Saks Global’s woes signal waning enthusiasm for luxury department store chains

December 30, 2025

Saks Fifth Avenue's holiday window display in Manhattan on Dec. 16, 2025. Image credit: Leonard Zhukovsky, Shutterstock

Saks Global’s potential Chapter 11 bankruptcy filing – more likely than not, if the luxury retailer’s words are to mean anything – reflects a harsh reality that the industry refuses to accept: the department store model is not fit for purpose in the 21^st century, and certainly not for today’s shopper.

The inability of the United States’ largest luxury retailer to pay its vendors on time and struggles to make its $100 million debt interest payment due Dec. 30 puts at risk the future of storied marques such as Saks Fifth Avenue as well as the newly acquired Neiman Marcus and Bergdorf Goodman. It’s a shame that this has come to pass.

Chop shop
While others mumble about company governance and debt load – the Neiman Marcus and Bergdorf acquisition cost $2.7 billion – here’s what they should be focusing on: how have U.S. shoppers changed the way they shop online and in-person for luxury fashion, accessories and leather goods?

Department stores’ woes go back to the rise of the Internet and even predate the 1990s with the proliferation of shopping malls. But now, it’s time to call a spade a spade: the reason for luxury department stores to exist as a chain is fast-vanishing.

Sure, we can point to Nordstrom and Bloomingdale’s as exemplars of retail success, but both have had their own fair share of struggles.

Nordstrom went private in May this year for $6.25 billion after the Nordstrom family realized the retailer couldn’t survive the relentless financial expectations of the stock market and public investors. The new owners are the Nordstrom family and Mexican retailer El Puerto de Liverpool.

Bloomingdale’s is the premium arm of Macy’s Inc., itself the final avatar of Federated Department Stores, which gobbled up storied department store brands decades ago, including Macy’s, Marshall Field’s, Rich’s and Burdines.

Mono tone
Luxury department stores existed to provide four services unique to them: a wide variety of merchandise comprising heritage labels and new entrants with a one-stop-shop convenience, personal shoppers who developed a tight rapport over the years with their best clientele, a generous returns policy and a surprise-and-delight element with the entire shopping experience.

Now, department stores’ biggest competitors – monobrand luxury stores in bricks-and-mortar and online – offer the same benefits.

These luxury brands, who are the department stores’ vendors, aggressively seek to own the last-mile relationship with the end-customer. They spend heavily in earning the brand loyalty of their customers. Their staff are encouraged to cultivate loyalty among the best shoppers. Their stores have become emporia of delight, rightly located, elegant, creative and brand-immersive. Moreover, they are not relying on the wholesale business as much to shift merchandise.

The biggest losers in the shrinking department store world are smaller and newer brands who rely on wholesale distribution to gain market awareness. Not all small luxury brands can afford their own monobrand retail store footprint. Even some larger brands will feel the pinch of fewer department stores, although it’s doubtful that LVMH, Kering, Richemont, Hermès, Chanel and Giorgio Armani will shed many tears.

Those familiar with Saks Global and its HBC parent will recognize that the Neiman Marcus Group acquisition was yet another real estate play. After all, there’s plenty of valuable owned and leased real estate between Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman. But history has shown that retailers make poor landlords and, now with Saks Global, worse tenants.

KNOWING HOW the markets work, Saks Global will probably declare bankruptcy, gain reprieve via new creditors, cut more overhead in terms of C-suite and talent across the board, and end a few leases. They’ll redesign stores and logos.

Sadly, they’re kicking the can down the road. They’ll revisit the same issues in a year or two – to the undeclared glee of larger luxury brand conglomerates who will have seen off their smaller competitors reliant on department store awareness and wholesale distribution.

Truth is, luxury department stores have to readapt not to real estate, but to luxury shoppers’ changed behavior and priorities. These shoppers want exclusive and wow, attention in-store and intuitiveness online, warmth and courtesy, tribal brand identification and pride of place-of-purchase. They want to feel they shopped a unique experience, not a retail chain.

We'll be discussing this issue and the future of luxury retail at Luxury Roundtable's Luxury Outlook Summit Jan. 14-15 in New York. Do check out the agenda and join us!

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