Hottest luxury M&A deals of the year
In 2021, the M&A buzz in the luxury goods industry only ramped up further and went bigger. Early in the year, LVMH announced the completion of the acquisition of Tiffany & Co., the iconic U.S.-based jewelry retailer. At the time of the year, the brand value of Tiffany & Co. was around five billion dollars, and the deal with LVMH was quoted to be worth 15.8 billion U.S. dollars. With the Tiffany & Co. acquisition, LVMH is set to strengthen its luxury watch and jewelry business, which currently boasts brands like Bulgari and Chaumet. That year LVMH did not stop at Tiffany & Co. either. Off-White was another purchase that caused excitement as it meant the luxury group was trying its hand at streetwear. The brand is one of the most popular streetwear labels and 60 percent of it is now owned by LVMH. The consolidation of streetwear brands into the larger fashion and luxury landscape had already started with VF Corporation’s acquisition of Supreme, another hugely popular streetwear brand, in late December 2020.There were many other brand acquisitions and investments in 2021 in the traditional sense. The Italian company Moncler completed the purchase of menswear brand Stone Island. The luxury department store Nordstrom announced buying stakes in the online-only fashion retailer ASOS, and the UK-based luxury department store retailer Selfridges announced it was open to buyers. But perhaps the most interesting investment moves came from the luxury giants that were eyeing the comparatively new players in the promising digital and rental luxury space.
Digital, resale, and rental opportunity for luxury groups
In the first quarter of 2021, the French luxury group Kering announced that it would be investing in the online platform for pre-owned luxury Vestiare Collective. Just at the end of 2020, Richemont had announced a similar move with a joint plan involving the Alibaba group into investing in the expansion of Farfetch into the China market. Looking at their expanding investment portfolio, it is clear that both Kering and Richemont understand the key importance of the digital channels and alternative consumption models in the luxury industry. With the changing profile of the luxury consumer, digital is already a must for luxury groups, and Richemont already saw this as a priority and acquired the online luxury goods and fashion platform Yoox Net a Porter (YNAP) back in 2018. Since then, the group reported online sales of over two billion euros annually.Another opportunity on the horizon for luxury groups is rentals and shared luxury goods. In the mainstream fashion landscape, renting apparel is already a popular phenomenon and platforms like Rent the Runway are well-known by consumers. Rising consumer consciousness about circular economy and the environmental impetus to consume smartly are the biggest drivers towards making space for a sharing-based model in the luxury industry. After secondhand and online luxury investments, Kering took heed of the rental luxury opportunity as well and invested in the UK-based rental platform Cocoon for luxury handbags. Luxury rental is already a promising industry for certain sectors like watches and jewelry. The market is predicted to grow at the rate of over nine percent (CAGR) over the next five years.
