Yoox Net-A-Porter Group (YNAP), a leading global online luxury fashion retailer, has announced a joint venture with Symphony Investments, an entity controlled by Mohamed Alabbar, to create a new online luxury retail business in the Middle East.
The partnership will see Mohamed Alabbar focus his entire online luxury retail activity in the region exclusively through the new joint venture. The partnership will draw on the region’s enormous growth potential and will be a major force in the luxury retail business,a statement said.
YNAP will hold a 60 per cent stake in the joint venture, which will be fully consolidated in YNAP’s accounts, while Symphony Investments will own the remaining 40 per cent.
The JV will manage all of the group’s existing multi-brand online stores in the region – 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, the statement said.
The new company will operate in the Gulf Cooperation Council countries. The JV may expand to other countries in the Middle East and North Africa in the future, it said.
To provide Middle Eastern luxury customers with a fully localised offer, the JV 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 Dubai-based entity to bring the company closer to its customers: a local office with dedicated sales and marketing, customer care and PR teams will provide Middle Eastern customers with a highly tailored offering that will set a new standard of customer service in the region and further drive brand awareness;
• The opening of a new distribution centre in Dubai powered by YNAP’s omni-stock techno-logistics platform to guarantee the highest level of service, including premier same-day delivery;
• The development of a localised offering ranging from Arabic-language customer care and content, as well as local currency and payment methods.
The JV will open the local office and distribution centre in Dubai by end of 2017. Yoox and The Outnet will debut in 2018, while Net-A-Porter and Mr Porter will launch in 2019, followed by select Online Flagship Stores, it said.
“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, a global business and leisure hub, 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. A ground-breaking initiative, the JV will serve as go-to online destination for luxury retail and set new industry benchmarks in customer service, speed of delivery and diversity of choice,” said Mohamed Alabbar, chairman of Symphony Investments.
“We are thrilled by the potential of the Middle East market: combining YNAP and Mohamed Alabbar’s strengths, we look forward to giving shoppers in the region access to a fantastic luxury assortment with our unparalleled service and content. We were delighted to welcome Mohamed Alabbar as a strategic investor earlier this year and together we are now embarking on a major expansion in the region,” said Federico Marchetti, chief executive officer of YNAP.
This partnership will combine the unique experience and expertise of both parties. YNAP will contribute its burgeoning business in the region, as well as its strong existing brand recognition and a high-value customer base. It will also provide long-standing expertise as the world’s leading online luxury retailer, plus a world-class techno-logistics platform that is tailored to luxury fashion, the statement said.
Symphony Investments will bring its unique experience of luxury retail in the Middle East along with its unmatched knowledge of luxury consumer trends and its extensive network in the region, it added.
Alabbar is also the chairman of Emaar Properties and Emaar Malls, and is world renowned for successfully developing and managing The Dubai Mall, the world’s largest retail destination.
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 JV further strengthens an existing relationship that was forged when Alabbar invested in YNAP through subscription for a €100 million capital increase in April 2016, it said.
Symphony Investments, along with its affiliates, operates and invests in businesses in the Middle East, Southeast Asia and Africa across a variety of sectors including luxury fashion, retail, e-commerce, mining, and real estate, among others.
Mohamed Alabbar is now leading the digital transformation in the Middle East with the launch of Noon.com which aims to be a generalist ecommerce platform that will include payments and logistics enablers.
He also led two investor groups in buying a combined 16.45 per cent stake in Dubai-based global logistics provider Aramex.
The Middle East region accounted for 3 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 (HNWIs) 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.
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.
YNAP will appoint the majority of the JV’s board of directors and will nominate the chief executive officer and the finance manager. The chairman of the board will be appointed by Symphony Investments, the statement added.
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