Multi-brand retailers brace for 2025

Capping off a year marked by several large-scale mergers in luxury retail, Saks Global announced last month that it had completed its $2.7 billion acquisition of Neiman Marcus Group, the Texas-based department store chain founded in 1907. Saks Global’s portfolio now comprises Neiman Marcus, Bergdorf Goodman, Saks Fifth Avenue, and Saks Off 5th. The Saks-Neiman merger was the final crescendo of 2024, which saw a multitude of legacy giants ink milestone deals. Nordstrom secured the $6.25 billion privatization of Mexican retailer El Puerto de Liverpool in December; Frasers Group bought Matchesfashion before closing the company in June; and Farfetch was sold to white knight Coupang in January. Meanwhile, Mytheresa’s acquisition of Yoox Net-a-Porter is still in the works. Where does this leave multi-brand retail in 2025? Independent designers Last year’s disruptions risk leaving many indie designers — whose products are stocked in the retailers mentioned above — in the lurch. “We’re drifting deeper and deeper into waters where the whales keep getting bigger, and it can be intimidating as a small fish who’s trying to eat,” says Ashley Smith, founder of PR agency Lobby PR. Fewer buyer options are a major point of concern, as the monopolization of multi-brand retail leaves fewer channels for independent brands and designers to sell through. Wholesale, a lifeline for many, is under pressure; reduced competition in the market could strip indie designers of their bargaining power. Moreover, as companies streamline their operations to recover from last year’s significant market downturn, newly consolidated retailers may reduce their inventory demands from independent designers — a potentially fatal blow to those who rely heavily on large retailer orders to stay afloat. With limited control over these shifts, many independent sellers face uncertainty about the future of their brands. Potential catalog reductions could hit emerging Chinese creatives, who rely on Western conglomerates like Saks Group for global exposure, especially hard. For advocates like Lobby PR, the focus is on empowering indie brands to build resilience with strategies “that don’t rely on third-party gatekeepers which come and go with the wind, leaving businesses constantly vulnerable,” says Smith. Banking on innovation A key growth strategy for retailers in 2025 will focus on innovation and personalization. “With deep relationships across the industry, cutting-edge personalization, and strategic technology partnerships, we are poised to drive innovation and growth,” Marc Metrick, CEO of Saks Global Operating Group, announced in a statement released at the time of the Saks-Neiman merger. By leveraging hyper-personalization, Saks aims to gain a sharp edge in understanding and catering to consumer preferences. Enhanced shopper engagement, which translates into increased sales and profits, depends on offering value beyond the product itself. Rivals such as Farfetch have been experimenting with augmented reality (AR)-enabled try-on services. Farfetch-owned AR tech provider Wanna, for instance, aims to tackle the retailer’s return rates and boost customer satisfaction. The company began piloting a tool that allows Farfetch to provide immersive 3D experiences across all product categories last November. Anne-Liese Prem, head of cultural insights and trends at digital creative agency Loop, expects luxury e-commerce retailers to “move away from 2D to immersive 3D spaces” this year, along with “improved and more responsive chatbots and hyper-personalized AI product recommendations.” “It will ultimately feel like stepping into a fully tailored, high-touch digital boutique where exclusivity and convenience merge seamlessly, making it intimate, bespoke, and every bit as indulgent as in-person shopping,” Prem says. Deploying innovation can help retailers stand out, but true personalization remains prohibitively expensive for consolidated brands, argues Jonathan Torres, a strategic marketing leader who has held former roles at Saks Fifth Avenue Stores and Bloomingdale’s. “Don’t get me wrong; some level of innovation and personalization is necessary to stay competitive. But I wouldn’t expect to see any truly groundbreaking initiatives from these companies anytime soon,” he says. Ultimately, other pressures take precedence. “The pressure to meet quarterly earnings will always trump long-term investments in innovation,” Torres adds. “Shareholders demand immediate returns, and that incentivizes a focus on short-term cost-cutting measures.” New entities, new concerns When companies are absorbed by new owners, they often face job cuts and store closures as part of efforts to boost profitability. For example, following Matchesfashion’s administration last March, over half of the company’s workforce was swiftly laid off. Coupang meanwhile shuttered Farfetch's white label business unit, Farfetch Platform Solutions, last August following a $105 million loss. As more retailers look to streamline their operations in light of luxury’s market slowdown, the same could be on the cards for the likes of Saks Group and Nordstrom, should they fail to reach their targets this year. The birth of new retail conglomerates like Saks-Neiman may seem like a victory for the American market, but Torres argues there’s a risk of consumers being swayed to pay higher prices for luxury goods, along with a decline in product diversity. The consolidation of power also raises concerns about diminished distinctiveness. “When brands are merged, their unique identities get diluted. The risk is losing what made each one special — the curated selections, the distinct brand voices,” he says. The bottom line is that consolidation “often prioritizes cost-cutting over customer experience. We could see things like reduced staff, fewer personalized services, and a decline in the overall shopping experience,” Torres adds. So, what’s next? While analysts predict a slight upturn in luxury spending this year, some of these changes are still likely to take effect. To avoid further eroding their market position, companies must prioritize customer experience and brand integrity, Torres advises. “Cost-cutting alone will not be enough,” he says. “[Retailers like] Saks Global need to find the right balance between efficiency while maintaining the unique luxury experience that has defined these iconic brands for generations.”

Sectors

Insights

Company

Multi-brand retailers brace for 2025