Our thinking

Fashion and Luxury

Overall, the luxury goods market is expected to grow by 4 percent in 2016.

In 2015, the global fashion market exceeded €1 trillion, an annual growth of 5 percent, while the personal fashion goods subsector ballooned to more than €250 billion (13 percent growth over previous year), aided by global currency fluctuations and purchases by “borderless consumers.”


The Americas has emerged as the biggest global region for personal fashion purchases, while Europe shows sound growth primarily by Chinese and US tourism.

The main challenge facing most fashion and luxury goods brands today is establishing the right pricing model, as e-commerce and global tourism create greater transparency of international price differentials. In the next 10 years, the sector’s success will be defined by a focus on a superior customer experience, flawless retail management and product excellence.

Distribution increasingly has become the key factor for growth, with the so-called “Omni Channel” distribution strategy serving as the main driver in the industry. In past years, partners from the GCC region have represented up to 30 percent of turnover generation for most fashion houses, and contribute both tangibly and intangibly to fashion brand building. Despite this fact, they are excluded from the mid-term strategy control of these brands.

Among European fashion houses, there is a lack of understanding of industrial aspects, difficulties to fill product gaps in large integrated groups on a stand-alone basis, and a difficulty in developing a serious international presence. This presents a clear window of opportunity to short-list potential targets.

Acquiring control of fashion house distribution allows for upward integration in the value chain by Middle Eastern distributors, and guarantees stability in strategy, mid-term development and capital appreciation. It also secures commercial margins of local distribution subsidiaries. Achieving these goals via a common vehicle would maximize the potential capacity in all luxury segments and provide a complementary presence in different sectors and regions.

In recent years, private equity investments have focused increasingly on the fashion and luxury goods industry. Since 2000, there have been over 600 mergers and acquisitions globally in this domain, resulting in increased liquidity. Tell is developing strategies to capitalize on potential investments in targeted fashion houses.