By Eurasia Business News – November 6, 2020
The Swiss luxury good group Richemont teams up with the Chinese tech giant Alibaba Group and the British online fashion marketplace Farfetch to boost sales in the China’s market, reported a corporate press release. The three partners said they will bring luxury retail “to the next generation by seamlessly integrating the digital and physical realms.“
Alibaba and Richemont will invest $ 600 million ($ 300 million each) in private convertible notes issued by Farfetch Limited and will also invest $ 500 million ($ 250 million each) in Farfetch China, taking a combined 25% stake in a new joint venture that will include Farfetch’s marketplace operations in the China region.
Farfetch (NYSE:FTCH) stocks jumped by 12.23 % at Wall Street on Friday as 11.25 AM, gaining $ 4.68 to reach $ 42.47. They were at $ 37.79 at close on Thursday.
Johann Rupert, founder and CEO of Richemont, told journalists that “This is really the pursuit of building an omnichannel business.”
The booming Chinese luxury market – which is expected to account for half of global luxury sales by 2025 – is made of hundreds of millions of young, digitally-native consumers with sufficient income for luxury goods.
In the frame of this global partnership, Farfetch will launch luxury shopping channels on Alibaba’s platforms, Tmall Luxury Pavilion and Luxury Soho, China’s premier luxury and luxury outlet destination within the Tmall marketplace, as well as Alibaba’s cross-border marketplace Tmall Global.
The new channels will expand the reach of Farfetch’s global luxury platform to Alibaba’s 757 million consumers, offering luxury brands a multi-brand solution through a single integration with Farfetch.
According to Johann Rupert, this partnership will allow the owner of jewellery brands like Cartier, Van Cleef & Arpels or the watchmaker IWS to benefit from the technological tools necessary to better serve his customers and expand in a booming Chinese market.
On the Zurich Stock Exchange, Cie Financiere Richemont SA’s shares were up 9.18% around 9:30 a.m. GMT on Friday. At close Richemont’s stocks rose by 8.90%, gaining 5.61 CHF to reach 69.04 CHF.
Luxury groups saw their sales pick up in the quarter ended in September, supported by the surge in e-commerce, but new lockdowns in Europe are casting a shadow over the end of 2020.
The recovery of luxury retail was supported by China, which has become the group’s leading market ahead of the United States. Sales in China jumped 78% in the first six months of the year.
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