Saks Fifth Avenue Separates its Online Business
Insight Partners Invests $500 Million in Saks.com
HBC, the owner of Saks Fifth Avenue, plans to separate the brand’s brick-and-mortar stores from its ecommerce operations. Venture-capital firm Insight Partners invested $500 million in Saks.com, the iconic brand’s online division.
“By separating the dot-com business, we can show investors its value,” explained HBC CEP, Richard Baker. “Investors don’t want to put their money in bricks-and-mortar retailers right now.”
Luxury Brands Go Digital
Luxury brands have been slow to build their ecommerce operations in recent years. The in-person shopping experience at a store like Saks Fifth Avenue has been difficult to replicate virtually.
However, the pandemic has changed these trends. Online sales of luxury handbags, clothes, and other items have surged. The valuations of online luxury goods platforms like Zalando and Farfetch (FTCH) have climbed over the past year. Saks.com’s sales hit $1 billion last year.
Rethinking the Digital Luxury Shopping Experience
With the new funding, Saks.com will improve its customer service and return procedures. It will also speed up its shipping process. Saks’ physical stores will still be integrated into online operations. For example, customers will be able to order online and pick up their purchases at store locations.
Saks.com also plans to invest in rethinking the digital luxury shopping experience. Sebastian Gunningham, a former Amazon (AMZN) executive who will join the board of Saks.com, said, “Today, you buy a toothbrush online the same way you buy a $1,000 dress.” Saks.com wants to change that.
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