Yoox Net-a-Porter boss Federico Marchetti looks to China for sales growth
Despite the weak luxury market in China, Italian believes there is scope for two of the company’s online fashion portals to expand there, and says high-net-worth indiviuals are more willing to shop online now
With no real background in fashion, Federico Marchetti founded the internet retailer Yoox in 2000 and, in the face of the industry’s scepticism, slowly but surely won over the giants of Italian fashion, convincing them to first sell through the nascent platform and later allow Yoox to operate their e-commerce sites.
Marchetti shook things up again in 2015 when he aggressively pursued a merger with another online fashion retailer, Net-a-Porter. Today the 47-year-old Italian is the chief executive of Yoox Net-a-Porter Group, the world’s biggest online retailer of luxury fashion following the merger with the Net-a-Porter group. The company operates four web portals: unisex retailer Yoox, womenswear-focused Net-a-Porter, menswear retailer Mr Porter and outlet site The Outnet, and about 40 single-brand internet retail stores for the likes of Armani, Chloe and Dolce & Gabbana.
Marchetti spoke to SCMP.com a few weeks before the release of Yoox Net-a-Porter’s five-year plan outlining how the group intended to “robustly” grow its business between now and 2020. According to the plan, released in early July, the company is looking for annual net revenue growth of 17 per cent to 20 per cent, positive cash flow from 2018 onwards, improved profitability, and complete integration of its portals.
The merger of Yoox and Net-a-Porter did not go smoothly. Several reports suggested Net-a-Porter founder Natalie Massenet was not aware that the company she founded, and by then majority-owned by the Richemont Group, was merging with Yoox. Massenet resigned from Net-a-Porter in September 2015 before the merger’s completion.
Aware of the industry gossip surrounding Massenet’s departure, Marchetti is keen to set the record straight, at least where it’s related to Yoox.
“I don’t like to state opinions, just facts,” he says. “When we announced the merger, I had one very specific intention, which was to run a company with a clarity of governance.” He says it was agreed that he would be chief executive and Massenet would be “in charge of certain responsibilities within the company where she had definitely bigger strengths; marketing, PR and an ambassador.” He says Massenet’s resignation was unexpected, but that the company is in good shape. A number of Net-a-Porter executives followed Massenet in quitting the company and Yoox Net-a-Porter has sought to promote from within.
Looking ahead, Marchetti sees strong growth for the company in China. Luxury retail sales there have slowed markedly, thanks to a government crackdown on graft and the worsening economic outlook.
Marchetti, however, believes the industry’s continued shift away from physical retail to online will continue to benefit his company and says Net-a-Porter and Mr Porter are still relatively new brands in China. Both have been wildly successful in Hong Kong, with the city ranking in the top five for both brands in terms of sales. Yoox, on the other hand, has been more successful in China, resonating with the culture of discounted purchase, but Marchetti feels the market there has matured enough to embrace full-price retailers. Additionally, Yoox Net-a-Porter is ramping up sales of high-end jewellery and watches across its portals following successful trials with Mr Porter.
Charming, urbane and immaculately dressed, Marchetti straddles the line between old-world corporate executives and the more easy-going Silicon Valley type. His conversation is flecked with buzzwords, some picked up from meeting the biggest names in tech. “I was invited to dinner by Bill Gates at his home, and I met with guys from Facebook, Instagram and Apple,” says Marchetti of a recent visit to the US that inspired his future vision for his company. “It seems like they have two words on the west coast; they have ‘disruption’ and they have ‘holistic’.”
Marchetti outlines how he has applied those notions to Yoox Net-a-Porter, and says it continues to be a disrupter in the luxury fashion industry. He says the enlarged group is better able to hit more market segments, adding: “We have such a holistic approach to luxury fashion because basically we have in-season multibrand, off-season multibrand as well as mono brand.”
Marchetti bristles at the notion that Europeans haven’t been able to create globally significant internet firms in the same way the Americans and the Chinese have. “It’s not true. If you take fashion and luxury, the internet companies associated with those industries are mostly European,” he says, rattling off a long list of names. Marchetti admits that he has an almost American drive to be an entrepreneur, something far removed from the small town of Ravenna in the north of Italy where he comes from and in stark contrast to both his parents, who were white-collar workers.
He says he’s always brimmed with ideas, including an early notion to combine mobile telephones and cameras, but lacked the technical know-how and capital at the time to see the ideas to fruition.
Today, Marchetti feels that targeting high-net-worth individuals to sell jewellery and watches is becoming easier as people feel more comfortable paying for higher-priced items online, and more so when Yoox Net-a-Porter is the market leader.
“We [represent] 10 per cent or 11 per cent of the total online luxury fashion market. So when the market is growing, we are going to grow,” he says.