Amazon changed the face of retail over the last 20 years but has failed miserably to make inroads in the luxury goods market. Now, it’s trying something new. The online retailer has purchased a small stake in retailer Neiman Marcus and will reportedly provide data and logistics to Neiman and its new owner, Saks Fifth Avenue.
Yesterday, Saks Fifth Avenue and parent HBC announced the $2.65 billion acquisition of Neiman Marcus (which also owns Bergdorf Goodman), putting the largest US luxury retailers under the same roof, The Wall Street Journal reported. Amazon is a minority investor in the deal, which is still subject to regulatory approval.
“How do you future-proof a brand like Saks or Neimans or Bergdorf? You do that through technology,” Saks CEO Marc Metrick told Bloomberg. To that end, Amazon will gather high-quality customer data, analyze it to offer more personalized options and improve logistics.
Amazon has attempted to access the luxury retail market over the years, but the major brands want nothing to do with it. “We believe the business of Amazon does not fit with LVMH, full stop, and it does not fit with our brands,” LVMH said back in 2016. The only place that LVMC (which owns Louis Vuitton, Dior, Givency and other labels) does business is in its own retail stores, at retailers like Neiman Marcus or on its own website.
In Europe, luxury brands won the right to block third-party sales of products online if they felt it damaged their image. In addition, the EU ruled in 2010 that brands with less than a 30 percent market share could prevent online retailers from selling their wares.
Amazon has tried to break into bricks-and-motor retail with varying degrees of success. Its ownership of Whole Foods is one positive example, but its cashierless Go stores have largely failed to take off.
With the acquisition of Neiman Marcus by Saks’ parent HBC, Amazon is getting involved in an organization expected to do a combined $10 billion worth of annual sales. There’s no word on the size of Amazon’s investment, but it seems a relatively safe bet compared to the more radical brick-and-mortar experiments it’s tried in the past.
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