Saks Teams With Amazon – But Can Luxury Really Thrive Online?

This week, the upmarket American department store chain Saks Fifth Avenue announced a partnership with Amazon to launch a curated range of women’s and men’s ready-to-wear, beauty, shoes, handbags and accessories on the e-commerce giant’s app and website.

Visitors to the ‘Saks on Amazon’ digital storefront will be greeted with images inspired by the windows of Saks Fifth Avenue’s New York flagship.

The deal marks Amazon’s latest attempt to break into the luxury fashion scene, which first began in September 2020 with the launch of its luxury fashion and beauty platform, Luxury Stores. 

Although Amazon has already built partnerships with high-end brands such as Oscar de la Renta and Coach, the online retailer has struggled to be seen as a legitimate destination for luxury fashion. However, it has expressed significant optimism about its latest partnership. 

“This collaboration with Saks furthers Amazon’s commitment to supporting the luxury industry and increasing our assortment for customers, while maintaining an elevated shopping experience that meets the varying tastes of our diverse customer base,” Jenny Freshwater, vice president of Amazon fashion, fitness and creators, stated in a press release.

However, several retail experts expressed ambivalence about the benefits of this partnership.

What experts have to say about Saks’ partnership with Amazon 

Steve Dennis, president and founder of SageBerry Consulting, told Inside Retail, “This is a bit of a ‘hell’s frozen over’ moment.”

He pointed out that “the conventional wisdom has been that luxury products must be sold in a luxury environment, which explains why many iconic brands, such as Chanel or Hermes, were told to embrace e-commerce, for their businesses, and even selling through Neiman Marcus and Saks.”

While this certainly holds true for retailers like luxury e-commerce platform Mytheresa, which has been holding surprisingly strong in today’s rocky fashion market, the reality is that players like Saks must go where the customers are, Dennis mused. 

Selvane Mohandas du Ménil, the managing director of the International Association of Department Stores, offered another take on the reason some luxury brands may be making the “inevitable” move to Amazon. 

“We are being told that brands need to opt in to be featured on the Amazon storefront… [But] to be honest, the brands that have done so are not exactly in the best shape possible, with the exception of Dolce & Gabbana and La Prairie,” said du Ménil. 

The managing director pointed to brands like Balmain, Alberta Ferretti, Altuzarra, Corneliani, Hervé Léger, Stefano Ricci and Clergerie, which was recently liquidated in France this month.

“Following up [on this announcement], the online assortment in the coming months will be telling… My take is that hardcore negotiations are going on behind the scenes to convince more brands to join, and Saks is probably flexing all its muscles (and orders sizes) to ‘encourage’ them to do so,” he added.

Meanwhile, Global Data’s managing director Neil Saunders theorised that the timing of this partnership seems to reflect the recent challenges facing Saks Global.

“The Saks business is under financial pressure, and it needs to drive revenue and cash flow. Amazon can help with that, just as it can widen the audience,” he said.

However, “the problem is that, in the end, Saks will need Amazon more than Amazon needs Saks and that imbalance in the relationship means this may not end all that well for Saks,” Saunders added.

Dennis noted that there are plenty of places for customers to buy the brands that Saks will be offering on Amazon, and the pricing is all the same. “Amazon adds a wee bit of convenience I suppose, but it’s hard to see that this solves a big problem consumers have,” he said.

Both Saunders and Dennis said the move could tarnish Saks’ image and potentially annoy vendors who are already not happy with the retailer’s actions over the past few years. 

Melissa Minkow, CI&T’s global director of retail strategy, put it bluntly: “I don’t expect this to do particularly well, as I struggle to imagine luxury shoppers looking to Amazon for that category.”

While they may turn to Amazon out of convenience, Minkow commented that “luxury is a category best shopped in more experiential environments.”

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