Written by Danny McGorry
Swiss fashion giant Richemont put in a secret bid to purchase Yoox Net-a-Porter earlier this week for nearly three billion euros. Richemont is a fashion conglomerate that owns traditional labels like Chloé, Peter Millar, Azzedine Alaïa, Piaget, Cartier, and Van Cleef & Arples as subsidiaries. Net-a-Porter is an innovative retailer that sells many of these same brands with the ease of ecommerce. Historically, Richemont stands strong as a predominately brick-and-mortar retail experience.
The New York Times reported that by 2025, at least 25% of all luxury retail spending will occur online in comparison to just 9% today. With the growth of the luxury ecommerce market outperforming the general retail sector, Richemont’s investment in Yoox Net-a-Porter is prudent and forward-looking. The Richemont chairman, Johann Rupert, says that “with this new step, we intend to strengthen Richemont’s presence and focus on the digital channel, which is becoming critically important in meeting luxury consumers’ needs.” Traditional luxury fashion brands have been slow to adopt ecommerce as it is felt to diminish both brand equity and control but Rupert and Richemont have certainly made a major pivot in the industry by investing so heavily in Yoox Net-a-Porter. This move signifies to the greater fashion industry that brands are going to have to innovate to survive and the traditional retail model is becoming outdated.
A shift to ecommerce will also uphold Richemont’s determination for sustainability and longevity. Since its inception in the 80s, Richemont has acquired and supported some of the most iconic brands in the fashion industry. Cartier being one example, has been operating for over 150 years, making the jeweler one of the oldest and most renown in the industry. So, to maintain and grow brands like Cartier, Richemont needed to adapt and innovate to new market standards and circumstances.
The Yoox Net-a-Porter acquisition is the next step of innovation by Richemont as it will be a vital move to maintain the company’s relevancy in the digital era. As competition thickens with commercial knock offs and luxury fire sites, Richemont’s prudent decision to acquire the e-tailer can save Richemont from becoming an over leveraged conglomerate that’s trapped in brick-and-mortar.
The merger my also act as a signifier for the rest of the luxury fashion industry to wake up to the reality of ecommerce. Some attentive brands are already migrating to the internet and are embracing the changes that its bringing. Gucci has been releasing pop culture/social media driven campaigns for several seasons and Teen Vogue pivoted to strictly digital promotions. So even though there are gestures towards the internet, Richemont’s acquisition will be one of the most important of the decade and it will show the fashion industry how to embrace a marketplace disruption.