Luxury Brands Eventually Surrendered To Digitalization.

The day after the merger of Net-a-Porter and YOOX, there was a news that surprised the fashion industry, but the reason was that CHANEL stepped down the altar to enter the electricity supplier in 2016. This move means that in the current market environment, luxury brands in the future will have to submit to digitalization.

CHANEL moves toward the electricity supplier. At the beginning, Bruno Pavlovsky, President of CHANEL brand, also refused. At 2014, he said in an interview that he hoped consumers could go to boutique shops and feel that only boutiques could provide consumers with Chanel services. But now in this market environment, the situation has reversed.

Yoox and the group announced their trading details. Combined with the sales of 1 billion 300 million euros ($1 billion 400 million) in 2014, they will jointly create a leading online luxury retail platform, which is more competitive than the e-commerce giant Amazon.

At the same time, Cartire and Van Cleef & Arpels's group said that after the merger of the two companies, they will invest up to 200 million euros to complete the spanaction. The new group is called Yoox Net-A-Porter group, and the group will hold 50% shares.

Earlier this month, Farfetch was valued at about $1 billion in the deal. It can be seen that online luxury retail competition is still fierce. NatalieMassenet, who founded NAP in 2000, said the newly merged group is currently the world's largest luxury mall, and it is "never closed and has no regional character".

Bernstein, a senior luxury analyst at MarioOrtelli, told CNBC that luxury goods companies have been reluctant to adapt to the digital trend. However, as the growth of the emerging market is weak and the industry's revenue is slowing down, the company must "reform or else it will face a deadlock."

"The peak group is mainly a durable luxury retailer, but it has realized the potential of NAP business growth. For them, maintaining equity is very important, because they are still learning online retail mode. " Ortelli said. According to Bernstein data, in the next 5 years, the growth of the traditional luxury goods market is around 5%, which has increased over the past 17 years. data It's 6%. Meanwhile, about 62% of the sales of luxury goods will be affected by the trend of digitalization, leading to a reduction in sales of pure physical stores.

　　 London Group Farfetch is a website that searches high-end fashion boutiques in the world. It has more than 300 boutiques in 25 countries, so that users can buy clothes and accessories through computers and smart phones. The company recently raised $86 million and currently has a valuation of $1 billion. Investors include Russian venture capitalist Yuuri Milner.

"Online fashion and luxury goods markets are becoming more and more important, especially when Luxury goods The company realizes that increasing physical stores is no longer the only choice. " LucaSolca, a bank analyst in Paris, France, told CNBC.

"The Chinese market has been infiltrated, and the forefront of the market has been occupied, so they are looking for more opportunities for growth. It has done a good job in giving consumers the convenience of online shopping and the seamless connection with offline stores. In the past few years, sales in China have increased by 30%, and we expect this situation to continue. " He added.

Ortelli said that, like the group, Louis Weedon and Burberry have also recognized the importance of online and digital marketing. "Change has never been smooth. But on the positive side, luxury brands have overcome the more difficult side of creating real big companies. They already have an everlasting, long-term and lasting brand, and technology is just another way to use their assets. " Ortelli pointed out in a research report.

ThomasChauvet, a luxury analyst at Citibank, talked about the sale of NAP by the group, saying that it was "irrelevant" in Swiss Corporation's investment case. The buyers of the peak group still have a long-term vision for the durable luxury market, while NAP accounts for only 4% of our total value. Therefore, we do not think that the shareholders of the group should be excessively excited about the merger of Yoox and NAP. He said. "However, we maintain the purchase rate of the peak group and the target price of 98 Swiss francs (equivalent to US $100). This is, in my view, one of the most attractive merging stories of emerging markets.