On April 4, Kering announced that it would be making Europe’s largest property investment in over two years by buying Via Monte Napoleone 8 in Milan from Blackstone for €1.3 billion. Despite issuing a rare warning in mid-March that Q1 revenues would be down 10 percent year-over-year after a couple of years of underperformance in a hot luxury market, Kering has moved to take control of the flagship property that currently houses a Saint Laurent store as well as Prada Group and Café Cova, owned by LVMH.
This announcement is the latest in the number of large real estate acquisitions by luxury giants. In January, Kering announced its purchase of the $963 million building at the corner of Fifth Avenue and 56th street in New York while in December of last year LVMH invested €1 billion for 150 Champs-Élysées in Paris and Prada purchased the 724 Fifth Avenue location in New York that it had been leasing for $424 million.
It is notable that these massive real estate investments come at a time when the future trajectory of digital luxury commerce has become less certain with the closure of MATCHESFASHION LIMITED and instability at FARFETCH, two of the cornerstones that platformed the industry’s head long rush into online sales during the pandemic, and which resulted in years of exceptional revenue growth for most companies.
The prospect that large luxury organizations will be putting together new and likely “immersive” customer experiences in grand locations will offer opportunities as well as new challenges. Luxury brands are struggling to set in place consistent brand stories across their growing list of customer touchpoint channels. As Fashion Strategy Weekly, omnichannel content strategies will help turn touchpoint by touchpoint strategies (e.g. digital, retail stories, printed materials, product packaging) into more effective and scalable engagements with customers. Without such a strategy, these new real estate acquisitions may result in separate brand content generation that is less than the sum of its parts.
Kering shares were up around 90 basis in intraday Paris trading today at the time of publication.