"As per the recent Deloitte report, ‘Global Fashion & Luxury Private Equity and Investors Survey 2019,’ mergers and acquisitions in the luxury industry increased to 265 in 2018. Of this, 75 deals were recorded in the luxury hotel sector while the luxury goods sector recorded 145 deals. Of this, 73 deals were recorded in the apparel and accessories sector while 28 were recorded in the watches and jewellery sector. Only cosmetics and fragrances category recorded an increase in the number of deals, which rose from 28 in 2017 to 44 in 2018."
As per the recent Deloitte report, ‘Global Fashion & Luxury Private Equity and Investors Survey 2019,’ mergers and acquisitions in the luxury industry increased to 265 in 2018. Of this, 75 deals were recorded in the luxury hotel sector while the luxury goods sector recorded 145 deals. Of this, 73 deals were recorded in the apparel and accessories sector while 28 were recorded in the watches and jewellery sector. Only cosmetics and fragrances category recorded an increase in the number of deals, which rose from 28 in 2017 to 44 in 2018.
As Elio Minantoni, Partner, Deloitte Financial Advisory & Corporate Finance reveals, the cosmetics and fragrances sector is increasingly attracting the attention of investors as is the apparel and accessories sector. Of the 70 per cent private equity firms who plan to invest in the fashion and luxury sector in 2019, 79 per cent plan to invest in the apparel & accessories, and cosmetics & fragrances sectors.
Digital luxury to lead with 10 per cent growth
According to Deloitte, the fashion and luxury sector will continue to grow between 5 per cent and 10 per cent
every year. Of this, the digital luxury, cosmetics and fragrances and furniture sectors will grow by over 10 per cent every year. On the other hand, the annual growth rate in the apparel & accessories, hotels and restaurants sectors is expected to range between 5 per cent and 10 per cent. Though the sale of cars and private jets are forecast to slump, those of yachts, jewellery and the selective distribution sector are expected to remain stable.
Growing interest in new technologies
Interestingly, the application of new technologies and digital innovations in fashion is increasing. As the survey reveals, nearly 43 per cent of the participants showed an inclination to invest in disruptive technologies such as innovations linked to the web, big data and analytics, artificial intelligence, robotics and blockchain applications. Geographically, only Europe recorded a significant increase in the number of fashion & luxury mergers and acquisitions in 2018, with 41 extra deals. North America and the Middle East emerged second with one deal less. Asia-Pacific recorded two more deals than Europe while Japan recorded four more. Investors are increasingly veering towards Asia and the Middle East with growth in these regions to average around 10 per cent.
Volume increases but value decreases
Though the number of mergers and acquisitions in the fashion and luxury sector increased between 2017 and 2018, their average worth decreased by 12 per cent to $233 million. Operations by medium-sized companies decreased by 25 per cent while those involving larger companies declined by 22 per cent. This trend is expected to further intensify in 2019.
