High anxiety is spreading through the world of luxury fashion as focus turns to which businesses will win and lose over the coming years.

As the sector returns to ‘pre-pandemic normal’, there has been a renewed effort by top brands to forge deeper relationships with clients, both in-store and online.

Struggling are high-end e-commerce fashion platforms like loss-making Yoox Net-A-Porter, as shoppers demand personal in-store experiences again.

Matchesfashion, initially a small Wimbledon boutique business, has faced a similar fate. Valued at about £800million on its 2017 acquisition by Apex Partners, it fell into administration this month.

Matches, which sells items from designers such as Balenciaga and Prada, was the latest messy reckoning for companies that sell luxury goods online.

Tie-up: Kate Moss for Saint Lauren. High-end e-commerce fashion platforms like loss-making Yoox Net-A-Porter, are struggling as shoppers demand personal in-store experiences again

Tie-up: Kate Moss for Saint Lauren. High-end e-commerce fashion platforms like loss-making Yoox Net-A-Porter, are struggling as shoppers demand personal in-store experiences again

Many are in financial free fall.

Mamta Valechha, analyst at Quilter Cheviot, said: ‘Maybe one way to look at this is by asking why would you want to settle for ordering a high-end handbag online from a multi-brand retailer when you could visit the luxury brand’s website, or go to its flagship store and get treated to a glass of champagne while you make your purchase?’

In LVMH, there are exclusive suites, with fine art on the walls, for top tier shoppers. Others finding it difficult include Kering, the luxury group controlled by Francois-Henri Pinault, who is married to actress Salma Hayek.

Two weeks ago, it revealed a 20 per cent decline in sales at Gucci, which contributes 70 per cent of Kering’s profits. 

Gucci has been slow to roll out the more simple styles of its new designer Sabato De Sarno; his predecessor Alessandro Michele was famed for his flamboyant creations.

Swetha Ramachandran, manager of the Artemis Consumer Brands fund, said: ‘In the post-Covid revenge spending spree, all luxury names were lifted. But the environment is returning to the pre-pandemic normal, where there will be winners and losers.’

Ramachandran adds that Asian consumers are especially sensitive to ‘newness’ and the lack of availability of the De Sarno ‘quiet luxury’ collection in stores is likely to have frustrated them.

Kering’s other houses include Yves Saint Laurent and McQueen, a line that is favoured by the Princess of Wales. A year ago, consultancy Bain forecast that the global luxury goods market will be worth a whopping €580billion (£496billion) by 2030, against €353billion (£302billion) in 2022. 

But a hierarchy of brands is set to develop. Shares in Hermes, maker of Birkin bags, are still 31 per cent higher than a year ago.

Also up, by more than 20 per cent over the same period, are shares in Brunello Cucinelli, celebrated for its cashmere pullovers.

This reflects the move away from sportswear.

Valechha says ‘category leaders’ such as LVMH, and Richemont have ‘momentum and the leverage to protect margins.’ 

But there are considerable challenges for British house Burberry – its handbags are considered insufficiently exclusive. Valechha said: ‘These companies will find it tough to find a balance between driving top-line growth in a moderating environment, while also trying to protect margins at a time when they have no other option but to invest to elevate their brands and re-engage with consumers.’

Challenges are also coming from unexpected quarters. Inditex, the Zara group, rose to eminence through fast fashion and is now entering the elite with £569 leather coats. At Reiss, you will find Atelier, where blouses are £245.

And the holder of a 72 per cent stake in Reiss is Next, the consummate high street and online retailer which may have more elevated ambitions.


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