This week, an in-depth look at what’s driving the current wave of luxury retailer acquisitions. Plus, Authentic Brands Group hops on the brand incubator train with Saks Fifth Avenue.
Catering to the 1% is too limiting.
That was the message sent by Mytheresa and Watches of Switzerland over the past week when they announced acquisitions of fellow luxury retailers offering comparatively more accessible products: Net-a-Porter and Hodinkee, respectively. Mytheresa has earned a reputation for catering to high-net-worth shoppers — its “Top Customers,” who reportedly spend at least $40,000 per year, drove 39% of sales in the company’s fiscal 2024. Watches of Switzerland, meanwhile, offers nearly 60 watches selling for six or seven figures.
“We want Mytheresa to be positioned as an ultra-luxe, highly curated, less-editorial, high-spending-customer proposition,” Michael Kliger, CEO of Mytheresa, told Glossy on Monday. On the other hand, “We want Net-a-Porter focused on luxury, but including accessible brands and aspirational customers, relying on a much stronger voice of editorial.”
It’s repeatedly been said that today’s brands and retailers must also be media companies, regularly producing and distributing multimedia content across marketing channels. That pressure has, at minimum, held true for most sectors. But, rather than exclusively a play for engagement, these new luxury deals show a business demand for the necessary one-two punch of culture-fueled content and aspirational customers. The two go hand-in-hand, according to involved executives and recent research.
As defined by McKinsey & Company, aspirational luxury consumers are those who spend a moderate amount on luxury goods. They purchase at least one item from a luxury fashion brand every six months and spend $3,300-$10,900 on fashion goods annually. The segment accounts for 18% of the total fashion market’s value and 50% of the luxury market’s value.
As reported in April, in the fourth quarter of 2023, McKinsey surveyed 5,600 aspirational shoppers across seven geographic markets about their shopping behavior. Forty-two percent of respondents said they look to fashion magazines for inspiration, and another 42% said they gain inspiration from celebrities. Among respondents located in China, 44% listed fashion shows among their top three sources of shopping inspiration.
A stamp of approval from a proven editor or stylist goes a long way for this customer. But the same is untrue for top-spending luxury shoppers.
“[Mytheresa’s] customers are heavy luxury users and big spenders, and they come to the platform to buy things. They’re well-informed and have a pretty good understanding of what’s going on [in fashion]. They decide for themselves, so to speak,” Kliger said. “Whereas, on the aspirational side, [customers] buy less, but they love the topic [of fashion]. Editorial content fulfills an interest. … The fact that Net-a-Porter does more editorial content makes sense for their customer. For our customer, it wouldn’t make sense.”
He added, “As evidenced by our numbers, we are not running out of growth options. But absolutely — with this combination [of companies], there’s even more white space to develop in and [more room for] growth. We seized the unique opportunity to bring these two companies together. … We’re covering the market with differentiated offerings and letting the customer decide what they like.”
Mytheresa has remained an industry outlier in recent years as the online luxury fashion landscape has been plagued by closures and consolidation, In its full-year 2024 earnings, reported in September, Mytheresa reported an annual sales increase of 10% to $927 million, and $29 million in earnings before interests, taxes, depreciation and amortization.
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Known for their strong, industry-shaping content, both Net-a-Porter and Hodinkee were scooped up by a comparatively less-content-focused competitor — in multi-brand online retail and timepieces, respectively.
On Monday, Munich-based luxury e-tailer Mytheresa announced its deal with Richemont to acquire the Yoox Net-a-Porter Group. Under the new setup, expected to be established in the first half of 2025, YNAP’s Luxury division, inclusive of Net-a-Porter, Mr Porter, will be integrated into Mytheresa to form “one group with three distinct storefronts,” according to Mytheresa. Its off-price retailers, Yoox and The Outnet, meanwhile, will be separated.
