HBC, the parent company of luxury retailer Saks Fifth Avenue, has reached an agreement to acquire its high-end competitor Neiman Marcus Group in a deal valued at $2.65 billion. The merger will result in the creation of a new corporate entity named Saks Global, with e-commerce giant Amazon (AMZN) set to become a minority stakeholder.

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This post was written by Angel Smith

Video Transcript

The parent company of Saks Fifth Avenue H BC says it will acquire Neiman Marcus Group in a $2.65 billion deal.

Yeah, I mean, II I wanna be more excited about this but I think this has been and I've talked to Mark Metric before.

I think he has been working on this for some time.

So this was largely to be expected, but it really, it comes against a backdrop of really of a department store space.

This continues to fall apart.

You have Macy's closing hundreds of stores and I think this is ultimately a play, I think on the e commerce business for these companies and then maybe for the uh the off price business, I was gonna ask you.

So I was like, what is the future of the department store business like in general?

I mean, I think Macy's is giving you a taste of it.

It is probably you have 200 to 300 stores open in a locations the best of the best and everything else just doesn't exist then it just all online, it just is online.

OK. That was gonna the follow up though is like, is there a combined Ecommerce business here?

And I say it because I find myself as a consumer and I think the businesses find this as well.

Everyone has pretty much everyone.

Now they would say some of the luxury houses they play with, maybe don't have an ecommerce presence, but pretty much everyone does.

And I usually have a general idea of what I want and, you know, let's call Ecommerce Warehouse type, uh um websites, you know, even the ex Amazon division, it's not the most pleasant experience like browsing through a variety of brands.

I don't really know what I'm getting.

So if I'm at a combined Sachs Nieman website, I'm gonna see some brand, I would probably rather go to that brand's website and figure it out for myself there.

It's more coherent inside of a brand.

That's why the, the ultimate player is a Louis Vuitton that is well off its high.

So this is a brand that has been able to control their own dest, they're opening shops.

You want Louis Vuitton, you go to a Louis Vuitton store and get that full on experience.

It's just a better experience.

Well, here's the thing, the, the reason that department stores to your point did so well was because people didn't know what they want.

So what's, what's become the kind of modern day resolution for that for retailers online?

It's inferential technology, artificial intelligence in some cases that tells you what you want and essentially takes your purchase history and is able to aggregate enough information around you to suggest, hey, you're either running low on this or this is where we're gonna uh generate demand in another part of your home or in your lifestyle.

And then on top of that, the mall was successful because of traffic, traffic has shifted to go online or, or the new mall is essentially on your Instagram app where you're just searching through there and you get a bunch of ads that get thrown in front of you as if you were walking through a mall and having that discovery uh process taking place in a virtual concept instead.

Yeah.

And I think like, you know, we, we talk a lot about our own data and the integrity of our data where it goes.

But to your point, Brad, I think I've made peace at least and I think a lot of people have um OK. Instagram knows pretty much everything about me.

Guess what?

Over time, they'll probably target me something that I will eventually buy.

And I'll be like, you know what I do like that?

I like, I did want that.

Exactly.

And that's fine.

You know, you would have probably you would appreciate, I think the nuance on this one, I think story here is, is Amazon uh being a minority investor in this combined company as they're not only an investor, but they're also focus on the logistics.

If I'm A ups and fedex.

I'm looking at this, I'm like, Amazon is really playing ball in logistics, the subtext.

It's a whole different conversation that we don't have time for, but the whole subtext of the, what do you do with these combined e commerce storefronts?

The Amazon experience has plenty of problems that we could go for hours about.

And I wonder how the current team with all the A I pressures?

What's going on A aws, what they do with the retail piece going forward to make that just like a more Amazon experience.

I mean, there's plenty of good things about it, but there are plenty of things about going on Amazon and a lot of other, you know, warehouse type e commerce sites these days.

That is, uh, not the greatest thing that I've ever experienced.

No.

Well, sir.