After months of industry chatter, a pair of mergers may soon reshape the luxury retail landscape, both online and off.

Richemont is reportedly making progress in finding a buyer for its loss-making Yoox Net-a-Porter unit, with e-tailer Mytheresa, a rare success story in a troubled luxury e-commerce market, the most frequently cited suitor. Both Richemont and Mytheresa report quarterly results this week, though neither has spoken much about M&A in past earnings calls.

Then there’s the on-again, off-again merger between Saks and Neiman Marcus, which is thought to be on a fast track after Saks owner Hudson’s Bay Co. put together a $3 billion bid for its rival. We’ve heard this story before, of course, but recent reports in WWD and Axios indicate HBC has significantly sweetened its offer from a $2.1 billion bid in December. Also in the mix lately is Nordstrom, with the upscale department store’s founding family lining up financial partners for a buyout.

Any of these deals could be announced this week, or this month, or later this year, or never. For now, it’s worth stepping back and thinking about why all this is happening. I’ll be speaking with BoF’s founder and editor in chief Imran Amed on May 15 about the many challenges facing luxury e-commerce, in the first of our monthly live video calls for Executive Members. You can find details about how to sign up below. For now though, here’s a quick rundown of the state of play:

Multi-brand luxury retail is broken. For the last decade, too many players have fought over the same customers with product offerings and experiences that were insufficiently differentiated. To make matters worse, they were increasingly forced to compete not just with each other but with their own vendors, as brands opened more of their own stores in a bid to improve profit margins and better control the customer experience, often in second-tier markets where department stores were once the only luxury game in town.

For a time, low borrowing costs and booming luxury sales papered over the issues in the market. But the days of zero interest rates are long gone, and consumers aren’t spending like they used to. After a series of missteps, Matches ultimately succumbed to this tougher environment. Ditto Farfetch, which was acquired in a fire sale by Coupang late last year.

The thinking now is that fewer, stronger retailers have a better chance of success. That’s almost certainly true for department stores, which need to strengthen their balance sheets so they can compete with online rivals and brands’ own retail operations. As for luxury e-commerce, it remains to be seen if there is a model that works at scale; there are no large, unambiguously successful e-tailers in the space, though Mytheresa, with its tightly curated assortment and sharp focus on wealthy customers, comes closest.

For brands, luxury retail’s merger mania would be a good news/bad news situation. Consolidation would reduce the likelihood of a repeat of the Matches fiasco, where the company’s sudden downfall has left labels big and small out of pocket. But consolidation also gives retailers more power to set the terms of their arrangements with brands (something US antitrust regulators, who have already sued to block Tapestry’s acquisition of Capri, will surely consider if the Saks/Neiman Marcus deal happens).

Luxury retail’s upcoming M&A wave isn’t just about survival. It’s also about securing the best position for when the luxury market recovers from its recent slump. Tomorrow’s winners may be determined by decisions made in boardrooms this week.

Upgrade your BoF Professional membership now to become an Executive Member and join our first live video call discussing The Future of Luxury E-Commerce, on Wednesday, May 15 at 5pm London time, 12pm in New York.

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.

Fast-fashion giant Shein is stepping up preparations for a London listing after its attempt to float itself in New York faced regulatory hurdles and pushback from US lawmakers, two people with knowledge of the matter said.

The online fashion retailer plans to update China’s securities regulator on the change of the initial public offering venue and file with the London Stock Exchange as soon as this month, said one of them.

Shein, which according to one of the sources was valued at $66 billion in a fundraising last year, started engaging with the London-based teams of its financial and legal advisors to explore a listing on the LSE early this year, said the source and a separate person familiar with the matter.

The China-founded fashion company has also approached London-based fund managers for introductory meetings ahead of the planned float, said another source with direct knowledge of the matter.

Shein and the LSE declined to comment. The China Securities Regulatory Commission did not respond to a request for comment.

Shein confidentially filed for an IPO with the US Securities and Exchange Commission in November, and approached the CSRC to seek Beijing’s nod in the same month, sources have said.

The plan for a US IPO is still officially on the table, but the Singapore-based company has been struggling to clear regulatory hurdles both in the US and China, amid lambasts from US lawmakers on alleged labour malpractices and lawsuits from competitors.

The CSRC earlier this year informed Shein that the regulator would not recommend a US IPO due to the company’s supply chain issues, said a separate source.

While Shein is now gearing up for a London IPO, it still prefers New York as its listing venue and plans to keep its SEC application alive in case there is a change in the stance of US regulators, said the second source.

It may also pursue a secondary US listing in New York following its London IPO when it deems the US political climate to be more favourable, the second source added.

The company has faced tougher-than-expected scrutiny from US regulators in an election year. In a sign of the fraught nature of the application process, the SEC has yet to advance Shein’s IPO filing, said the two sources.

The SEC did not respond to a request for comment.

Shein’s plan to update the Chinese regulator on the London IPO would make it subject to Beijing’s approval under the new listing rules for Chinese firms going public offshore, said the first source and a separate source.

