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There’s a new luxury venture on the horizon. Authentic Luxury Group (ALG) is a joint venture of Authentic Brands Group (which now goes by Authentic), the owner of brands including Barneys New York, Vince and Hervé Léger, and Saks Global.
The platform was established as an incubator for brand growth. In addition to fashion, the platform’s purpose is to help Authentic’s luxury brands expand into new sectors, including retail, digital, hospitality, real estate, art and travel. Saks and Authentic will use their combined resources and expertise to expand the brands within Authentic’s portfolio with a luxury focus. Barneys will be the first Authentic brand that the pair will revamp under ALG.
“The creation of ALG represents years of successful collaboration under our initial licensing agreement with Saks for Barneys New York,” Jamie Salter, founder, chairman and CEO of Authentic, said in a statement on Wednesday. “Building on our complementary strengths, ALG will further cultivate our brands by creating a multifaceted environment that reaches a broader audience through a wide range of offerings and experiences.”
“With ALG, we are able to further our efforts to serve the full continuum of luxury consumers,” Richard Baker, executive chairman of Saks Global, said in a statement. “We are proud to further enhance our partnership with Authentic and leverage our collective capabilities to unlock access to new audiences and reimagine the luxury experience.”
There’s opportunity in the beyond-fashion expansion strategy, analysts agree, but it’s also a sign of fashion’s increasing need to look beyond its scope to drive revenue, says Neil Saunders, managing director of Globaldata’s US retail division. “[It] underlines how challenged the luxury fashion segment is right now.”
It’s a mutually beneficial deal. For Saks’s part, it means the retailer will now touch even more brands and retailers that sit under ALG. Saks Global recently announced the expansion of its retail footprint with its pending $2.65 billion acquisition of Neiman Marcus (and, with it, Bergdorf Goodman). Once it closes, Authentic plans to make a minority investment in Saks Global. This venture is a potential safety net outside of the department store realm as consumer demand for department stores dwindles, says Bryce Quillin, co-founder of brand strategy agency It’s A Working Title. And for Authentic, deepening its ties with Saks (with which it already has a relationship via Saks’s Barneys licensing agreement) lends an air of luxury to its scattered brand portfolio, which ranges from accessible luxury and sportswear labels to fast fashion brands and estates such as Marilyn Monroe and Elvis Presley.
“[Authentic] is involved in a wide range of retail verticals and this does represent an opportunity to deepen its footprint in luxury,” Quillin says.
But the platform debut comes at a rocky time, analysts say, against the backdrop of a global luxury slowdown. This may be, in part, the impetus for such expansion, but it also presents hurdles. “The main obstacle is a slowing luxury market that is crowded with competing brands,” Saunders says. “A lot of the labels owned by [Authentic] are not top tier, and they are going to have to work hard to make them cut through more with consumers.” This is where Saks comes in, he says. “Saks may be able to help with some of this thinking.”
What happens to Barneys?
We all miss Barneys. Industry insiders lament its absence almost weekly despite the cult favourite department store shuttering in 2020. Though the name is still associated with luxury, it hasn’t been clear what exactly Authentic was going to do with the name beyond licensing it out to Saks for speciality departments (since 2021) and establishing a partnership with Laox Holdings for locations and outlet stores in Japan.
The Barneys brand has been in flux since Authentic’s 2019 acquisition, teetering between high-low ventures. Progress has been modest, analysts agree. “The problem is that Barneys is trying to move from being a store to a brand,” Saunders says, which brings complications.
Last month, New Yorkers were abuzz when makeup brand Hourglass enlisted Barneys for a New York Fashion Week pop-up. It was a hit, thanks to the brand mix and programming that centred New York mainstays and emerging designers, curated by former Barneys New York creative director Simon Doonan and ex-senior vice president and fashion director Julie Gilhart. But Barneys has also collaborated on collections in the past.
Earlier this year, Authentic opened Barneys New York Residences in Tulum, Mexico. Under ALG, the owners plan to further expand Barneys via an enhanced presence at Saks Fifth Avenue (via a private label product line expansion into sportswear, home and other categories), a strengthened retail footprint, a dedicated e-commerce platform and the launch of (more) Barneys New York residences. There are no plans to open the original Barneys flagship, though.
Instead, Salter told WWD, there is opportunity to open Barneys stores in South Korea, China and other countries. He also emphasised the focus on Barneys-branded product and the fact that 30 per cent of Japan’s Barneys stores are made up of Barneys product.
It’s a sign of the uphill battle ALG might face. How long can operators rest on the cultural cachet of an iconic name that exists only in consumers’ memories? The Barneys stores may be actively missed, but its current iteration isn’t yet in the conversation, Quillin says: “Barneys has almost completely disappeared from the mainstream retail media since being acquired.” Hospitality allows brands to immerse consumers in their brand worlds, as Stéphane Rinderknech, president and CEO of the LVMH beauty division, as well as hospitality excellence, said at a Vogue Business event. But this rests on a physical manifestation of a brand from which to build out a brand world — not just name association.
Beyond fashion
This cross-industry expansion is perhaps the most notable aspect of the platform. It illustrates the value of fashion-adjacent industries and opportunities that previously sat outside the remit of capital-F fashion brands — especially amidst the current luxury slowdown. “Volumes are in decline, and there is huge competition among brands for a more limited pot of spending,” Saunders says. “This makes winning difficult and diversification more attractive.”
It’s a strategy large luxury conglomerates like LVMH and Kering have been exploring for some time and are increasingly investing in. LVMH is reportedly investing billions in real estate, from Paris to Miami. It’s expanding its Cheval Blanc hotel properties, with a new Seychelles outpost scheduled for December this year. Chopard, Bulgari and Audemars Piguet all either recently opened their first hotels, or are expanding their existing portfolio rapidly. Other brands are dabbling on a smaller scale, taking over hotel pools and beach clubs for the summer season to test the hospitality waters.
It’s a smart strategy, analysts say, when executed with care. Real estate partnerships are necessary, for example, Saunders flags: “real estate is very specific and needs particular skill sets which most luxury brands will not already have in house.” ALG plans to establish real estate partnerships to develop branded luxury residences, condominiums and hotels, building on its Barneys residence in Tulum.
“Diversification only works if brands have permission to play in various sectors and can execute well. Diversification carries its own risks and problems,” Saunders says. “Some luxury companies are seen as lifestyle brands, so it makes more sense for them to be involved with things like real estate. Other luxury brands are more inherently linked to specific products or categories, so it’s harder for them to diversify. There is a natural fit for brands to expand into these areas, as far as consumers are concerned.”
Update: Saks Global is acquiring Neiman Marcus, pending approvals. Authentic Brands Group now goes by Authentic.
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