Editor’s Note
This article outlines Yoox Net-a-Porter Group’s strategic five-year plan for the online luxury sector, set for completion by 2020, and includes the company’s perspective on potential Brexit-related challenges.
Yoox Net-a-Porter Group (YNAP) has announced a five-year plan for the online luxury market, aiming for completion by 2020. The group also addressed the potential impact of Brexit on its business.
The luxury market is currently facing a difficult period. According to a recent report by Bain & Company, due to a decline in tourists, China’s economic slowdown, and reduced department store traffic and consumer spending, the market is expected to grow by only 2% this year, with modest growth of 2-3% projected until 2020.
Despite the economic slowdown, YNAP has taken on the challenge to survive. On July 6 (local time), the London-based luxury e-commerce company announced a five-year plan aiming for 17-20% annual sales growth over the next five years, surpassing recent slowdown trends. The plan also aims to strengthen its operating profit margin from 8% in 2015 to 11-13% by 2020.
Currently, YNAP holds an advantage as an online retailer. However, according to Bain & Company, online luxury sales are expected to grow at a much healthier rate of 15% by 2020. YNAP has been leading the online luxury market since 2009 and recently presented investors with strategies to overcome the economic slowdown. The following is a summary of that report.
The company plans to further accelerate its mobile segment through focus and selection to enhance “improved conversion, customer engagement, and retention.” Over the past five years, smartphone sales have surpassed all other devices.
YNAP plans to strengthen personalized marketing using customer data, as well as localized content. Of course, it will provide a “perfect service” for an overall enhanced experience. For example, for Net-a-Porter and Mr Porter customers, this means style advice provided through personal shoppers for “most valued customers” and local apps.
The introduction of fine jewelry and watches for the in-season business (Net-a-Porter and Mr Porter), as well as the new in-house label Iris&Ink for Mr Porter and The Outnet, are all expected to significantly increase revenue.
After selling a 4% stake to the Middle Eastern retail giant Alabbar Enterprises earlier this year, YNAP plans to further expand in China and the rest of the Asia-Pacific region, as well as significantly expand its business in the Middle East.
Additionally, YNAP has a plan to streamline operations organizationally by launching a new “global technology and operations platform.” It is a system where all brands are connected to the company’s hub and distribution centers, allowing visibility of all inventory from anywhere. In the omnichannel era, companies that can provide the same customer service whether consumers access them online, offline, or through any channel will be the winners.
Brexit has recently become a global economic topic. Brexit is a portmanteau of “Britain” and “exit,” a new term meaning the UK’s withdrawal from the European Union (EU). YNAP also addressed the expected impact of Brexit on the online luxury business. While the impact of the pound’s depreciation against the euro is expected to be ambiguous, the company claims it will outperform the market regardless of Brexit thanks to its “high degree of geographical diversification.”
