Amazon (NASDAQ: AMZN) goes after Fifth Avenue digs with big move into luxury apparel market

It’s a move that should send chills down the spines of storied department store chains like Macy’s (NYSE: M) and Nordstrom (NYSE: JWN): Amazon (NASDAQ: AMZN) is getting further into the luxury apparel market with an investment that will take it straight onto the world’s most famous shopping street.
The news came buried in a statement earlier this month about a multi-billion dollar deal led by Canada’s HBC to bring the Saks Fifth Avenue and Neiman Marcus retail chains under the same corporate roof. While mentioned just one time in the formal announcement as an investor, Amazon—the world’s second-largest retailer—will loom large in the newly created retail giant being dubbed Saks Global. There are several signs that the online superstore known for its best in class logistics plans to be much more than a silent partner.
For starters, Saks.com CEO Marc Metrick will lead the combined enterprise in a show of just how central online sales will be for the revamped venture. HBC said it plans to drive advancements in online functionality and fulfillment processes, two things right up Amazon’s alley. It will also bolster technology-driven personalization, “leveraging first-party data and AI to create individualized online shopping experiences.” Salesforce (NYSE: CRM) was also named as an investor, further highlighting the tech-driven shift.
Amazon is known for being a fierce competitor with unmatched scale, and the transaction has the potential to shake up the industry as other department chains struggle. Shares in both Macy’s and Nordstrom have seen double-digit declines over the past five years amid rising competition from online retailers and changing demographics. Both companies have been under pressure to go private or find new buyers.
The Saks Global deal could also have widespread ramifications for the owners of luxury brands like LVMH Moet Hennessy Louis Vuitton (CBOE: MC). They’re notoriously protective of their distribution, but HBC’s plan will suddenly give Amazon a seat at the table and be too big to ignore. The combined retail operation will have annual sales of around $10 billion and more than 150 locations.
While not an outright acquisition such as Amazon’s 2017 purchase of Whole Foods Market, it’s hard to imagine that the transaction is not part of a broader strategic plan to go after the global luxury fashion market that’s expected to be worth nearly $200 billion by 2031. Designers in Paris and Milan may not like it, but resisting Amazon’s latest push onto Fifth Avenue might not be an option. Amazon is coming for absolutely everything.