While department stores like Saks Fifth Avenue are trying to get customers back to stores after the Covid-19 pandemic outages, the shift to online sales may continue to accelerate thanks to personalization technology.
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HBC, which owns Saks Fifth Avenue, said on Friday that it would split the luxury department store’s website into a separate business from its stores after raising $ 500 million.
He said venture capital firm Insight Partners invested $ 500 million in a minority stake in Saks.com, valuing the deal at $ 2 billion. Saks’ 40 physical stores will become a separate business known as SFA, which will remain wholly owned by HBC.
The Covid pandemic has caused consumers to shift their spending online, with several luxury retailers showing resilience. Wealthy shoppers have squandered bags, jewelry and other sophisticated accessories.
“Luxury e-commerce is poised for exponential growth,” said HBC CEO Richard Baker in a statement.
Marc Metrick, who was chief executive of Saks’ combined business, is set to become CEO of the new digital company. Former Amazon executive Sebastian Gunningham is joining the e-commerce company’s board, and Saks veteran Larry Bruce has been named president of SFA’s business, reporting to Baker.
HBC was closed last year by a group of shareholders that includes Baker. HBC also owns Hudson’s Bay department store chain in Canada and discount company Saks Off Fifth.
“Luxury e-commerce is an exceptionally resilient high-growth sector,” said Deven Parekh, managing director at Insight Partners.
Some of Insight Partners’ other investments include technology and software companies Shopify and Qualtrics.