Luxury, crisis does not discourage operators: 8 out of 10 will continue to invest

The conspicuous slowdown in luxury is not deterring investment. Indeed, 83% of the financial operators surveyed by Deloitte for its 'Fashion&Luxury Private Equity and Investors Survey 2024' will continue to invest despite fears over China and ongoing international conflicts. The survey, conducted on a panel of 114 companies and presented today as part of the White show, thus confirmed a certain dynamism in the fashion-luxury sector. Which had already seen 358 deals concluded globally in 2023: 66 more than the previous year.

"Although macroeconomic and geopolitical uncertainty persists, investors in the Fashion&Luxury sector are responding to rapid market changes in an effective and timely manner by leveraging M&A assets," said Elio Milantoni, SeniorPartner M&A of Deloitte Financial Advisory - In fact, 83% of funds are considering investing in an F&L asset, with high interest, in particular, in the apparel and accessories manufacturing sector (30%), cosmetics and perfumes (26%), furniture (19%) and apparel and accessories retail (11%). In addition, the focus of more than half of the investors is mainly on investments in small- and medium-sized companies, with a clear objective of consolidation in the F&L sector'. Massimiliano Bizzi, White's president and founder, echoes him: 'SMEs represent a fundamental economic force, especially in Italy, for several reasons, first and foremost for their contribution to the economy, representing the productive fabric and contributing decisively to GDP and employment. No wonder then that they are an object of interest for investors. (...) Therefore, I maintain that for the end of 2024 and for the years to come, most financial investors will not continue to invest in luxury, which is already showing important signs of weakness, but will reverse course, investing in new brands and in small and medium-sized companies that are the new luxury today'.

In 2023, there was a significant increase in M&A transactions. Specifically, the most attractive sectors are Apparel&Accessories (30%), Cosmetics&Fragrances (26%) and Furniture (19%). The M&A market was driven by sectors such as Hotels (+46 deals compared to 2022), Apparel&Accessories (+28), Cars (+15 ) and Yachts (+13). By contrast, there was a decline in deals in the Furniture and Cosmetics&Fragrances sectors, at -23 and -8 year-on-year, respectively. Geographically, Asia showed the strongest growth with +30 deals on 2022, followed by Europe (+17) and North America (+17). In contrast, on the IPO front, 2023 was a slow year for fashion listings, with one IPO down on 2022.

In 2024, the year that has been the most complex for luxury brands so far, investors' fears are focused on the slowdown in China, also due to the real estate crisis that has impacted assets and also consumer confidence, which is considered a relevant factor by almost 7 out of 10 traders. This is followed by macroeconomic uncertainty (55%), the risk of supply chain disruption (45%), ongoing international conflicts (38%) and the US elections (21%).

"Despite the recent slowdown," commented Ida Palombella, Global Fashion &Luxury Co-leader at Deloitte, "China is set to overtake Europe and the Americas to become the largest luxury market globally with almost 25% of purchases by 2030. Many companies are implementing ad hoc strategies to reach younger generations, investing heavily in IT and digital solutions as generations Y, Z and Alpha will account for almost 85% of global purchases by 2030. And by that year, mono-brand shops and online are expected to become the main channels for luxury purchases with almost 60% market share. To support future growth, companies are investing in more robust technology infrastructure and a pricing strategy based on exclusivity and the limited edition concept'.