What's going on?

Switzerland�s Richemont, one of the biggest names in the luxury business, has agreed to spend up to $3.3 billion buying the 51% of online fashion retailer Yoox Net-a-Porter (YNAP) that it doesn�t already own.

What does this mean?

Richemont, the owner of Cartier, Montblanc and various other luxury brands, already owns 49% of YNAP, though only 25% of its voting shares. It�s now buying the rest of the company in a deal that values YNAP at over $6 billion. As well as running major online fashion marketplaces like Yoox and MR PORTER, YNAP also designs websites for luxury brands like Armani to sell their own products. The company also has an extensive logistics (e.g. delivery) operation, the sine qua non of ecommerce � especially when dealing with high-rolling customers used to top-notch service at the speed of money.

Why should I care?

For markets: It�s a big payday for YNAP�s shareholders; Richemont�s are more circumspect.

YNAP�s shares jumped 25% on Monday, close to the price that Richemont has agreed to pay. Meanwhile, Richemont�s stock fell about 2%. That�s fairly typical of such a deal, as investors fret over the company�s ability to successfully integrate a new firm and the risks that accompany Richemont’s promises to spend money expanding YNAP.


The bigger picture: It�s the rise of the millennial shopper.

Richemont�s aim here is to strengthen its online presence, which has become critical to meeting the demands of luxury customers. In particular, affluent millennials demand a digital experience and have high expectations regarding logistics such as delivery (couriered Church�s shoes on demand? Yes please). Richemont isn�t alone; competitors such as LVMH have recently launched their own multi-brand ecommerce ventures. The digital world was once seen as infra dig � too mass-market and a quick way to devalue one�s brand � but the land of luxury is now being forced to beef up such capabilities as millennials become a much more important demographic.