The luxury industry in Italy has been greatly impacted by the Covid-19 pandemic, resulting in significant changes and transformations. With store closures and production stoppages, luxury brands have had to adapt their retail strategies and accelerate their digital transformation. In addition, there has been a focus on sustainability, which requires substantial investments.

To navigate through these challenges, many Italian luxury brands have sought new investors and partners, leading to a wave of acquisition deals in recent months. The country’s manufacturing sector, known for its hidden gems and medium-sized companies still owned by their founding families, has been a driving force behind these acquisitions. The appeal of Made-in-Italy products in the luxury market has made established brands highly sought after, while struggling labels have had to rely on state aid or be acquired by larger groups or Italian investment funds.

The Covid crisis has further accelerated the need for mergers and acquisitions in the luxury industry. With increased competition and growing investments in various aspects such as distribution, product development, advertising, digitalization, supply chain sustainability, and overseas expansion, luxury companies have had to streamline operations and cut costs to overcome the pandemic. As a result, 2021 is expected to be a year of consolidation for stronger groups with low debt.

Among the key players in the Italian luxury market looking for acquisition opportunities are private equity firms, large luxury groups, and financial holding companies. Small-sized companies cannot survive on their own and need financing or partnerships to remain competitive. Italian third-party suppliers and manufacturers will also need to expand their range of services to withstand the additional costs generated by the pandemic. Consequently, labels that require capital for recovery are likely to be acquired.

The impact of Italian investment funds has extended beyond national borders. Exor, the Agnelli family’s holding company, has acquired several luxury brands and is seen as a potential luxury label aggregator. Renzo Rosso’s OTB group, already a powerful fashion player, is also involved in discussions regarding a united front of Italian luxury labels.

Rumors have circulated about potential acquisitions of renowned brands such as Giorgio Armani, Dolce & Gabbana, Salvatore Ferragamo, and Brunello Cucinelli. With the Italian luxury market undergoing significant transformation, more deals are expected to be announced in the coming weeks.

Not only are acquisitions taking place in the Italian luxury market, but the production sector is also evolving. Investment funds have formed the Florence Group, which has acquired four established Italian producers to become the leading manufacturing hub for luxury apparel in Italy. Onward Luxury Group’s assets were acquired by a new entity called High Italian Manufacturing Co., which includes specialized producers and small fashion labels. Furthermore, Prada and Ermenegildo Zegna collaborated to acquire a stake in an Italian cashmere producer.

Expectations are high for further deals in the Italian market, with rumors suggesting that two or three acquisitions may be announced before the summer break. The Italian luxury market is currently undergoing a period of upheaval as it responds to the challenges posed by the pandemic and changing consumer preferences. Partnerships, investments, and consolidation are key factors in navigating through these challenges and ensuring long-term success in the luxury industry.

Useful links:
Leveraging Partnerships in the Luxury Industry During Covid-19
How the Pandemic is Driving Consolidation in Luxury