LUXURY

Massive Investment Makes Farfetch Happen

On Monday, The Information reported Alibaba and Richemont would invest “nearly $300 million” in luxury marketplace Farfetch. All three companies confirmed the investment last night—but the early reports were off by a few zeroes.

The final receipt: $1.1 billion. Specifically, Alibaba and Richemont both invested $300 million in Farfetch, and $250 million each in Farfetch China.

They picked the right platform: Farfetch has performed like pizza and butter during the pandemic (very well). Revenue rose 74+% in Q2, and gross merchandise volume increased 48% YoY.

The focus: Enhancing Farfetch’s reach throughout Asia, and making luxury more web-friendly overall. Alibaba will host Farfetch shops on two of its current e-comm platforms: Tmall Luxury Pavilion and Luxury Soho. Both investors will back efforts to grow the Farfetch China platform. 

The fine print: Competitors are becoming allies through this deal. Farfetch previously partnered with JD.com, an Alibaba rival, to enhance its ops in China. And Richemont’s the owner of Yoox Net-à-Porter—another multi-brand luxury digital retailer.

Eyes on the same prize 

Luxury sales in the U.S. and Europe rebounded faster than baguette bag collectors expected following Covid-19 closures. But they’re no match for the recovery underway in China. 

• LVMH, Kering, and Capri Holdings have all noted resilient demand in the region following global lockdowns. 
• The country’s estimated to account for nearly 50% of global luxury sales by 2025, per recent estimates that account for the pandemic.

Consumers unafraid to shop are just one benefit of the deal. Unlike other luxury marketplaces we know and acknowledge, Alibaba’s managed to sell luxury items at massive scale without diminishing their brand value. 

• By partnering with it, Farfetch hands its brands direct access to Alibaba’s 757 million shoppers. 
• Down the line, Alibaba and Richemont are exploring “additional opportunities” to enhance services for Farfetch brands in the region. 

My takeaway: If luxury brands had trouble deciding which online marketplace to prioritize before, this deal all but chose for them.

APPAREL

All 2020 Trends Lead Here

It made comfy clothes over a century before comfy clothes became our Entireworld. It’s got a monopoly on underwear drawers throughout America. So why did HanesBrands announce a sweeping business review yesterday? 

It comes down to two factors:

• Distribution. Hanes’s sales mostly come from licensed gear found in college bookstores. Without fall campus tours and sporting events, activewear sales declined 41% in Q3. 
• Consumer perception. CEO Stephen Bratspies said some brands are “aging a little bit”; I’d say its store/online mix is too. Its Champion brand only opened its first standalone store in 2018—99 years after it was founded.

What could change? Hanes execs are leaving no sweats unturned. The company said it’s reviewing everything from supply chain ops to internal organization to potential direct to consumer sales channels.

• If Hanes ends up converting tightywhities.com into a storefront, we won’t see it for a while. The review is expected to take several years.

My takeaway: Hanes technically has the right products at the right time—but it needs a better method of getting into consumers’ closets to turn things around. 

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Basically: better results, less work, and fewer vendors to manage.

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INTERNATIONAL

Lockdown 2.0

It’s beginning to look a lot like March: As Covid-19 cases shot upward in Europe, officials in several countries instituted new retail lockdowns. 

Just like last time…nonessential businesses are required to close their doors in several countries, including the U.K. and France.

• Retail trade groups in the U.K. said that enabling curbside pickup and online sales would not make up “lost ground” from temporary closures.
• Effects from earlier closures still linger: Marks & Spencer reported its first-ever loss this week, partially due to pandemic store closures.

Unlike last time...e-comm and production operations in some countries are prepared to work overtime. Italy will allow all factories to remain open during its second lockdown—a benefit for many fashion houses. And Zalando, a Germany-based online fashion retailer, is expediting plans to build online storefronts for previously IRL-only brands. 

Zoom out: Despite reaching consecutive single day records for reported Covid-19 cases, the U.S. isn’t yet pursuing plans to restrict retail businesses. Still, some brands are preparing for a second lockdown with enhanced e-comm ops, BoF reports. 

WHAT ELSE IS BREWING

• CVS promoted EVP Karen Lynch to CEO. Her appointment marks 40 women leading Fortune 500 companies.
• GoPuff is acquiring BevMo, an alcoholic beverage chain, for $350 million.
• Peloton raised its guidance for 2021 off strong quarantine sales.
• L’Oréal will partner with Google to enable virtual cosmetics try-ons.
• Nintendo sold ~12.5 million Switch consoles between April and September.

SWAPPING SKUS

Trends don’t stop developing after they’re given the Retail Brew treatment. Pour some coffee, find a comfy chair, and settle in for these longer looks at topics you might recognize. 

• Seasonal hiring in 2020 means fewer store workers, more warehouse openings, and startling vacancies at mass retailers. (The Goods)
• As department stores crumble, NYFW darlings are cutting their wholesale accounts and finally going direct to consumer. (Vogue)

FRIEND OR FAUX?

At last, the cherry on top of this week’s newsletters. Which of the following news stories didn’t happen?

1. Marc Jacobs will design costumes and a shopping line for The Masked Singer.
2. Marks & Spencer asks shoppers to nibble on a holiday treat called Santa’s Yumnut.
3. GameStop workers can win extra Black Friday hours in a TikTok challenge.
4. Twitter blasts Kylie Jenner for promoting limited edition makeup collection on Election Day.

Keep reading for the answer.

ICYMI

Catch up on this week’s top Retail Brew stories.

• Consumers Historically Stop Spending After an Election. How Can Retailers Prepare?
• European Beauty Brands Lean In to Virtual Pop-Ups
• Some DTC Brands Are Moving to the Suburbs

FRIEND OR FAUX? ANSWER

1. Nope, there’s no fashion tie-in for America’s No.1 show. Yes, that stat is true.