The industry was awash with fashion mergers and acquisitions last week. Credit: Shutterstock.

As the global economy grapples with the impacts of rising costs and shifting consumer behaviours, brands are seeking innovative strategies such as fashion mergers to navigate the challenges posed by rising inflation and consumers’ reined in spending.

UK-based fashion company, Frasers Group upped its share in online pureplay, Asos on 7 August, only a couple of days after the company increased its takes in Boohoo on 1 August from 6.8% to 7.8%.

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Fashion mergers signal companies are thinking about long-term success

GlobalData associate apparel analyst Alice Price linked the mergers to Fraser’s confidence in the resurgence of online fast fashion which has struggled to remain consistent since its “glory days” during the pandemic.

She further explains that in the long-term GlobalData expects online channels to gain further share within the total apparel market with it remaining popular among young shoppers.

Against this backdrop, the industry’s landscape is rapidly evolving as established labels join forces, forging mergers and acquisitions to reshape the competitive dynamics.  

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Whilst Frasers Group’s deals were intended to laser its focus on Gen Z and young female consumers, British retailer, JD Sports, acquired the remaining 40% stake in Marketing Investing Group S.A (MIG), to boost its expansion across Central and Eastern Europe.

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Making it the sole owner of the Poland-based retailer following the initial 60% stake it made in the business in March 2021.

Yours clothing owner, AK Retail Holdings also acquired plus-size retailer, Evans Clothing for £8m ($10m) from City Chic.

City Chic CEO and managing director Phil Ryan said he’s witnessed a deterioration in the EMEA market over the past two years and this was compounded by supply chain constraints which he believes stalled the ability for the company to sell its expanded product range.

Biggest fashion merger deal was worth $8.5bn

The biggest deal of all however was in the US with the parent company of luxury brands Coach and Kate Spade, Tapestry, Inc., acquiring rival fashion luxury group Capri Holdings Limited in a deal valued at $8.5bn.

The luxury fashion company said the acquisition builds on its core tenets as consumer-centric brand builders and disciplined operators, accelerating its strategic and financial growth agenda.

The traditional playbook of relying solely on individual brand strength and design prowess is being reshaped by the urgency to mitigate the impact of rising production costs and dwindling consumer purchasing power.

The relentless upward trajectory of inflation has compelled fashion brands to revaluate their supply chain strategies, sourcing methods, and pricing models. Escalating costs of raw materials, transportation, and labour have squeezed profit margins, meaning creative solutions are required to maintain affordability while preserving quality.

Mergers and acquisitions provide an avenue for brands to streamline operations, share best practices, and optimise procurement, resulting in potential cost synergies that could counterbalance the inflationary pressures.

Beyond financial considerations, changing consumer preferences also plays a huge role in shaping the industry. In fact global ecommerce retailer Amazon announced last week it was streamlining its private label clothing brands, following reports it had scrapped 27 of its 30 own-label clothing brands.

Amazon claimed to be placing a thorough and close eye on what does and doesn’t resonate with customers. However, the announcement raised critical questions about Amazon’s ability to navigate the intricacies of the fashion world as both inspiration and brand identity hold as much weight as convenience and choice.

GlobalData analysts suggested Amazon has not been able to use its power or knowledge to outcompete other fashion brands as it does not cater to fashion shoppers noting Amazon’s website lacked inspiration and holds so many brands that its in-house ranges can get lost and lack a strong identity.

This move appears to be an attempt to fine-tune its fashion offerings based on consumer feedback and preferences. Yet, beneath this strategy lies a glaring truth – the fashion world thrives on more than just catering to a customer’s needs.

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