Neiman Marcus

Bergdorf Goodman stocks major luxury brands such as Prada, Jimmy Choo, Gucci, Lanvin, Dolce & Gabbana | Source: Visit 5th Avenue

Luxury Retail Giant Farfetch Invests A$266m in Neiman Marcus Group

Luxury e-commerce industry success story Farfetch has invested A$266 million in Neiman Marcus Group (NMG), owner of department stores Neiman Marcus and Bergdorf Goodman, in an attempt to increase its share of the A$100 billion US luxury goods market.

Under the weight of debt from two huge buyouts and pandemic-related temporary store closures, Neiman Marcus was forced to file for bankruptcy in May 2020. Since successfully implementing a restructuring plan and emerging from bankruptcy in September 2020, NMG has forged ahead towards a digitised future, announcing the multi-million dollar investment in a press release on Tuesday.

The major “global strategic partnership and investment” by Farfetch will accelerate NMG’s “growth and innovation through investments in technology and digital capabilities.”

NMG CEO Geoffroy van Raemdonck believes the investment and partnership will allow the company to improve the customer experience and expand global reach. 

José and the entire FARFETCH team have built a best-in-class technology platform and are the ideal partner to help us grow Bergdorf Goodman to be an even stronger global digital luxury retailer.

Geoffroy van Raemdonck, CEO of Neiman Marcus Group
José Neves and Geoffroy van Raemdonck
José Neves and Geoffroy van Raemdonck | Source: Business Wire

The global luxury goods market was valued at A$1.65 trillion in 2021 and is forecast to increase by 29 per cent this year.

Farfetch founder, chairman and CEO José Neves expects the partnership to increase global recognition of NMG’s brands, boosted by the ascendant US market.

“This partnership is about revolutionizing the luxury landscape globally, both online and offline, by combining NMG’s iconic presence in the U.S. and Farfetch’s Luxury New Retail vision and technology,” he said.

Farfetch has experienced a meteoric increase in revenue up to over A$5.3 billion in online business, accounting for six per cent of the US online luxury market. Predicted to be the largest online distribution channel, Farfetch is expected to account for between 28 per cent and 30 per cent of the market by 2025.

Joining existing investors including PIMCO, Davidson Kempner Capital Management and Sixth Street, Farfetch will power the website and mobile app of Bergdorf Goodman, the New York department store acquired by NMG in 1972. Both department stores will join the Farfetch marketplace as partners.

Farfetch has been steadily expanding its enterprise commerce brand Farfetch Platform Solutions, which gives luxury brands the opportunity to use the company’s technological capabilities. Currently, the technology is being used by companies like UK department store behemoths Harrods and Browns and brands including Off-White and Roberto Cavalli.

Alibaba Group Holding Ltd and Swiss group Richemont invested A$1.47 billion in Farfetch Ltd. and Farfetch China back in 2020. Last year, Farfetch terminated its partnership with JD.com which had invested A$530 million in the company in 2017.

Alibaba, Richemont and Farfetch subsequently introduced the Luxury New Retail initiative with a vision of stepping up omnichannel technologies and offering e-commerce solutions to luxury brands and multi-brand retailers.

“Our vision for the future of luxury — which we call Luxury New Retail — is about the convergence of the physical experience, as the vast majority of sales are still in physical stores,” Farfetch’s José Neves said.

“Even if you fast forward five years, let’s say two-thirds of transactions are going to happen in physical stores, but not in the way they happen today. They will be augmented by digital technologies and they will be completely convergent with those digital technologies.”

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