They are in some ways a less than obvious pairing.
Johann Rupert, founder and chairman of Compagnie Financière Richemont, is an intellectual ready to tackle weighty topics who once joked to analysts that his son answers the phone with, “Tech support” when he calls, and then tries to answer the luxury titan’s questions simply, starting with, “Well, basically, Dad…”
José Neves, founder, chairman and chief executive officer of Farfetch, oozes high tech. When WWD asked him this summer about his giddiness over the company’s work to integrate digital and physical retail, he said: “It’s not just the vision from geeks like me, that get really excited about gadgets. It’s a vision that is really based on the love of fashion as well. I’m a technologist by vocation. I love revolutionary technology and I love innovation. I can’t help it. It’s like a kid in a candy store.”
But they are both dreamers. More than that, they both dream big.
Neves isn’t running an e-commerce company, he’s building a new operating system for the $300 billion luxury industry.
And Rupert, when asked in 2015 about what kind of relationship Richemont will have with customers “10 to 20 years out,” he sidetracked into robotics, technology and its longer-term ramifications clearly on his mind. “Some countries do not understand yet what’s about to eat us, and our people will simply be replaced. You cannot replace hand skills, style. And Europe is very well positioned.…So there will be a total change where a big percentage of the population as we know today will become unemployable, and given the social turmoil we already have because of the repression of interest rates, I see more social turmoil.”
Clearly, Rupert thinks on a grandiose scale with far-flung connections and generational ramifications.
Now Rupert and Neves’ dreams just might be coming together — and in a way that not just speaks to their own ambitions and their own abilities to move outside of fashion’s comfort zone, but also fleshes out a notion of partnership that could remake the industry.
- see Farfetch invest in Richemont’s Yoox Net-a-porter and give the luxury e-commerce pioneer access to Farfetch’s platform services;
- bring Farfetch’s Luxury New Retail connected concept to Richemont brands, and
- add Richemont brands to the Farfetch marketplace.
It’s substantial all around — not a merger, but a different kind of combination, a collaboration that takes a step toward Rupert’s dream of a “neutral platform.”
Rupert made his big pitch for such a platform at a 2015 conference and, at the time, pointed to the massive amounts Amazon was spending to build its business and noted: “This is a big boys’ game, and that’s why I’ve reached out to the other big companies to say, look, here, we’ve built a neutral platform so that we can still maintain the luxury experience.”
Neves was at the 2015 conference as well, but the two didn’t connect and Rupert on Friday said: “And as usual, as my son predicted, prisoner’s dilemma ensued where we all acted in our own worst interest. We continued with a linear model, and we made mistakes en route — not the mistakes that you necessarily and some of the analysts have alluded to and referred to — but we did make mistakes. But we realized that we have to get to a hybrid model.”
That model could be getting closer now, as Rupert eyes “the remarkable, truly remarkable technology of Farfetch.”
“Alibaba told me in the beginning, when they introduced us, that they could not replicate that technology,” he said.
Rupert is essentially renewing his call to the industry and noted that other industry players have said they were interested in investing in YNAP alongside Richemont and Farfetch.
No names were named, but this coming together seems to be gaining ground. (Last year, Kering CEO François-Henri Pinault’s Artemis invested in the deal connecting Richemont, Farfetch and Alibaba).
The old go-it-alone attitude — a tendency that was only strengthened as luxury brands split from their department store partners and went direct to consumer with their own monoline stores — is being adjusted.
Lines are being crossed everywhere.
Real estate giant Simon Property Group is getting into retail with stakes in J.C. Penney and others and taken a stake in licensing giant Authentic Brands Group, Walmart is working with Adobe to offer cloud services and other technology to outside retailers and Gap is selling home goods at walmart.com.
Walmart CEO Doug McMillon said recently: “While we’ve had tremendous growth in the last couple of years, there’s just a lot more upside in front of us in apparel. And then everything I’ve just mentioned is Walmart U.S. We have similar opportunities in markets [internationally].
“What has become apparent in recent years is that when you become a digital company you can start to build businesses on top of other businesses in a way that’s efficient and manageable,” he said. “And so I’m not overly concerned about Walmart becoming too diversified.”
Walmart for years was a very large, relatively simple business. Now it’s branching out, learning from the online competition and changing the way it operates down to its core.
Clearly it’s a realization coming to more C-suites around the world, opening up new kinds of opportunities.
Rupert saw this long ago and started to evolve. He knows he’s been the prisoner in the prisoner’s dilemma, knows he wants out and to get out, he’s calling on Neves.
At least the Farfetch chief didn’t say, “Well, basically…”
Neves needs the big players like Rupert to power up his operating system.
Farfetch is in the luxury lead on line, and closer ties to Yoox Net-a-porter could expand that position. Closer ties with Richement for sure would.
Rupert and Neves are now pitching something like the same vision of the future and together — if they’re good salesmen, a new kind of fashion force is forming.
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