amazon changed the face of retail over the past 20 years, but it failed miserably in its attempt to crack the luxury goods market. Now, it's trying something new. The online retailer has bought a small stake in retail chain Neiman Marcus and will reportedly provide data and logistics to Neiman and its new owner, Saks Fifth Avenue.
Yesterday, Saks Fifth Avenue and its parent company HBC announced the $2.65 billion acquisition of Neiman Marcus (which also owns Bergdorf Goodman), putting America's largest luxury retailers under one roof. amazon-f71a0fda” class=”link rapid-with-clickid etailiffa-link” rel=”nofollow noopener” target=”_blank” data-ylk=”slk:The Wall Street Journal;elm:affiliate_link;sellerN:The Wall Street Journal;elmt:;cpos:1;pos:1;itc:0;sec:content-canvas”>The Wall Street Journal amazon is a minority investor in the deal, which is still subject to regulatory approval.
“How do you future-proof a brand like Saks, Neimans or Bergdorf? You do it through technology,” said Saks CEO Marc Metrick. amazon-to-help-future-proof-neiman-deal” rel=”nofollow noopener” target=”_blank” data-ylk=”slk:Bloomberg;cpos:2;pos:1;elm:context_link;itc:0;sec:content-canvas” class=”link “>BloombergTo do this, amazon will collect high-quality data from its customers and analyze it to offer more personalized options and improve logistics.
amazon has tried to tap into the luxury retail market over the years, but major brands want nothing to do with it. “We believe that amazon’s business does not fit with LVMH, period, and it does not fit with our brands,” LVMH said in 2016. The only place LVMC (which owns Louis Vuitton, Dior, Givency and other brands) does business is in its own retail stores, at retailers like Neiman Marcus or at its own website.
In Europe, luxury brands were given the right to block third-party sales of products online if they felt it was damaging to their image. In addition, the EU ruled in 2010 that brands with less than 30 percent of the market could prevent online retailers from selling their products.
amazon has tried to break into brick-and-mortar retail with varying degrees of success. Its ownership of Whole Foods is a positive example, but its cashierless Go stores have failed to take off.
With the acquisition of Neiman Marcus by HBC, the parent company of Saks, amazon is getting involved in an organization that is expected to have combined annual sales of $10 billion. The size of amazon’s investment is not known, but it seems a relatively safe bet compared to the more radical brick-and-mortar experiments it has attempted in the past.
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