Amazon and Saks Fifth Avenue have cut a deal to create the “Saks on Amazon” store. It’s not really the first time that the e-commerce giant has sold luxury goods. The company opened Amazon Luxury in 2020, selling products from Oscar De La Renta and pre-owned Louis Vuitton and Christian Dior bags. The goods will be able to be found in the new location.
Bigger than Amazon, though, it’s the most recent example of how luxury brands have tried to use omnichannel sales and distribution to expand beyond their traditional niches and stores to gain broader revenues and profits without losing the exclusivity critical to their branding and core success.
This isn’t the first time Amazon and Saks have joined forces. When HBC, Saks Fifth Avenue’s parent, struck a deal to buy Neiman Marcus Group, Amazon was one of the minority shareholder backers. It also isn’t the first, or last, exploration of omnichannel marketing by luxury brands that need to move beyond just physical stores.
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Luxury goods have been pulled in opposite directions for decades. Exclusivity allows companies to maintain quality and pricing for a select audience. The trade-off has been limited access to much larger markets. The growth and development of omnichannel operations—online, brick-and-mortar, and cross-connections between the two—have been an attempt to crack the barriers without breaking the foundation.
In a recent report, Bain & Company noted that overall global luxury spending in 2024 saw a variation of between +1% and -1% between 2023 and 2024 at constant exchange rates. However, the personal luxury goods market saw its first contraction in 15 years and its customer base reduced by about 50 million over the last two years. Top customers have accounted for a larger share of purchases, “despite feeling that their luxury shopping experience has become less exceptional," according to Bain.
Only about a third of brands grew in 2024, versus 95% from 2021 to 2022 and 65% from 2022 to 2023. In the U.S. specifically, there was a “slowing” across key cities. Overall, most physical luxury stores had “plummeting” walk-in traffic, according to the Bain report. Outlet channels “overperformed” with consumers looking for better deals. Online sales entered a “normalization trajectory.” What is needed is “immersive, personalized, and brand-curated experiences” to drive people back to stores through “differentiated value propositions and broadening in-store engagement," the Bain report further noted.
According to luxury marketing and commerce consultancy G & Co., 98% of luxury consumers can be found online. Gucci has used e-commerce, social media, and mobile to expand its brand and communications. One result is that half of its sales are attributed to millennials. Michael Kors uses “online platforms and collaborations to enhance visibility and reach new customers,” as ProjectPractical.com reported.
McKinsey recommended that companies “rethink client engagement strategy,” investing in tech, artificial intelligence, and data capabilities to develop unique experiences inside and outside stores, including online.
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