{"id":9854,"date":"2024-08-29T19:40:58","date_gmt":"2024-08-29T19:40:58","guid":{"rendered":"https:\/\/wslstrategicretail.com\/?p=9854"},"modified":"2024-08-29T19:55:11","modified_gmt":"2024-08-29T19:55:11","slug":"saks-neimans-2-65-billion-deal-mean","status":"publish","type":"post","link":"https:\/\/wslstrategicretail.com\/blog\/saks-neimans-2-65-billion-deal-mean\/","title":{"rendered":"What Does the Saks-Neiman\u2019s $2.65 Billion Deal Mean for the Beauty Business?"},"content":{"rendered":"

[vc_row full_width=”stretch_row_content_no_spaces” el_class=”single-post-content”][vc_column width=”2\/3″ el_class=”aside”][vc_column_text]By Kathryn Hopkins, JULY 9, 2024 || A Publication of WWD<\/a> [Women\u2019s Wear Daily] <\/em><\/p>\n

Hudson\u2019s Bay Co. reached an agreement last week to acquire the Neiman Marcus Group for $2.65 billion.<\/em><\/p>\n

What has long been rumored became a reality last week.<\/p>\n

Hudson\u2019s Bay Co. reached an agreement to acquire the Neiman Marcus Group for $2.65 billion, bringing the Dallas-based luxury retailer together with the New York-based Saks Fifth Avenue as Saks Global. Amazon was also revealed as a surprise investor in the deal, which is pending approval by the Federal Trade Commission.<\/p>\n

But what does this mean for beauty, of which department stores are a slowing but still important retail distribution channel?<\/p>\n

\u201cThis merger could potentially have a very positive impact on the prestige beauty category,\u201d said Edgar Huber, chief executive officer of Nest. \u201cSaks has consistently proven over the last couple of years that they invest in the quality of their stores, have launched innovative retail-, hospitality-, shared workspace concepts, have modernized merchandising strategies and the assortment mix.\u201d<\/p>\n

He added that the most interesting aspect for him is the partnership with Amazon. \u201cAmazon will work with Saks Global to \u2018innovate on behalf of customers and brand partners following the close of the transaction,\u2019 HBC said. That could involve logistical and digital upgrades.\u201d<\/p>\n

Recently, a slew of prestige brands, including Clinique, Bumble & Bumble, Too Faced and Kiehl\u2019s, joined Amazon after years of eschewing it as beauty companies are now viewing it much more seriously as a distribution channel.<\/p>\n

\u201cWe will have to see how this will unfold concretely but you could imagine substantial mutual benefits for both retailers in terms of access to luxury brands, targeted data mining, quality of online execution and DTC logistics,\u201d Huber continued.<\/p>\n

Revive Skin Care CEO Elana Drell-Szyfer told WWD that only time will tell how the deal impacts luxury beauty as the two businesses have a very different approach when it comes to beauty.<\/p>\n

\u201cThere actually is a great cultural difference in how the two run their beauty businesses and truthfully, of late, I would say that the Saks business has been much more focused on how to drive business through digital,\u201d she said. \u201cBut Saks has not leaned into as many branded in-store experiences and very important customer or brand ambassador in-store events in the way that Neiman\u2019s does and fosters.\u201d<\/p>\n

Drell-Szyfer added that for a luxury beauty brand that is not in Ulta Beauty or Sephora, this also means there are now fewer points of distribution.<\/p>\n

\u201cThere are fewer places really to scale your business as a luxury brand, and that\u2019s not only with the consolidation of the two, but even with Neiman\u2019s bankruptcy a few years ago, when they ended up closing 13 stores,\u201d she said.<\/p>\n

According to the Green Street real estate research firm, there are eight malls that have both a Saks Fifth Avenue and Neiman Marcus store. Decisions could be made on closing the weaker of the two in certain locations, benefiting the remaining store.<\/p>\n

Wendy Liebmann, chief executive officer and chief shopper at WSL Strategic Retail, also questioned whether the merger could impact a brand\u2019s negotiating power.<\/p>\n

\u201cIt may give Neiman\u2019s a greater viability, and Saks a greater viability to be under one roof or under one company, but from a brand standpoint, the ability to negotiate, the ability to create a different, unique offer to a customer it\u2019s a bit of a challenge,\u201d she said.<\/p><\/blockquote>\n

\u201cHowever, having said that, all the smart people I know in this world who worked in the space say to me, we really can\u2019t justify that many luxury department stores in this country anymore.\u201d<\/p>\n

\u201cSo there\u2019s two sides of the question,\u201d she continued.<\/p>\n

\u201cAm I going to lose business because now I\u2019m dealing with one company, one buyer, and my negotiating power will dissipate, or because now I\u2019ve got one bigger, stronger company that actually has the resources to tell the story more effectively, does that make it easier? It\u2019s probably a bit of both.\u201d<\/p><\/blockquote>\n

Other sources discussed whether the merger would help Saks pay vendors on time.<\/p>\n

At the end of last year, the Instagram account Est\u00e9e Laundry posted that Est\u00e9e Lauder Cos. Inc. had issued a directive that Saks is on credit hold for all Lauder brands, which include Tom Ford Beauty, Jo Malone, Bobbi Brown, MAC, La Mer and more. Some sources backed that up, while others said there was a passing credit dispute and that the beauty giant is still shipping Saks as usual. Shortly after, HBC raised $340 million in cash that can be used to bolster its retail operations.<\/p>\n

One source said: \u201cOne would hope that it would get better, but I think the structure of financing a deal versus what your operating cash flow looks like is handled pretty separately.\u201d<\/p>\n

Visit WWD<\/em><\/a> for the full article.<\/em>[\/vc_column_text][\/vc_column][vc_column width=”1\/3″ el_class=”sidebar”][vc_column_text]\n\t\n\t

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