It was announced at the end of March that Richemont – the Swiss luxury goods group behind brands such as Cartier and Van Cleef – has entered into a deal to merge its high-end online retailer Net-A-Porter (www.net-a-porter.com/) with Italian fashion site Yoox (www.yoox.com). Richemont will hold a 50% stake in the new company, the fairly unimaginatively titled Yoox Net-A-Porter.
The NAT/Yoox merger reflects an interesting change in luxury retail, namely that the high-end market is seemingly – some would say finally – embracing the digital age. Long seen as not ‘luxe’ enough, online shopping is now becoming chic. In a society where consumers are increasingly on the move, working, socialising and shopping are activities we want to be able to do at any time, from any place – and that includes buying our designer garb. However, according to Mario Ortelli, senior luxury analyst at Bernstein, luxury goods companies have been hesitant to embrace new digital trends, but, as the industry faces a slowdown due to lacklustre growth in emerging markets, companies now realise they must “evolve or face possible irrelevance”. As well as Richemont, Ortelli lists LVMH and Burberry as companies that have recognized the importance of embracing digital marketing in order to increase sales.
The success of London-based online retailer Farfetch (www.farfetch.com), which recently scored an evaluation of $1 billion after announcing an $86 million investment (from, amongst others, Russian venture capitalist Yuri Milner), is a case in point. Rather than trawl cities on foot, seeking out small luxury brands, the consumer can click onto the website to browse and buy from over 300 independent boutiques from across the globe.
While some consumers may fear a future devoid of physical shops (think of the sizing woes of never being able to try anything on before buying), it’s undeniably true that a brand without a digital presence stands little chance of competing on a global level, and for many companies – such as those on Farfetch – the rise of digital luxury has been integral to their survival and growth.
Thomas Chauvet, a luxury analyst at Citigroup, is keen to emphasize that Richmont is still mainly a hard-good based company, saying that NAT was “largely irrelevant” to the Swiss company’s investment case, and shareholders should not be “overly excited” by the Yoox deal. However, the words of Natalie Massenet, the former fashion journalist who founded Net-a-Porter, on the merger do have a compelling ring to them:
“Today, we open the doors to the world’s biggest luxury fashion store. It is a store that never closes, a store without geographical borders, a store that connects with, inspires, serves and offers millions of style-conscious global consumers access to the finest designer labels in fashion. A store that provides established and emerging brands with the greatest interactive shop window to the world.”
Undoubtedly, digital is a part of the future of luxury. How big a part remains to be seen…