Zalando to double luxury brands to take on Richemont e-commerce
Millennials are pushing a trend of increased purchases of luxury goods online
Frankfurt — Zalando, Europe’s largest online fashion retailer, will add more premium brands in a move that will position it head-to-head with Richemont’s e-commerce business Yoox Net-a-Porter.
Zalando plans to double its premium and luxury assortment by the end of 2023 to gain a bigger share in the €38bn market for high-end fashion, the company said on Thursday. Zalando has started out by adding Moschino Couture and Alberta Ferretti.
Millennials have been accelerating a trend of increased purchases of luxury goods online as they grow more comfortable having higher-priced items delivered instead of setting foot in brick-and-mortar boutiques. That has prompted Richemont, the maker of Cartier jewellery and Vacheron Constantin timepieces, to bolster e-commerce through acquisitions and a partnership with China’s Alibaba.
The shares dropped as much as 5.8% in Frankfurt amid a global stock sell-off as the coronavirus’s spread around the world weighs on consumer companies. They have risen 61% over the past 12 months.
Zalando’s 2020 profit guidance is “perhaps a little light”, Morgan Stanley analysts including Geoff Ruddell said in a note. Zalando will also start offering a platform to buy and sell pre-owned fashion items in the third quarter.
While Zalando keeps adding customers, the rate at which it was able to gain new clients stalled in 2019, suggesting intense competition from both brick-and-mortar fashion retailers and online specialists from Asos to Boohoo and Amazon.com.