The deal isn’t done yet, but the looming potential acquisition of Neiman Marcus by Saks Fifth Avenue parent Hudson’s Bay Company looks ever more likely to happen. And if it does, there’s an intriguing possibility that it could have an impact on the home furnishings sector.

The $2.65 billion merger of Saks and Neiman Marcus, which won’t be final until it receives FTC approval and confirmation that it does not risk a monopoly, has reportedly been in the works for years. If approved, the deal will create a new luxury retail megabrand called Saks Global, encompassing the two aforementioned brands, along with Bergdorf Goodman and Saks Off 5th, among others. A new stakeholder in the future brand is Amazon, which would also run e-commerce for Saks Global.

Right now, neither Saks nor Neiman has much of a presence in the home furnishings space. Each physical department store carries a small assortment of decor items without any dedicated home section, while their online counterparts offer wider assortments in more traditional categories like bed and bath, tabletop, and decorative accessories.

Neiman Marcus, still recovering from its 2020 Chapter 11 bankruptcy filing, also operates Horchow (a brand that began with a catalog and is now primarily online), which does carry a more widespread product mix that includes furniture, lighting and rugs in addition to textiles, tabletop and decor items.

But Saks and Neiman Marcus are far from serious players in the home space. In fact, in the upscale department store sector, only Bloomingdale’s has a fully developed home furnishings department—a category that has always been a foundation of the retailer’s go-to-market strategy. During the 1980s and 1990s, its model room displays, often merchandised and styled according to the promotional themes the store was famous for back in the day, were a must-see for designers and shoppers alike. Those rooms are long gone, but home remains an important part of the retailer’s overall business, accounting for an estimated 15 percent, or about $400 million, of its overall volume.

The only other department store in the high-end home market is Nordstrom, but with a very uneven and limited approach to the category. Most of its stores have a small (1,000 square feet at most) area sectioned off for home goods, which are largely focused on decorative accessories like pillows, throws, picture frames, home textiles, gourmet food and gifts. Assortments are often sparse and odd in their mix—a throw here, a teapot there. Nordstrom has tried to get more serious about the home business with the Manhattan store it opened in 2019 near Columbus Circle. The two-story space initially featured a broad array of home products, including a number of direct-to-consumer e-commerce options like Great Jones; the section has been pared down in variety, if not in volume, in recent years, and is clearly focused more on gift-giving than furnishing a home.

Given this limited department store home category landscape, could a merged Saks and Neiman Marcus forge a bigger presence? In looking for new areas to grow their business, the new company would do well to give home a serious look.

There is also the matter of how to address the issue of overlapping physical stores in many markets—there are an estimated eight malls where both brands have stores, and several others where locations may be within a few miles of each other. In previous retail takeovers or rebranding (as in the case of Macy’s), the companies have chosen to keep both locations open, generally using one for women’s and children’s and the other for men’s and home, which allowed them to monetize existing spaces while expanding assortments, particularly home. Sometimes these were short-term solutions until leases ran out, but they often endured longer, keeping multiple storefronts in operation.

In the pending Saks–Neiman Marcus deal, the companies have not talked specifics about how they would operate or take advantage of merchandising opportunities, but it seems inevitable that home is one of the strategic routes receiving serious scrutiny.

The takeover may ultimately fall through, or another suitor could enter the picture—it’s still pretty early in the acquisition process timetable. Yet high-end home furnishings remain a category that is underserved in the department store channel of distribution, and one they might be wise to pursue.

Right now, the home business remains soft. But it won’t always be that way.

____________

Warren Shoulberg is the former editor in chief for several leading B2B publications. He has been a guest lecturer at the Columbia University Graduate School of Business; received honors from the International Furnishings and Design Association and the Fashion Institute of Technology; and been cited by The Wall Street Journal, The New York Times, The Washington Post, CNN and other media as a leading industry expert. His Retail Watch columns offer deep industry insights on major markets and product categories.