Yoox Net-A-Porter Group (YNAP) is all set to make its foray into the Middle East market through a joint venture with Mohamed Alabbar's Symphony Investments.
The online luxury fashion retailer will own a 60 per cent stake in the venture, which will be fully consolidated in YNAP's accounts, while Symphony Investments will own the rest. The joint venture is set to accelerate the growth of the luxury market in the region, and will highlight the enormous potential of the segment.
Speaking at a media session on Monday, Mohamed Alabbar, chairman of Emaar Properties, said that the luxury market in the region was growing, and that the new joint venture would provide consumers with a totally unique experience. He also revealed that the value of the venture was around 130 million euros. Previously, in April this year, Alabbar had acquired a four per cent stake in Yoox Net-A-Porter, leading analysts to speculate on a broader partnership in the future.
"The Middle East is one of the fastest growing global centres for luxury retail. The region also has a significant population of over 200 million young people who are tech-savvy and influence luxury retail decisions. With this joint venture to be based in Dubai, we are pioneering a never-before online luxury retail experience that integrates luxury with techno-logistics. It will redefine the retail sector, and create a brand-new way to access the world's high-end brands brought by YNAP," said Mohamed Alabbar.
The partnership will see Mohamed Alabbar focus his entire online luxury retail activity in the region exclusively through the new joint venture. The joint venture will manage all of the YNAP Group's existing multi-brand online stores in the region including Net-A-Porter, Mr Porter, Yoox and The Outnet, as well as, in agreement with the brands, select existing and future online flagship stores 'Powered by Yoox Net-A-Porter Group' that have significant business potential in the Middle East.
Alabbar revealed that the new company will operate in the GCC countries, and may expand to other countries in the Middle East and North Africa in the future. To provide Middle Eastern luxury customers with a fully localised offer, the venture will establish on-the-ground operations, which will allow YNAP to capture the region's significant growth potential.
In particular, the JV's localisation strategy will include the establishment of a local office with dedicated sales & marketing, customer care, and PR teams; the opening of a new distribution centre in Dubai powered by YNAP's omni-stock techno-logistics platform; and the development of a localised offering ranging from Arabic-language customer care and content, as well as local currency and payment methods.
The local office and distribution centre in Dubai is expected to open by the end of 2017; while Yoox and The Outnet will debut in 2018; followed by Net-A-Porter and Mr Porter going online in 2019; which will be followed by select online flagship stores.
Symphony Investments will make a significant cash contribution to the JV, to be phased over the first three years of the venture, which will support YNAP's expansion in the Middle East and the related investments. The joint venture will have an indefinite duration; however, the agreement allows Symphony Investments to exit the JV after a few years of operations. In addition, the agreement envisages that YNAP will have the right to exercise a call option on Alabbar's stake during pre-defined time periods.
The Middle East region accounted for three per cent of global luxury consumption in 2015 and is expected to significantly outpace the growth of the global personal luxury goods market over the next five years. The region boasts one of the highest GDP per capita worldwide, a particularly high concentration of high-net-worth individuals, and a promising e-commerce landscape, driven by a young and mobile-friendly population, growing internet penetration and public investments in IT, e-services and telecoms infrastructure.
- rohma@khaleejtimes.com
Published: Mon 28 Nov 2016, 6:08 PM
Updated: Tue 29 Nov 2016, 6:58 PM
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