In a statement, Johann Rupert, chairman of Richemont, mentioned YNAP’s strength of a “distinctive and inspirational editorial voice.” The company operates five digital production facilities, according to its corporate website. Net-a-Porter’s digital Porter publication, which reads like a style guide, features multiple daily stories and regular celebrity cover stars. Its dedicated Instagram account boasts 1 million followers. For its part, Mytheresa’s content is largely confined to its social channels and heavily focuses on footage from its exclusive global events, which number at least 50 per year, according to Heather Kaminetsky, president of Mytheresa North America.
Meanwhile, on October 4, the Watches of Switzerland Group, one of the world’s largest luxury watch retailers, announced its buyout of the NYC-based watch e-tailer and publication Hodinkee. In Watches of Switzerland’s press release about the deal, CEO Brian Duffy noted the opportunity to “gain valuable insights from [Hodinkee’s] groundbreaking team and [editorial] operation.” The statement also pointed to the resulting “access to one of the most developed communities in the industry.” Hodinkee will continue to operate independently to ensure that its “unique voice and lens” stay intact, according to Watches of Switzerland.
Hodinkee, which has 1 million Instagram followers, offers print, digital and video content. That includes multiple daily stories about newly launched watches and a weekly podcast with the people powering the industry, among other products. Its 2019 YouTube video “Talking Watches 2 With John Mayer” has 5.2 million views. Comparatively, Watches of Switzerland has 82,000 Instagram followers.
In 2017, Hodinkee became the first online-only authorized retailer of watches working directly with brands. Its most recent assortment encompassed brands not sold through Watches of Switzerland, including Apple and Hermès, plus exclusive collaborations. Hodinkee eclipsed $100 million in revenue in 2021. For its part, the Watches of Switzerland Group reported revenue of £1.54 billion ($1.95 billion) for the year ending on April 28. Terms of the acquisition were not disclosed. Watches of Switzerland declined an interview, and Hodinee did not respond to interview requests.
Other luxury retailers that have gone all in on editorial content include Montreal-based and family-owned Ssense, which made waves earlier this year with its kidswear campaign inspired by a spelling bee. According to Thom Bettridge, who, at the time, was the company’s head of creative and content, Ssense’s overall mission is to “turn everyone into a fashion fan.” As such, it would “continue to double down on storytelling as a source of marketing magic,” he said in July. Ssense, valued at $4.1 billion in 2021, sells brands from Nike to Chloé.
In addition, retail companies including 1stDibs, Assouline and Sotheby’s have invested big in content-focused products, from podcasts to print publications. Each falls within the luxury category but offers products within reach of aspirational shoppers.
Different product categories, same playbook?
On Wednesday, it was announced that Authentic Brands Group and Saks Global, comprised of Saks Fifth Avenue and Saks Off 5th, are launching a joint venture made up of Authentic-owned luxury and accessible luxury brands. Dubbed Authentic Luxury Group, the platform is intended to be an incubator for brand growth through new, strategic licensing agreements and distribution channels across sectors.
“We think we’re going to be able to build a multibillion-dollar platform over the next five years,” Salter said in an interview. “We’re taking the Authentic playbook and applying it to aspirational and luxury brands.”
But according to Mytheresa’s Michael Kliger, what works for one company doesn’t work for another — especially when it comes to retailers catering to different audience demos.
Kliger attributed Yoox Net-a-Porter’s struggles in recent years to a backend issue: It operated its off-price businesses on the same platform as its luxury businesses.
“They are quite different businesses and have quite different needs,” he told Glossy, adding, “Our unique advantage is that we can bring Net-a-Porter and Mr Porter onto our luxury infrastructure — because what serves Mytheresa, in principle, can serve them, in technological and infrastructure terms. By doing so, we can separate off-price from luxury. And the off-price retailers [Yoox and The Outnet] … can be streamlined — there are a lot of things that off-price [companies] don’t need. [Their backend platform] can be simpler, less complex and cheaper — and that will drive higher growth and higher profitability. That’s the fundamental idea of what we envision with this transaction.”
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