This year saw a series of acquisitions and mergers in fashion, luxury and beauty. They were marked by a need to grab at new consumer dollars, win over younger generations and absorb the competition in order to consolidate newcomer markets.
Here are the top takeaways of the industry’s year of major fashion deals.
Luxury invested in new areas
Major luxury groups are adapting to the changing customer landscape and looking to combat the slowed growth of luxury apparel — which Bain & Co. predicts will grow by a dismal 2 to 3 percent over the next five years — by reaching into new, buzzy markets. LVMH Group led the charge in this arena, with its involvement of the acquisition of bicycle brand Pinarello in October as part of a push toward the wellness sector. The company that lead the acquisition, L Catterton, which is partly owned by LVMH, did not disclose details of the acquisition.
At the end of November, LVMH was also rumored to be in talks to purchase Rapha, a British cycling apparel brand. Luxury cyclists will need something to wear while riding their new Pinarello bikes, after all. This acquisition is yet to be confirmed.
In October, LVMH added German luggage brand Rimowa to its arsenal, acquiring an 80 percent stake in the company for $716 million. The decision made sense, said Luca Solca, head of luxury goods at Exane BNP Pariba. Luxury brands are looking to cash in on tourism, as well as inject new technology to their offerings, he said — and Rimowa’s suitcases are equipped with a bluetooth chip that can communicate with owners’ phones.
Like-minded brands consolidated under pressure
Crowded markets forced companies to join forces this year. In January, Le Tote, a monthly subscription service for fashion apparel, acquired Threadflip, a social platform where users can buy and sell unwanted clothing, after the company abruptly ceased operations. At the time, Le Tote’s president told TechCrunch that the two companies’ technology and platforms were “eerily similar.” What’s more, he said that with ThreadFlip, Le Tote could build on its used clothing offering and get closer to its goal of reducing waste in the apparel industry.
In December, Fitbit acquired Pebble, a joining of two major players in the wearables market. Pebble’s smartwatches first went on sale in 2012, making it early to the space — but it was of no concern of Fitbit, which was more interested in the company’s data and software assets than its actual watches. Basically, Fitbit sucked all of the intelligence out of Pebble’s smartwatches, then discarded the shell.
“The bar is being raised in markets that are finally coming into their own,” said Evan Asano, CEO of influencer marketing agency Mediakix. “Wearables, reselling platforms — competitors are being weeded out as consumers get used to them.”
Big Beauty scooped up indie brands with millennial audiences
The beauty industry’s longtime stalwarts are seeing their stronghold on the market slip away as e-commerce and social media have given new prominence to indie brands that can garner cult followings, particularly among younger audiences. In an effort to absorb this youthful allure, major beauty corporations are acquiring their millennial competitors.
This year, 70-year-old beauty empire Estée Lauder purchased Becca Cosmetics and Too Faced, the latter of which sold to the company for a whopping $1.4 billion. Estée Lauder president Fabrizio Fred did not try to hide his intentions of targeting young blood: “We’ve put our focus on the younger consumer,” he said during a call with investors.
The big acquisitions weren’t limited to cosmetics: Unilever’s $1 billion purchase of Dollar Shave Club signaled a shift in customer ideals. Sick of marked-up razor prices from the traditional brands, consumers flocked to Dollar Shave Club’s cost-effective blade subscription, to the tune of $150 million in revenue in 2015.
“While traditional brands are reticent to collaborate with e-tailers or allow reviews to be posted on their products, savvy newcomers have leveraged the rise of e-commerce and emergence of new e-tailers to gain the advantage,” said L2 analyst Elizabeth Rosen in a 2016 report on indie beauty.
On a related note, some prestige beauty players also joined forces: Revlon acquired Elizabeth Arden, and Shiseido acquired Laura Mercier.