“We’re thrilled to take this step in bringing together these iconic luxury names, Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman,” Richard Baker, HBC Executive Chairman and CEO, said in a news release. “This is an exciting time in luxury retail, with technological advancements creating new opportunities to redefine the customer experience.”

Amazon and Salesforce will have minority stakes in the company, assisting with technology, logistics and integration of artificial intelligence.

Industry experts say the merger could provide stability for two retailers grappling with sluggish growth. Department stores have lost relevance as their primary customers skew older, and younger ones gravitate to other shopping options. “Usually [merging] is a sign of weakness in retail; it’s typically not a sign of strength,” said Sucharita Kodali, a retail and e-commerce principal analyst with the research firm Forrester.

The union is years in the making, with Saks — a unit of Hudson’s Bay Company — and Neiman Marcus having engaged in on-again, off-again negotiations since 2017. Last year, Neiman’s walked away from a $3 billion offer after the two sides failed to agree on sales terms, the Wall Street Journal reported. News of the merger was first reported by the Journal.

The deal brings Saks, which has 41 locations in North America, under the same corporate umbrella as its Dallas-based rival, which comes with 36 Neiman Marcus and two Bergdorf Goodman stores. There are no plans for store closures.

“This is a real estate transaction, it’s not just about ‘let’s merge,’” said Fashion Institute of Technology professor Shawn Grain Carter. “It’s about where these leases are, in what areas, and in what malls. … To the customer, they’re not going to know it’s one holding company that owns [both Saks and Neiman’s].”

While Saks and Neiman’s both sell high-end goods, they attract different tiers of luxury consumers and offer varying levels of service.

“Saks under Hudson’s Bay is not as exclusive and elegant as it used to be, whereas Neiman Marcus still is considered the luxury purveyor of truly extraordinary, exclusive, exciting merchandise that is cultivated and curated for a very high net-worth individual,” Carter said.

Both retailers have struggled in recent years. Neiman’s filed for bankruptcy in 2020, but emerged from Chapter 11 protection a few months later, after shedding $4 billion in debt and refinancing the rest. In November, New York City-based Saks raised $340 million through real estate transactions to pay vendors after months of late payments. Saks.com, a separate entity but also owned by Toronto-based HBC, announced in April it raised $60 million from Pathlight Capital and Bank of America as online sales dragged.

The U.S. luxury retail market boomed during the pandemic, hitting $145.2 billion in 2022, according to GlobalData. But inflation swelled as high as 9.1 percent that year and has remained elevated since, leading to higher borrowing costs and a more subdued consumer. In 2023, sales fell 3.7 percent in the category, the analytics and consulting company reported.

The decline reflects shoppers’ cooling interest in department stores as well as reticence to spend on discretionary items. Though about 60 percent of sales at luxury department stores come from consumers whose household earnings exceed $200,000, Carter said, these retailers still need the aspirational luxury shopper to make up the rest.

“That customer is squeezed,” she said. Inflation, interest rates, gas prices and college tuition fees are all “dampening their purchasing power.” The geopolitical environment, wars, an impending election and news of white-collar layoffs are also “impacting the consumer psychology,” she said.

Luxury department stores are defined by exclusivity and experience, a collective that once included such brands as Barneys and Henri Bendel in New York, Garfinkel’s in Washington and Marshall Field in Chicago. And for those that are left, such as Neiman’s, Saks and Nordstrom, they face fiercer competition. Specialty retailers like Sephora and Ulta have lured away cosmetics and fragrance customers with their expansive online offerings and store locations, Kodali said.

“You just don’t see as much heavy traffic into department stores anymore,” she said.

There may be roadblocks ahead, with the considerable likelihood that federal regulators scrutinize the deal, said John B. Kirkwood, a professor at Seattle University School of Law. Though the likelihood of a lawsuit actually coming to fruition is slim, Kirkwood said. “It’s possible, but this doesn’t jump out at you as a really powerful case.”

The Biden administration has been cracking down on megamergers, including in the retail industry. The Federal Trade Commission voted unanimously this week to block mattress maker Tempur Sealy from buying retail chain Mattress Firm. Federal regulators sued luxury fashion conglomerates Tapestry and Capri Holdings in April over its $8.5 billion union and supermarket giants Kroger and Albertsons in February.