Luxury fashion outlet Farfetch is taking its business to the Middle East via a deal it signed with the Chalhoub Group, one of the largest distributors of fashion and luxury goods in the region.
As a result of the deal, the “unicorn” company will now be present all the world’s most important luxury markets and brings reality to the company’s global ambitions. Farfetch has already raised $700 million in funding and is readying itself for the next step with its planned initial public offering scheduled for September 2018 in New York.
José Neves, founder and CEO says the IPO is the “next financial milestone” for the company which will be valuated at $5 billion.
“As one of the largest luxury markets in the world, the Middle East is of great strategic importance to Farfetch,” said Neves on the deal with Chalhoub. “We have a presence in China and Hong Kong, Japan, Russia, Latin America, Korea and the US — the Middle East was a big gap in our strategy. The plan is to grow the Middle East very, very fast.”
According to a report by McKinsey & Company published in 2016, the Middle East is currently experiencing a “massive digital disruption” which has important untapped e-commerce potential.
“You’re talking about a population that is growing and very digitally savvy. They’re very big shoppers of fashion and luxury in general, very well-travelled, very well-educated and connected — their usage of social media is incredible. And yet the penetration of luxury e-commerce is tiny compared to the West,” explained Neves. “The market is underserved by the major players in online luxury and customers are hungry for it.”