By Key Points
- Amazon buys stake in Neiman Marcus
- Partnership with Saks Fifth Avenue owner HBC
- Amazon to enhance data and logistics
- Move targets $10 billion annual sales
While it has completely reshaped retail over the last twenty years, Amazon hasn’t had as much success breaking into the luxury sector.
Seeking to bring its data and logistics know-how more to the forefront, the online giant has made a strategic move by acquiring a minority holding in Neiman Marcus — a long-established high-end retailer.
Amazon’s New Luxury Play
As part of a larger $2.65bn acquisition deal by Saks Fifth Avenue’s parent company, Hudson’s Bay Company (HBC), which also owns Bergdorf Goodman and now Neiman Marcus, this marks Amazon’s first foray into luxury retailing. With all three brands under its control, the combined entity could become the dominant player in US luxury goods.
What it means for Amazon
Known for pioneering data use and efficient supply chains, Amazon will be looking at how those strengths can be applied to Neiman Marcus and other luxury retailers it may acquire down the line.
The e-commerce giant wants to create personalized shopping experiences through sophisticated customer data analytics; these should optimize stock management while ensuring goods are delivered as quickly as people expect when using high-end stores.
The Challenge Of Winning Over Luxury Brands
However, major fashion houses have traditionally been wary of selling their products through Amazon.
LVMH — which owns Louis Vuitton, Dior and Givenchy among others — is one example where they prefer maintaining exclusivity via direct retail channels rather than using third parties such as this online marketplace due to its mass-market image.
Further troubles face Western European luxury labels too who have secured rules allowing them not only control over what can appear on sites like Amazon but even stopping any third-party resellers altogether if they deem it necessary for protecting brand image.
This regulatory environment combined with Amazon’s reputation as a generalist has meant penetrating higher-priced segments remains difficult despite its vast resources.
Nevertheless, partnering with Saks and Neiman Marcus provides an unprecedented opportunity; one that is not lost on Marc Metrick, CEO at Saks who believes technology holds the key to future-proofing luxury brands.
He envisions a situation where Neiman Marcus could offer more personalized services than ever before thanks to data gathered by Amazon from upper-class customers who shop there regularly – thereby setting new benchmarks within this vertical of retailing.
Bridging The Gap Between Online And In-Store
Amazon’s previous attempts at physical retail have been mixed: while its purchase of Whole Foods proved successful, cashier-less shopping concept stores like Amazon Go failed to take off in any meaningful way.
This latest move seems like a calculated play for an established market rather than creating new brick-and-mortar locations from scratch.
The collaboration between these two powerful companies is expected to generate roughly $10bn per year which would constitute a significant percentage share of sales revenue within the luxury goods category alone.
Therefore, it can be considered as one among many potential examples where hi-tech solutions are integrated into traditional selling environments thereby reshaping relevant industries such as the fashion industry.
A Strategic Bet on Luxury Retail
It should be noted that exact details regarding this investment have not been released; however, insiders describe it as being more pragmatic compared to some prior moves made by Amazon in terms of brick-and-mortar establishments around different parts world (which were often seen as too disruptive).
Through working with established players like Hudson Bay Company & Co Ltd (HBC), owner-operator firms behind prestigious outlets including Saks Fifth Avenue Department Store Chain, etc.
Jeff Bezos-led company will be able to leverage its core competencies without risking dilution or loss of luxury appeal associated with such iconic establishments.
This latest development highlights once again how aggressively Amazon wants to expand control over various retail sectors including those dealing with premium goods.
By blending cutting-edge technology alongside age-old traditions surrounding top-tier brands, they hope to create an environment where people can seamlessly shop for high-quality items irrespective of whether they are physically present at stores or browsing online from the comfort of their homes.
What's your reaction?
