This Week, Luxury Retail’s Next Chapter Takes Shape


After months of industry chatter, a pair of mergers may soon reshape the luxury retail landscape, both online and off.

Richemont is reportedly making progress in finding a buyer for its loss-making Yoox Net-a-Porter unit, with e-tailer Mytheresa, a rare success story in a troubled luxury e-commerce market, the most frequently cited suitor. Both Richemont and Mytheresa report quarterly results this week, though neither has spoken much about M&A in past earnings calls.

Then there’s the on-again, off-again merger between Saks and Neiman Marcus, which is thought to be on a fast track after Saks owner Hudson’s Bay Co. put together a $3 billion bid for its rival. We’ve heard this story before, of course, but recent reports in WWD and Axios indicate HBC has significantly sweetened its offer from a $2.1 billion bid in December. Also in the mix lately is Nordstrom, with the upscale department store’s founding family lining up financial partners for a buyout.

Any of these deals could be announced this week, or this month, or later this year, or never. For now, it’s worth stepping back and thinking about why all this is happening. I’ll be speaking with BoF’s founder and editor in chief Imran Amed on May 15 about the many challenges facing luxury e-commerce, in the first of our monthly live video calls for Executive Members. You can find details about how to sign up below. For now though, here’s a quick rundown of the state of play:

Multi-brand luxury retail is broken. For the last decade, too many players have fought over the same customers with product offerings and experiences that were insufficiently differentiated. To make matters worse, they were increasingly forced to compete not just with each other but with their own vendors, as brands opened more of their own stores in a bid to improve profit margins and better control the customer experience, often in second-tier markets where department stores were once the only luxury game in town.

For a time, low borrowing costs and booming luxury sales papered over the issues in the market. But the days of zero interest rates are long gone, and consumers aren’t spending like they used to. After a series of missteps, Matches ultimately succumbed to this tougher environment. Ditto Farfetch, which was acquired in a fire sale by Coupang late last year.

The thinking now is that fewer, stronger retailers have a better chance of success. That’s almost certainly true for department stores, which need to strengthen their balance sheets so they can compete with online rivals and brands’ own retail operations. As for luxury e-commerce, it remains to be seen if there is a model that works at scale; there are no large, unambiguously successful e-tailers in the space, though Mytheresa, with its tightly curated assortment and sharp focus on wealthy customers, comes closest.

For brands, luxury retail’s merger mania would be a good news/bad news situation. Consolidation would reduce the likelihood of a repeat of the Matches fiasco, where the company’s sudden downfall has left labels big and small out of pocket. But consolidation also gives retailers more power to set the terms of their arrangements with brands (something US antitrust regulators, who have already sued to block Tapestry’s acquisition of Capri, will surely consider if the Saks/Neiman Marcus deal happens).

Luxury retail’s upcoming M&A wave isn’t just about survival. It’s also about securing the best position for when the luxury market recovers from its recent slump. Tomorrow’s winners may be determined by decisions made in boardrooms this week.

Upgrade your BoF Professional membership now to become an Executive Member and join our first live video call discussing The Future of Luxury E-Commerce, on Wednesday, May 15 at 5pm London time, 12pm in New York.

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