Will The Neiman Marcus Brand Survive Saks Merger?

While the news that HBC, parent of Saks Fifth Avenue, will acquire Neiman Marcus had been rumored for months, few expected Amazon to play a starring role. The ecommerce giant is an investor in the new Saks Global. And as part of the $2.5 billion deal, it will “work with Saks Global to innovate on behalf of customers and brands partners,” HBC says in the announcement. Salesforce and Insight Partners, a software investor, are also taking a stake in the newly formed enterprise.

While that lineup will likely inject plenty of sorely needed tech prowess into the department stores and give Amazon a leg up in the luxury landscape, it’s less clear how well the individual store brands will benefit.

Saks Global says it intends to maintain each of the four brands' identities: Neiman Marcus, Bergdorf Goodman, Saks Fifth Avenue and Saks Off 5th.



But that’s easier said than done. “Managing the brands in this scenario will become even more complex,” says Darren “Daz” McColl, an independent marketing consultant and former chief marketing officer of Neiman Marcus. “Department store brands like Neiman Marcus and Saks are already challenged. They sell the biggest fashion brands in the world, which they also compete with,” he tells Marketing Daily. And those luxury brands “are often more valued and desired than the department store brands.”

It doesn’t help that younger shoppers -- the ones who spend most on fashion -- are digital natives, not brick-and-mortar loyalists. They are happy to buy directly from the brands they love, whether online or in boutiques.

While that generational shift has been undercutting the relevance of every department store for years, the pressure has been especially intense for luxury stores -- and even more so following the pandemic. Neiman Marcus, which also owns Bergdorf Goodman, filed for bankruptcy in 2020 and since then, has closed some stores and had multiple corporate layoffs.

In 2021, HBC took the controversial step of spinning Saks’ digital business into Saks.com, a separate entity, with a $500 million infusion from Insight Partners, a software investment company. Insight Partners is also an investor in the new company.

In its announcement, HBC says the plan is to bring together all three luxury brands, supported by their portfolio of prime retail real-estate assets. It will also strengthen the digital infrastructure to keep customers happy, with a “highly personalized, seamless experience with greater opportunities for product discovery across all channels.”

Marc Metrick, chief executive of Saks.com, will become CEO of Saks Global. In an interview with Bloomberg, he said Amazon’s investment will help “future proof” the deal and that technology is critical to the new company. Changes will include "gathering high-quality data on customers, analyzing it effectively to offer them more personalized options online and improving logistics to make it easier for consumers to shop."

But even the richest tech infrastructure isn’t enough to guarantee the health of each individual store brand. Each retailer must “differentiate and add customer value through curation, customer experience and storytelling to remain relevant,” says McColl. “That becomes harder if you start to merge merchandise teams, look to maximize buying as a collective and genericize operational systems.”

Saks Global “will need a strong and well-defined brand architecture with actionable differentiation strategies and drive that from social media posts to the sales experience,” he says.

Saks Global will also include HBC’s U.S. real estate and Neiman Marcus Group assets, creating a $7 billion portfolio.

HBC will continue to owns HBC’s  Canadian retail and real estate assets, including Hudson’s Bay, which operates TheBay.com and the Hudson’s Bay network of stores.

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