What Happens When Big Companies Buy Cool Ones

This week, Zalando, one of Europe’s leading fashion e-commerce players, acquired a majority stake in Highsnobiety, the streetwear blog that has established itself as a cool agency through content, commerce and consulting. in brand. Financial terms of the deal were not disclosed, although it is possible that Highsnobiety was valued between $180 million and $250 million.

The reason why Highsnobiety wanted to sell is obvious: Zalando offered an exit after more than 15 years, as well as an opportunity to further develop its fast-growing retail business.

The real question is why Zalando wanted to buy Highsnobiety. It’s clearly not about the money, at least not directly: Zalando generated more than $12 billion in sales in 2021, and neither Highsnobiety’s revenue nor the cost of running it will have much impact. on the retailer’s balance sheet. But the value that Highsnobiety could generate is significant. Zalando, a mainstream apparel player, has been striving to gain a foothold in haute couture. Highsnobiety will essentially serve as an internal consultancy that can help introduce the retailer to the young luxury customers it wants to reach. (Over the past few years, Highsnobiety’s creative agency, which advises brands and retailers on content, has become a bigger part of the overall business and is growing, according to Highsnobiety’s co-founder and chief executive. , David Fischer.)

Another bonus is that Zalando and Highsnobiety are both Berlin-based and run with German sensibility.

The deal also reflects a prevailing M&A trend in the fashion industry, with a wave of established companies taking over businesses that cater to younger and/or more discerning consumers. Just a few weeks ago, Spanish beauty conglomerate Puig bought Byredo in a bid to meet the growing demand for niche fragrances from designers. Management company Marquee Brands, which owns names like Martha Stewart and Ben Sherman, recently acquired polarizing streetwear label Anti-Social Social Club in a bid to better understand the Gen-Z shopper. And a few months ago, Farfetch snapped up LA-based high-end beauty supplier Violet Grey, aiming to establish its authority as it makes a major breakthrough in the category.

The reality, however, is that 70-90% of mergers and acquisitions fail to add value, according to harvard business reviewbecause of the way the two companies are integrated after the merger. HBR did not single out deals like Zalando’s, where cultural cachet rather than pure revenue and profit was the primary rationale, but the failure rate of such deals may be even higher.

Often the culture of the most innovative company is lost and the cool factor dissolves. A classic case is Banana Republic. When acquired by Gap in 1983, it was a chic outfitter of safari clothing, later transformed into a ready-to-wear brand intended to compete with Ann Taylor. But despite some successes in the 1990s and more recently, its identity remains unclear and its performance inconsistent. The American beauty group Estée Lauder, which had great success with its takeover of MAC, has experienced acquisition difficulties more frequently in recent years. For example, five years after buying Becca Cosmetics in 2016, he decided not to resell it, but simply shut it down, citing poor performance.

It’s entirely possible for a brand to lose its magic once it’s taken over by a bigger entity, and Highsnobiety fans have taken to social media to voice their concerns. “What a disappointment,” said @marcjanssenberlin, a personal shopper. “Uh, I don’t know if this is a good deal for @highsnobiety!?! When they can/will do their [independent] business in the future, so okay. Otherwise I’d say it’s a fail…” @sven_moye added.

On the other hand, strong brand management can lead to success. VF Corp. managed to grow The North Face and Vans without, for the most part, damaging their reputation with their core clientele. Perhaps that’s why Supreme, the quintessential “cool” brand, chose VF as a partner when it “sold out” at a $2.1 billion valuation. So far, the lines outside his Lower Manhattan store remain just as long.

There are signs that Highsnobiety will retain some independence from Zalando: not just editorially, but physically. (They’re not merging offices.) Ideally, Highsnobiety will help polish Zalando’s brand, while growing the Highsnobiety business and retaining some of the magic that made it so special in the first place.



Zalando acquires Highsnobiety. The German fashion e-tailer has taken a majority stake in the high-end streetwear platform in a bet on the combined power of content and commerce.

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Compiled by Joan Kennedy.