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How Yoox Net-a-Porter Group Plans to Outpace the Online Luxury Market Through 2020

Plus, how it thinks "Brexit" will impact its business.
Photo: Stefanie Keenan/WireImage

Photo: Stefanie Keenan/WireImage

The luxury market is in a tough spot right now. Thanks to decreased tourism, a downturn in China, declines in department store traffic and shifting consumer behavior, the market is expected to grow only 2 percent this year, and to continue to grow at a 2-3 percent clip through 2020, according to a recent report from Bain & Company.

That slowdown isn't getting Yoox Net-a-Porter Group down, though: On Wednesday morning, the London-based luxury e-commerce player announced its five-year plan to transcend this trend and deliver sales growth of 17 percent to 20 percent every year for the next five, while boosting its operating profit margin by 11 percent to 13 percent in 2020, compared with an 8 percent lift in 2015.

Of course, YNAP has the advantage of being an online retailer, and according to Bain, online luxury sales are expected to grow at a much healthier rate of 15 percent through 2020. Still, YNAP is set on outpacing that — a reasonable expectation since it's outpaced the market since 2009 — and gave its investors a full breakdown on how it plans to do it. Here's the abridged version.

Mobile: "We have ambitious plans to grow faster than the online luxury market by leading through mobile," commented YNAP CEO Federico Marchetti. The company plans to accelerate its focus on mobile to drive "enhanced conversion, customer engagement and retention." Sales on smartphones have outpaced those on all other devices over the past five years.

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Personalized customer service: YNAP will ramp up personalized marketing using customer data, as well as create localized content and, of course, deliver "impeccable service" for an improved experience overall. For Net-a-Porter and Mr Porter customers, for instance, that means personal shoppers for the "most valuable customers" and style advice delivered through native apps.

New product: The introduction of fine jewelry and watches to its in-season business (Net-a-Porter and Mr Porter), a new in-house Mr Porter label and a bolstering of The Outnet's in-house label Iris & Ink are all expected to boost revenue significantly.

International expansion: After selling a four percent stake to Middle Eastern retail giant Alabbar Enterprises earlier this year, YNAP plans to make a big push into the region, in addition to expanding further into China and the rest of the Asia Pacific region.

A new omnichannel platform: YNAP also has some plans to streamline things organizationally by launching a new "global tech and operations platform" that sounds like it will connect all of the company's hubs and distribution centers for all of its brands so that all stock is visible from anywhere, among other things.

Brexit: The company also addressed how it anticipates "Brexit" could affect its business, claiming that the impact of the depreciation of the Pound against the Euro is expected to be "neutral," and that it will outperform the market regardless, thanks to a "highly diversified geographical spread." 

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