By Sabrina Lynch

• Saks Fifth Parent Company HBC is set to acquire Neiman Marcus for $2.65B with a $10B target in annual sales after the merger
• Amazon has had over 50% plummeting sales and is hoping to recoup losses from this investment

Saks Fifth Avenue has set its affluent sights on Neiman Marcus Group to tighten its stronghold in the retail market. A $2.65 billion deal is being drawn up by Saks Fifth parent company to buy its deluxe rival Neiman Marcus Group, which owns Neiman Marcus and the Bergdorf Goodman brand. The deal will be made even sweeter by an injection of cash from Amazon and Salesforce who will hold a minority stake too. This comes after sales in the retail industry dropped by 0.8% in Jan 2024 signaling shoppers’ financial constraints.

Why This Matters: The new deal between the two powerhouses will create a single department platform, newly named Saks Global, that will merge 39 Saks stores with 36 existing Neiman Marcus properties and two Bergdorf Goodman flagship stores. The agreement is a concerted effort to safeguard the respective retail chains from inflation and other economic challenges affecting consumers, such as the cost of living.

The question remains if it will be enough to keep luxury department stores relevant given the meteoric rise of secondhand marketplaces and online stores specializing in designer resale. Gen Z and millennials are also rebelling against full-price luxury, instead turning to online resale stores and upscale fashion & accessory pop-up shops. In fact, pre-owned luxury continues to dominate the market with a value of $46.5 billion. It’s a high price-tag to compete against. This has left department stores looking for ways to up their game in gaining cultural relevance, achieving a sought-after status where Masego, Metro Boomin, and Future were happy to drop a shout out to Neiman Marcus & Saks Fifth in the stores’ heyday. 

What’s Next: Cultural relevance will be crucial to Saks Global’s success to avoid a similar situation following Barneys’ fall from grace. Consumers are keeping their wallets close to their chest, contributing to a significant drop in department store sales which are, scrapping 50% below their peak in the year 2000. Elevated in-store experiences and new service offerings no doubt will be  key to attracting new luxury customers.

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