The IPO, if it materialises, could be one of the largest globally this year, sources have said.

China Regulatory Nod

For London, it could mark a turnaround after companies such as UK chip designer Arm chose to list in New York to chase deeper pools of liquidity. So far this year, there have been just four UK IPOs out of more than 30 in Europe.

Sky News reported in December, citing sources, that Shein’s chairman Donald Tang had met executives from the bourse and other stakeholders in the UK economy during a visit to London that month.

Shein, known for its $10 tops and $5 biker shorts, has filed with the CSRC which subjects it to Beijing’s permission for an offshore listing despite having moved its headquarters from China’s Nanjing to Singapore in 2022, highlighting the limits of its efforts to present itself as a global rather than Chinese company.

The group, which sells cheap fashion in more than 150 countries, does not own or operate any manufacturing facilities, relying instead on about 5,400 third-party contract manufacturers, mainly in China. That makes it subject to the CSRC listing rules, Reuters has reported.

The rules are applied on “a substance over form” basis, giving the CSRC discretion on when and how to implement them, sources have said.

Under the new rules, a host of other authorities such as the National Development and Reform Commission, which supervises foreign holdings in local firms, the cybersecurity regulator and others may get involved in approving offshore IPO applications.

The Cyberspace Administration of China has also been conducting a procedural cybersecurity review of the company’s data handling and sharing practices, mainly about information on its suppliers in China, as part of the IPO clearance process, said a separate source with knowledge of the matter.

The CAC did not respond to a Reuters request for comment.

By Julie Zhu, Kane Wu, and Greg Roumeliotis; Additional reporting by Helen Reid; Editing by Sumeet Chatterjee and Jan Harvey

LONDON — It’s already Friday, and my Instagram feed is still flooded with content from the Met Gala. Not just photos from this year’s garden-themed green carpet, but also Vanity Fair-style photo shoots featuring the groups of stars dressed by the same brands, behind the scenes videos, sketches and voice notes on the making of the biggest Met Gala moments, as well as an avalanche of photos from the afterparties that took place around New York City later that night.

Participating in the Met Gala comes with a significant investment for the brands that choose to join the festivities. A single ticket to attend this year’s event cost $75,000, though some brands like Balenciaga and Tommy Hilfiger bought entire tables for $350,000 or more, according to the New York Times.

But that’s just the beginning. There are other costs to take into account too. Each bold-faced name who attends needs to be dressed in a custom look, flown to New York, housed in a five-star hotel (usually the Mark Hotel or the Carlyle Hotel which are near the museum) and then offered hair, makeup, styling and other beauty treatments to look their absolute best on the day.

Some brands even go to the extra effort of creating custom looks for the afterparties. In addition to red carpet looks encrusted with hundreds of thousands of Swarovski crystals for Karlie Kloss, Anok Yai, Irina Shayk and Imaan Hammam, global creative director of Swarovski Giovanna Battaglia Engelbert also created custom looks so she and her crew could hit the town afterwards in outfits that were colour-coordinated with the looks they wore earlier in the evening.

Loewe, which was a sponsor of this year’s exhibition, dressed a total of 12 guests including new fashion it-girls Greta Lee, Taylor Russell and Ayo Edebiri, pop superstar Ariana Grande, actresses Ambika Mod and Alison Oliver, and an all-star cast of stylish men including singer-songwriter Omar Apollo, “Challengers” stars Mike Faist and Josh O’Connor (who is also a Loewe global brand ambassador) and director Luca Guadagnino, as well as frequent Loewe fashion plate Dan Levy.

And of course there was Anna Wintour who wore a satin Loewe column dress with a stunning long black tuxedo coat embroidered with hand-dyed feathers in the shape of tulips, requiring hours of meticulous hand-work by the specialist feather work company Maison Février, founded in 1929, which according to its website is one of the last plumassiers in the world.

But brands are understandably tight-lipped about how much they spend. Loewe likely got a big table as part of its estimated $2 million sponsorship deal. Adding in all the other expenses of bringing these people to the Gala would take the total cost well beyond that, resulting in a back-of-the envelope estimate of about $250,000 per attendee.

So is the Met Gala worth the investment?

An entire industry has developed around trying to put a dollar value on the conversations and content generated by big events like these, from fashion shows to the Superbowl. And every year just after the gala has finished, the BoF team receives press releases from a growing number of companies who claim to have cracked the code on who won the Met Gala.

But comparing the findings from these companies, each of which has their own methodology to measure the volume of the online conversation and the engagement it generates, surfaces some pretty significant inconsistencies.

Take for instance the difference in findings on the most talked about and visible brands at this year’s Met Gala. According to Lefty, the most visible brand was Thom Browne (who dressed Gigi Hadid and Cynthia Erivo, among others) based on 34 posts generating $2 million in earned media value or EMV, which the company defines as “the equivalent ad spend of the impressions gained, calculated by estimating the number of impressions of each publication and associating a CPM of $100, equivalent to $1 per engagement.” This sounds like $1 per like, comment and share.

