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Luxury retailers eye scale and capabilities in M&A

Aug 16, 2023
an illustration of a high heel shoe with a dollar sign formed on the heel

Illustration: Tiffany Herring/Axios

Buoyed by spending from affluent consumers, luxury retailers are leveraging M&A to scale and expand their capabilities, Boston Consulting Group's global head of luxury, Sarah Willersdorf, tells Axios.

Driving the news: Coach owner Tapestry agreed to acquire Versace parent Capri for a whopping $8.5 billion last week.

What's happening: "Scale matters more than ever in luxury," she says — whether that means retail space, purchasing media, or negotiating with department stores on concession arrangements.

What's next: Willersdorf expects to see more acquisitions focused on capabilities, like advanced analytics and artificial intelligence.

  • Luxury retailers need new ways of doing reverse logistics, authentication, content generation, and tailored customer services.
  • Luxury brands have also begun partnering or investing in resale platforms, which Willersdorf expects to continue.

Zoom in: When vetting technology platforms and systems, luxury brands are seeking platforms that deliver a smooth and luxurious consumer experience.

  • Beyond the functional basics like product availability and payment options, there's also "the emotional labor needs, like human reassurance," making the customer feel pampered and creating more one-to-one conversations, Willersdorf says.
  • The need to provide a human touch is what makes luxury retailers laggards when it comes to tech investments, and because of that, "many brands have probably underinvested in that area for a while," Willersdorf says.

Zoom out: When it comes to luxury retailers' omnichannel experience, "less than half of luxury consumers are truly satisfied with their overall experience," according to a BCG-Altagamma report.

  • "Luxury consumers are looking for the same level of exclusivity, human touch [and] pampering when online (as they receive offline) — and the lack of these is heavily impacting their satisfaction with online experience," the report says.
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