Here’s what industry experts say about Michael Kors’ takeover of Versace
The moment the news broke that American fashion house Michael Kors will acquire Italian luxury brand Versace for $2.1 billion, Donatella Versace fans were left wondering how it would impact the luxury brand. Michael Kors’ brand image is entirely different from that of Versace. The former has always appealed to the masses, with its relaxed, easy-going style, while Versace is a complete contrast, with its avant-garde, experimental design aesthetic that has been favoured by the elite class. How the Italian fashion house will shape up and what strategy Donatella was going to follow after the acquisition was the question that made everyone curious.
Michael Kors has released a statement that after the acquisition, the company will change its name from Michael Kors Holding Limited to Capri Holding Limited. Donatella has also given a statement reiterating the fact that her brand is always going to remain high-end luxury. Sharing her statement on Instagram, she wrote, “I also wanted to reassure you that Versace will remain ITALIAN, Made in Italy and that it will keep its GLAMOUR, DARING and INCLUSIVE attitude that have made you all love it. This is just the beginning of an exciting, new adventure that I hope you will live together with me!.”
This is not the first time such a huge merger has taken. Michael Kors had earlier acquired Jimmy Choo. When Louis Vuitton was merged with the champagne and cognac producer Moët Hennessy in 1987, it became LVMH, owned by the Arnault family. Under the umbrella they have brands like Fendi, Givenchy, Kenzo, Dior, among others. Now we see a trend where an increasing number of designer brands are turning into conglomerates. Industry insiders opine that such mergers are always beneficial for the brand’s future growth.
“Everybody needs a certain amount of investment to scale up. For the longevity of the brand, it is important to make some changes from time to time. It’s all business; it hardly affects the brand’s design aesthetics. For example, when DKNY was sold to G-III in a $650 million deal in 2016, it only benefitted the brand,” says Kalyani Saha, former VP marketing, Dior India.
FDCI president Sunil Sethi, too, says that such mergers boost the brand. “In today’s competitive market, every luxury brand is looking for funding for its sustainability. As long as the creative freedom remains with the designer, it’s good for the brand, because the logistics and management is handled by the brand taking it over. The customers will continue to remain loyal, as for them, it’s the brand that matters and not the people who own it,” says Sethi.