Farfetch boss says physical retail will always dominate luxury
Farfetch CEO and founder José Neves thinks luxury has its limits online and that only around a third, or maybe just a quarter, of all luxury sales will eventually be made digitally.
In an interview he said that around 90% of luxury goods are still sold in physical stores and while this percentage is changing, luxury customers will retain their love of the face to face experience.
And that prediction probably suits Neves as his business, which is based on the products sold in a network of around 700 luxury stores globally relies on the continued survival of such luxury boutiques to function.
Unlike big rivals Yoox-Net-A-Porter and MyTheresa, Farfetch doesn’t buy-in inventory but acts as the middle man between the boutiques and the shoppers, making the whole process as seamless as possible.
Far from presenting the often independent boutiques with the problem of a giant online competitor, Neves sees Farfetch as helping to ensure their survival.
“It means that these boutiques, often family-run, can have a booming export business and not have to worry about doing deliveries or working out import duty. There are many who have said that they wouldn’t have survived without us,” he told the Telegraph newspaper.
He said his affinity for the physical store came through his experience with men’s footers brand Swear, which he launched in the 1990s with a (very small) flagship in London’s Covent Garden. But by this century, with the global recession setting in, he said he realised that the boutique businesses doing well were those with an online presence and the idea for Farfetch grew out of that.
“I was a shopkeeper, I saw how magical physical retailing can be when you have the interior decoration right, the products, the staff, the level of service, the music – it all creates an experience that cannot be repeated online,” he explained.
He also said that the firm’s rumoured $5 billion stock marketing listing is “the next logical stage for the company,” explaining that “we are very well funded and we are cash flow positive so we don’t have to raise funds… but we have venture capitalists and private equity firms as investors and they look for an exit.”
The company is expected to float on the New York Stock Exchange, rather than in London where it is based, in the next 18 months but has not previously confirmed that it as even looking to launch an IPO.
Neves also told the newspaper he is concerned about the UK’s EU exit and can see “no upside to Brexit from a business point of view…. I am concerned about what happens to our talent as we have 25 different nationalities, including myself, at Farfetch. I just hope the Government… doesn’t jeopardise the UK as a great place to do business.”
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