Giants Merge to create Megalodon of Luxury Retail

July 5, 2024July 5, 2024Amazon, canada, Hudson's Bay, luxury retail stores, Neiman Marcus, retail store merger, saks fight avenue

Amazon is also involved in the luxury retail network that Saks Fifth Avenue and Neiman Marcus are creating. A merger among giants in order to create a Luxury Retail Megalodon never seen before. Saks Global, a new retail giant, and its $2.65 billion acquisition were announced in a press statement on Thursday by Saks owner HBC. Saks Off 5th, a bargain store, and Bergdorf Goodman, a luxury retailer owned by Neiman Marcus, are combined to form Saks Global.

Retail store mergers are a common occurrence in the business world, and they can have significant implications for consumers. When two retail giants decide to join forces, it raises several questions: Will this merger create a more consumer-friendly environment, or will it automatically lead to increased prices? The answer is not straightforward, as the impact of retail mergers can vary based on numerous factors, including market dynamics, the competitive landscape, and the strategies employed by the merged entities.

The news about two giants merging and the third having a sales benefit came out of the clear blue sky. In order to “innovate on behalf of customers and brands partners,” Saks Global has secured funding from Amazon. Following the merger, Saks Global and HBC’s Canadian operations will be run independently. The Canadian company comprises $2 billion in real estate and Hudson’s Bay department shops. According to the press statement, the unit “will be well positioned to support future growth, while continuing to serve its loyal Canadian base.”

One of the primary advantages of retail mergers is the potential for economies of scale. When two companies merge, they can often reduce operational costs by streamlining supply chains, consolidating administrative functions, and eliminating redundancies. These cost savings can, in theory, be passed on to consumers in the form of lower prices.

Mergers can lead to a more diverse and comprehensive product range. By combining resources and expertise, the merged entity may offer a wider selection of goods and services, providing consumers with more choices and convenience.

A larger, merged company may have greater bargaining power with suppliers, potentially leading to better purchasing terms and lower prices for consumers. This advantage can also result in exclusive product offerings that smaller competitors cannot match.

One of the most significant concerns with retail mergers is the potential reduction in competition. When two major players combine, the market becomes less competitive, which can lead to higher prices. With fewer competitors, the merged entity may have less incentive to keep prices low or to innovate.

In extreme cases, mergers can lead to monopolistic practices where the merged entity dominates the market. This dominance can result in price increases, reduced product quality, and fewer choices for consumers. Regulatory bodies often scrutinize mergers to prevent such outcomes, but not all anti-competitive behaviors are caught or mitigated.
Mergers often lead to job cuts as companies seek to eliminate redundancies. This reduction in workforce can negatively impact service levels, with fewer employees available to assist customers, leading to longer wait times and a decrease in overall service quality.

WHAT WILL BE THE END RESULT FOR CANADIAN SHOPPERS?

It is hard to predict the outcome for Canadian shoppers. A merger historically brings increase in prices due to less competition, but it can also create a benefit as the purchasing power is increased. When we take Hudson’s Bay as the major Canadian retail store under the magnifying glass, how many people shop there these days?

In the old days where SEARS, Zellers and even Eaton’s were still around, all of the stores mentioned were packed with shoppers. Now, after all those years, only one successor stays to fight the online battle.

Is Hudson’s Bay still attractive for shoppers? Probably not among young people, but it certainly is a great store to buy many things Canadians desire. For how long? That is a good question!

Not everyone loves shopping online, some of us prefer the connection with products, sales associates and like the overall experience while roaming through stores and shopping malls.

Hopefully, we will have the opportunity in the near future to enjoy the old fashion shopping where we mostly spend our money on food and drinks during a mall excursion rather than buying products, but it is still a lifestyle we enjoy having.