Luxury watches move online

Visitors walking past a Cartier stand, owned by the Richemont group, during the 28th Salon de la Haute Horlogerie in Geneva.
Visitors walking past a Cartier stand, owned by the Richemont group, during the 28th Salon de la Haute Horlogerie in Geneva.PHOTO: AGENCE FRANCE-PRESSE

BASEL • Time does not stand still for those who sell watches.

So even as Richemont has built a conglomerate offering the world's wealthiest consumers the highest-quality product, often in the most luxurious of settings, the hour has come for it to make changes to tick strongly again.

It used to be that clients walking into a Cartier flagship or a Piaget boutique - both Richemont brands - could expect radiant smiles and impeccable service, with time being no object to perusing the wares on sale.

Increasingly, though, well-heeled clients do not want that type of service. Cash-rich, time-starved customers want their shopping to be done in a matter of seconds from their smartphones.

Richemont, which also owns upscale brands such as IWC, Montblanc and Van Cleef & Arpels, knows that times are changing.

The Swiss luxury group has announced that it is doubling down on investments in high-end Internet retail, making an offer of about US$3.4 billion (S$4.5 billion) for online fashion retailer Yoox Net-a-Porter.

The surprise bid was a significant about-face in Richemont's strategy and an acknowledgement that wealthy consumers are increasingly comfortable buying an expensive watch with a click rather than a trip to an upscale store.

Personal luxury goods had been slower than other retail items to migrate online, but their Web sales rose 24 per cent last year, according to a study by Bain & Co.

It also estimated that online sales of such products would account for 25 per cent of the market by 2025, compared with 9 per cent now.

Richemont, which was already restructuring how it sold its watch and jewellery brands, clearly hopes to capitalise on that growth.

It is offering to buy the Yoox Net-a-Porter stock that it does not already own at a 25.6 per cent premium to the closing price last Friday.

Yoox and Net-a-Porter merged in an all-share deal three years ago.

At the time, Richemont was Net-a-Porter's controlling shareholder, and still holds about 25 per cent of the combined company.

Yoox Net-a-Porter owns and operates online retailers Net-a-Porter, Mr Porter, The Outnet and Yoox.

It also operates e-commerce sites for more than 30 luxury brands, including Stella McCartney, Dolce & Gabbana and Chloe.

"Richemont aims to provide additional resources that further strengthen and accelerate YNAP's long-term leadership in online luxury," Mr Federico Marchetti, Yoox Net-a-Porter's chief executive, said.

"This means investing even more in product, technology, logistics, people and marketing."

With much speculation over the death of retail, the steady decline of department stores and the looming threat of online giants like Amazon, one bright spot in the shopping landscape has been businesses such as Yoox Net-a-Porter - high-end, multibrand e-commerce companies that have attained sky-high valuations.

Moda Operandi, the luxury online retailer based in New York, raised US$165 million in its latest round of funding in December, just a few months after Apax Partners bought a majority stake in London-based Matchesfashion.com, which had a valuation of roughly US$1 billion.

In May, LVMH Moet Hennessy Louis Vuitton, the world's largest luxury group, made its own foray into the sector with the boutique shopping website and mobile app 24 Sevres.

Just weeks later, however, Conde Nast closed Style.com, its own high-stakes experiment in online fashion retail, a lesson to companies such as Richemont that even the most reputable names in fashion can struggle if they arrive late to the game.

But time waits for no one in the race to stay alive and Richemont has put money on the table.

NYTIMES

A version of this article appeared in the print edition of The Straits Times on January 26, 2018, with the headline 'Luxury watches move online'. Print Edition | Subscribe