2020 was a whirlwind for luxury and streetwear. What started as a promising year quickly spiraled as the coronavirus pandemic ravaged the global economy. That didn’t stop some of the biggest names in the game from expanding their footprint, acquiring valuable brands to place them in a position of growth as the market recovers. Beyond simply making waves in the industry, each acquisition provides clues as to what the luxury and streetwear space will look like in 2021—and beyond.
At the beginning of 2020, luxury and streetwear were riding high. LVMH, the world’s largest luxury goods company, kicked off the year posting record results for 2019. Kering, LVMH’s closet competitor, reported a record operating margin and sustained growth trajectory.
The global streetwear market, estimated to be $185 billion in 2019, making it by some estimates about 10% of the entire global apparel and footwear market, remained bullish: 76% of industry insiders expected the market to grow significantly over the next five years.
As 2020 unravelled and the economic consequences of the coronavirus pandemic became evident, the tune across luxury and streetwear quickly changed. Revenues dropped across the board and demand plummeted. No brand was safe.
The second half of the year tells a remarkably different story. As stocks hit record highs, luxury and streetwear brands showed promising signs of recovery, set to exit 2020 in a position to not just survive but thrive as 2021 approaches.
Taken together, the rise and fall and rise of 2020 provide a backdrop for some of the industry’s most headline-grabbing moments: acquisitions. At a time where some brands are looking inwards to rediscover their purpose others are looking towards acquisitions to bolster their positioning and set plans for an exceptional 2021.
These are the three acquisitions from 2020 that will shape luxury and streetwear for years to come.
Moncler’s Purchase of Stone Island For $1.4 Billion
Moncler, the pinnacle of luxury skiwear founded in France and bought by Italian billionaire Remo Ruffini in 2003, underwent something of a reinvention in just the last few years. Introduced in 2018, Moncler Genius invited a handful of today’s most influential and creative designers to add their personal touch to the brand’s premium garments.
The collections radically shifted the way consumers perceived the luxury brand, with designs from Japanese legend Hiroshi Fujiwara, in particular, earning respect from increasingly important streetwear communities.
Since its first collection, Moncler has expanded the Genius initiative, dropping seasonal collaborations and bringing the concept to physical locations around the world. By dipping its toes in the water with collaborations alongside Matthew Williams and Francesco Ragazzi, Moncler saw first hand the impact Millennial and Gen Z favorites can have on a storied label.
That’s why it’s acquisition of technical luxury pioneer Stone Island feels perfectly timed. Moncler’s recent experiments in luxury streetwear gives it the background knowledge it needs to bring Stone Island to the next level, applying its know-how around selling products through its own channels to a label that’s exploded in recent years but still remains vulnerable to a number of forces, wholesale chief among them.
Moncler earns 77% of its revenue through its own network of 218 stores, while Stone Island has only 24 shops and gets 75% of sales from wholesale partners. What we can expect to see is Stone Island mirror its parent company and take more control over its distribution, while expanding into key markets like the United States and China, the latter of which is expected to become the world’s biggest luxury market by 2025.
The result will likely be an even more exclusive aura around the Stone Island brand, one that can only be achieved by fully controlling the end-to-end consumer experience. Lineups outside Stone Island flagships every Thursday anyone?
Moncler might even look to take advantage of Stone Island’s existing relationship with Supreme, sneaking in a collaboration with Supreme for the first time—especially now that the former is in the hands of outdoor giant VF Corp.
VF Corp’s $2.1 Billion Supreme Acquisition
Home to The North Face, Vans, Timberland, and more, VF Corporation has quietly built an apparel and footwear empire. In November 2020, the company rounded out its portfolio with the ultimate prize: iconic New York skate brand Supreme.
Bought for $2.1 billion from founder James Jebbia and private equity firm Carlyle Group, who purchased a roughly 50% stake in the brand in 2017 for $500 million, VF Corp sees the acquisition as a way to stay ahead of market trends. “We’ve been on a journey the last four years to evolve our portfolio to really align with where we saw the market and more importantly the consumer going,” VF Chief Executive Officer Steve Rendle said in an interview.
VF says it has no plans to alter Supreme’s current business model, which relies heavily on scarcity, but it will no doubt seek to leverage its knowledge of international markets to introduce new brick-and-mortar stores in key cities across the globe. Supreme currently has stores in New York, San Francisco, Los Angeles, London, Paris, and Japan. A store in Italy has all but been confirmed and fans of the brand can expect even more doors in the coming years.
On the ecommerce side, over 60% of Supreme’s revenue $500 million+ comes from online orders and this number will almost certainly grow as VF applies its knowledge of digital infrastructure to the Supreme brand.
And while Supreme will benefit from VF’s scale, international presence, and supply chain, VF may be getting the sweeter end of the deal.
Supreme’s worked with a number of VF brands over its 25+ year history, causing those products to sell out instantly and command above-retail prices on the secondary market. VF can take notes from Supreme’s book and apply it to some of its better-known brands, driving further hype and broadening the appeal of brands like The North Face and Vans.
Even everyday brands like Eastpak, a VF company, could see interest surge as VF applies Supreme’s model and further builds out recurring collaborations with in-demand designers, like Eastpak’s seasonal work with Raf Simons.
Both sides will benefit from swapping expertise and access to attractive consumer segments, notably younger Millennials and Gen Z. Millennials are expected to represent 40% of the global personal luxury goods market by 2025, while Gen Z will fundamentally transform the way brands speak to consumers. To both demographics, cultural authenticity can be the difference between the real thing and a knock-off, and no brand operating today understands cultural authenticity better than Supreme.
VF is looking to position itself strategically ahead of these developments and Supreme will play a significant role in achieving this as VF widens Supreme’s global footprint and grows others in its portfolio.
LVMH’s Takeover of Tiffany For $15.8 Billion
LVMH couldn’t put a ring on Tiffany in November 2019. But after plenty of back-and-forth that lasted the majority of 2020, LVMH is set to acquire the famed jewelry brand for $15.8 billion pending Tiffany shareholder approval, making it the biggest deal ever for the world’s biggest luxury company. The deal is expected to close in early 2021 and if it goes through, it could prove transformative for Tiffany and LVMH.
In the last few years, Tiffany has worked tirelessly to create products that speak to younger generations on their own terms, applying its signature mint to lifestyle products that resonate with Millennials and Gen Z. LVMH has taken a similar approach with its own brands: Dior earned acclaim from peers and competition alike when Kim Jones appointed AMBUSH’s Yoon Ahn to head up Dior Homme’s jewelry division.
Tiffany, under the control of LVMH, could expand further in this direction, bringing in designers favored by hip-hop stars, a subculture that is more and more influential with today’s consumer. LVMH’s international reach could also help generate interest in Tiffany abroad, particularly in China where demand for luxury goods has steadily increased as incomes rise.
On the other side of the equation, buying a New York-based brand would help the French company increase its presence in the United States, while folding a brand into its portfolio that is known for one product above all: engagement rings.
However, because of Tiffany’s strong New York heritage, the direction LVMH takes Tiffany is difficult to predict compared to the other two acquisitions in this article. LVMH could seek to remake Tiffany in its Parisian image, giving it a similar luster to some of its most recognized brands. Equally, it could go the other way and lean heavily into Tiffany’s American roots.
Regardless of which direction LVMH takes Tiffany in—provided the deal is approved—the acquisition will shake up the jewelry and watch industry far and wide. Current market leaders will have to reevaluate their own positioning, likely preempting LVMH’s approach with Tiffany long before ink meets paper.
2021 is shaping up to be quite the year.
Header image: Supreme Fall/Winter 2020 lookbook