Over at CreatorIQ, which has its own measure of EMV analysing co-mentions of a brand with the hashtag #metgala based on three factors: platforms, audience engagement and creators. So for example, a YouTube video is accorded more EMV than a tweet; an Instagram post that gains lots of likes and comments has more value than those where a user just scrolls by, and brands are not rewarded for engagement on their own posts, just on the posts created by third parties, which in this case would include posts created by celebrities, who often have terms in their contracts about how much they have to post and where.

According to CreatorIQ, the most talked about brand was Tommy Hilfiger, with more than $5 million in earned media value based on 212 posts by 114 creators. Tommy dressed Madelyn Cline as well as eight members of the K-pop supergroup Stray Kids, which generated much of this conversation.

There are other companies that are in the metrics game too. Dash Hudson, which did its own ranking of most talked-about fashion brands using its “proprietary, AI-powered social listening tool” based on engagement rates and Brandatch also issued rankings crowning Tommy Hilfiger on top, but the rest of their top 5 looks different. In total, Burberry, Maison Margiela and Loewe each get 2 mentions in the top five across these data providers. Eleven other brands get one mention each.

The same phenomenon plays out when looking at how these data providers ranked the most talked about celebrities. According to Lefty, the most talked about celebrities based on EMV generated were Ariana Grande, Kendall Jenner, Felix from Stray Kids, Bollywood film star Alia Bhatt and Kim Kardashian.

But Dash Hudson says the stars generating most engagements were Stray Kids (as a group), followed by Zendaya, Gigi Hadid, Sarah Jessica Parker and the couple Dove Cameron and Damiano David.

Undoubtedly, participating in the gala brings global media interest and generates a huge online conversation for the brands that get it right. But exactly how you measure the return on investment is a lot more murky. As these are generally volume-based metrics, we know which brands are being talked about, but there is little insight into what people were actually saying.

It’s quite a feat that Tommy Hilfiger secured the entire Stray Kids crew, but much of the reaction I saw on Instagram and the Vogue livestream was a flurry of emojis from their fandom. I think their red carpet moment probably created more value for Stray Kids, introducing the band to people who don’t follow K-pop.

In the end, measuring a Met Gala investment should not just be about the total conversation generated, but about the fit with a brand’s strategy and how it resonates with the brand’s customers.

In that respect, the big winners of the night were Maison Margiela designed by John Galliano — leveraging looks from the viral Artisanale fashion show it staged in Paris in January to dress some of the biggest names of the night including Kim Kardashian, Zendaya, Gwendoline Christie, Ariana Grande and Bad Bunny — and Loewe, who put together a constellation of talents that reflected the brand’s influence and presence across contemporary culture.

Stay tuned for the second edition of BoF’s Brand Magic Index, powered by Quilt.ai, out on May 20 which takes a crack at providing a more nuanced view of brand conversation and customer alignment between October 2023 and March 2024,

This Weekend on The BoF Podcast

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In case you want to hear more about the Met Gala, this week on The BoF Podcast, I’m joined by New York Times chief fashion critic Vanessa Friedman who shares her journey into fashion journalism, reflects on what this year’s Met Gala says about the state of fashion and culture and of course, dissects the standout looks, of the night.

“Anna Wintour has raised the ante every year to the extent that this Met Gala made $26 million in one night,” she says. “The amount of social media impressions it generates is beyond compare. The guest list that she curates, because it is an entirely curated guest list, is like nothing else.”

Wishing you all a great weekend!

Imran Amed, Founder, CEO and Editor-in-Chief, The Business of Fashion

P.S. Over the last six months, Farfetch and Matches, two of the biggest names in luxury e-commerce have imploded and subsequently sold at a fraction of their one-time sky high valuations. Join me for a special private conversation on Wednesday, May 15 at 17:00 BST / 12:00 EDT examining what these seismic changes mean for the industry, what the next phase of luxury e-commerce might look like and how you can prepare your business for an uncertain future. Become an Executive Member to join the call.

Plus, here are my other top picks from our analysis on fashion, luxury and beauty:

1. Fashion’s Supply Chain Is Still Full of Banned Chinese Cotton. A study published this week found traces of cotton from Xinjiang in nearly a fifth of the products it examined, highlighting the challenges brands face in policing their supply chains even as requirements to do so spread to raw materials from diamonds to leather and palm oil.

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2. At the Met Gala, the Fantasy Was Intact. Despite threats of disruption from protests, the Condé Nast union and TikTok’s legal woes, the event continued as planned with attendees dazzling in bespoke and archival ensembles.

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3. Is Generative AI the New Fashion-Tech Bubble? The extraordinary expectations placed on the technology have set it up for the inevitable comedown. But that’s when the real work of seeing whether it can be truly transformative begins.

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4. Fixing Retail’s Sales Floor to C-Suite Pipeline. Fashion retailers are promoting fewer store employees into corporate roles, missing out on key expertise and diversity as a result.

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5. When Will India’s Streetwear Scene Become Big Business? Local streetwear brands, festivals and stores selling major global labels remain relatively small but the country’s community of hypebeasts and sneakerheads is growing fast.

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