The parent company of Saks Fifth Avenue said Friday (March 5) it was splitting its eCommerce and 40 traditional retail stores into “separate but related sister companies” in a move it said would “redefine the luxury shopping ecosystem.”
By establishing the Saks.com brand as a standalone eCommerce company, as well as receiving a $500 million investment and the digital expertise of Insight Partners, parent company Hudson’s Bay (HBC) said the two brands would be better able to plan and execute within their respective service models.
“With this move, we are redefining the luxury shopping ecosystem,” HBC CEO Richard Baker said in a statement. “Luxury ecommerce is poised for exponential growth, and as a standalone digital company with an existing strong position in luxury, Saks is primed to win significant market share,” he added, noting SFA’s 100-year-old brand status and legacy of reinventing itself.
In addition, HBC said the move reinforces its ability to unlock value within its stable of assets, which has seen it sell off Lord & Taylor and its European assets and focus more on its three remaining brands: Saks Fifth Avenue, Canada’s premier luxury retail chain Hudson’s Bay, and Saks OFF 5TH, its discount retailer.
“The team’s fashion expertise combined with a renewed digital focus will provide customers with an unmatched shopping experience,” Baker said. “We are delighted to partner with Insight Partners, a firm globally recognized for its ability to scale Internet, software and ecommerce leaders, to unleash Saks’ full potential as the preeminent luxury ecommerce platform.”
The Digital Divide
If nothing else, the deal to spin-off of online assets will grab attention within the retail sector, especially the high-end portion, where rivals like Nordstrom, Macy’s and Kohl’s continue to invest heavily in technology, not only to grow digital sales but also to improve service, convenience and the overall customer experience.
The break-up and Insight investment also values saks.com at $2 billion, which The Wall Street Journal said is about 30 percent more than the valuation of all of HBC when it went private one year ago.
“Luxury ecommerce is an exceptionally resilient high-growth sector and we are excited to invest in an iconic century-old brand that has so successfully morphed to a native digital strategy,” said Insight Partners Managing Director Deven Parekh.
According to HBC, Saks will make strategic investments to evolve and expand its already well-established digital business, including elevated styling capabilities, data-driven personalization that will ultimately lead to the creation of a hybrid retail-marketplace platform.
The Sister Concept
As much as the eCommerce business is where the growth potential is, the importance of the company’s 40 North American SFA stores cannot be minimized. “Saks and SFA will work in conjunction to continue delivering a seamless customer experience,” per the announcement. “Saks will lead marketing and merchandising across both businesses, while the stores will fulfill the physical functions of Saks, such as Buy Online, Pick Up In-Store, exchanges, returns and alterations.”
The move also comes just four months after the company relaunched and elevated its Saks.com site.
“This re-launch marks Saks’ first comprehensive website replatforming and redesign within the last five years,” the October 2020 announcement said, touting its reimagined experience that emphasized fashion, ease and personalization.
“As luxury consumer shopping habits evolve, Saks is meeting our customers where and how they want to shop and experience the best in fashion and beauty,” said SFA’s newly promoted CMO Emily Essner.”We are making strategic investments across all channels — including our online experience — to solidify our position as the go-to luxury shopping destination.”