Hip Hop Helps Versace Expand With 300 New Stores
By CultureBanx Team
Versace to open 300 new stores by 2022
Generations Y & Z are expected to account for 45% of the global luxury spend
Capri Holdings (CPRI +0.77%), Versace’s new owner due to its $2.1 billion acquisition of the iconic Italian brand is vying for a bigger stake with urban consumers by opening 300 new stores by 2022. Could their expansion plans tap into the mutual admiration that lingers to this day between Versace and the hip hop community, in an effort to control debt and increase sales?
Why This Matters: The Medusa and gold barocco prints that Versace is well-known for, has draped the silhouette of many hip hop artists for decades and these new store openings may make the brand more accessible. Versace currently has 188 stores globally, 28 of them are in the U.S. They plan to renovate these locations to reach its goal of doubling annual sales along with their $2 billion revenue target.
Versace boasts more than 14 million Instagram followers, making it perhaps the most influential social media platform for luxury brands. This directly impacts black consumers since they are the biggest user group on Instagram at 43%, according to Pew Research.
Getting in front of the Generations Y and Z is important for Versace, who are expected to account for 45% of the global luxury spend by 2025, according to Bain & Co. They also point out the landscape is shifting, driven by a younger more digitally focused audience and represents challenges for companies like Versace to expand.
The fashion labels upcoming campaigns will be more focused on products and marketed across social media. More money will be spent on marketing in general for Versace as part of its restructuring strategy, from campaigns to how the brand can drive consumers to its site.
Situational Awareness: Capri also wants Versace to ramp up its luxury handbag offerings to 60% of sales, since they have a lot of experience is this category with Michael Kors. However, in 2016 a Wedbush Securities report found that many Nordstrom (JWN +2.00%) stores were no longer going to carry Kors handbags because their sources said “Michael Kors was the number one returned handbag brand because of poor craftsmanship.” Hopefully they’ve worked out the kinks so that Versace won’t have similar problems.
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