“The growth potential of luxury e-commerce has never been so promising, and the importance of China for the luxury industry is only becoming more obvious every day.” – François-Henri Pinault, Chairman, Artemis (the controlling shareholder of global Luxury group Kering (Gucci, Saint Laurent, Bottega Veneta, Balenciaga, Alexander McQueen, Brioni, Boucheron, Pomellato, Dodo, Qeelin, Ulysse Nardin, Girard-Perregaux, and Kering Eyewear).
Strategic Investments in Farfetch and Farfetch China.
Farfetch, Alibaba Group, and Richemont luxury group announced a global strategic partnership to provide luxury brands with enhanced access to the China market. The idea is to bring luxury retail to the next generation by seamlessly integrating the digital and physical realms.
Farfetch to Launch on Alibaba’s Luxury Platforms in China
Farfetch will launch luxury shopping channels on Alibaba’s platforms, Tmall Luxury Pavilion and Luxury Soho, China’s premier luxury and luxury outlet destination within the Tmall marketplace, as well as Alibaba’s cross-border marketplace Tmall Global. The new channels expand the reach of Farfetch’s global luxury platform to Alibaba’s 757 million consumers, offering luxury brands a multi-brand solution through a single integration with Farfetch. This will provide luxury labels with a unique opportunity to elevate their brand awareness, while also significantly expanding their addressable market of luxury consumers through their participation on Farfetch’s global marketplace. For luxury consumers, this provides multiple ways to shop for their favorite brands either through the Farfetch integration, or through the already highly successful NET-A-PORTER integration on Tmall Luxury Pavilion.
As part of the global partnership, Alibaba and Richemont will invest $600 million ($300 million each) in Farfetch Limited. Alibaba and Richemont will also invest $500 million ($250 million each) in Farfetch China, taking a combined 25% stake in a new joint venture that will include Farfetch’s marketplace operations in the China region.
Separately, Artemis has also agreed to increase its existing investment in Farfetch with a $50 million purchase of Farfetch’s Class A ordinary shares.
Accelerating the Digitization of the Global Luxury Industry
Luxury New Retail (“LNR”) is a visionary initiative which will leverage Farfetch’s and Alibaba’s state-of-the-art omnichannel retail technologies to serve the needs of luxury businesses, including a full suite of enterprise solutions powered by Farfetch. These solutions will serve both mono-brand and multi-brand distribution strategies for luxury brands, including fully-connected e-commerce websites and apps, omnichannel retail technology, and access to the Farfetch and Tmall Luxury Pavilion marketplaces via a single integration.
Farfetch and Alibaba have also formed a steering group to further enhance the LNR initiative, which is aimed at leading the digitization of the global luxury retail industry. Richemont Chairman, Johann Rupert, and Artemis Chairman, François-Henri Pinault, will join Farfetch and Alibaba on the LNR steering group as founding members, bringing their combined decades of industry leadership and expertise.
“This highly complementary partnership brings together some of the world’s leading luxury retail and technology platforms, representing another milestone in Alibaba’s strategy to meet the rapidly growing demand for luxury products in China,” commented Daniel Zhang, Chairman and CEO of Alibaba Group, said: . The Chinese luxury market – which is expected to account for half of global luxury sales by 2025 – consists of hundreds of millions of young, digitally-native consumers. By partnering with Farfetch and expanding our existing relationship with Richemont, we will accelerate the digitization of the global luxury retail industry and transform the luxury shopping experience for consumers.