating fast. The announced $2.65 billion acquisition of Neiman Marcus by Saks Fifth Avenue will bring those two brands under the same roof as Bergdorf Goodman, Barneys, and Lord & Taylor — all backed by tech giants Amazon and Salesforce.
Why it matters: Luxury fashion brands are going from strength to strength, as exemplified by the $390 billion valuation of Bernard Arnault's LVMH. Luxury fashion retailers, on the other hand, are struggling.
The big picture: Brands like Tiffany and Hermès are increasingly focused on the customer experience and feel less need to partner with online or offline retailers.
- "Larger luxury brands, no longer dependent on wholesale, prioritise direct-to-consumer sales and their own data," writes Maghan McDowell of Vogue Business.
- Meanwhile, Neiman Marcus filed for bankruptcy in 2020. U.K.-based Matches followed earlier this year, and Farfetch came very close to bankruptcy before being rescued in a fire sale by Coupang.
Between the lines: Amazon is the largest clothing retailer in the U.S. and has long wanted to move upmarket, but it closed its Amazon Style stores last year and its online "luxury stores" outlet features no big-name brands while leaning heavily on second-hand goods.
- By investing in Saks Global, Amazon and Salesforce will be able to help the retailer develop cutting-edge personalization and logistics. In return, they will probably gain access to hugely valuable first-party data on who luxury shoppers are and how they behave.
The catch: It's far from assured that this deal will pass antitrust scrutiny. The FTC has sued to prevent two luxury-goods companies, Tapestry and Capri, from merging — and FTC chair Lina Khan is famously opposed to Amazon growing larger via acquisition.
The bottom line: Even if this merger goes through, Saks still won't have remotely the amount of market power that is being concentrated in the big fashion houses.
