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The recent acquisition of Swiss shoe brand Bally by American investment firm Regent is emblematic of a trend of acquisitions and consolidation in the luxury goods industry.
This content was published on August 16, 2024 at 17:29
Anand Chandrasekhar
Swissinfo.ch’s India expert covers a wide range of issues from bilateral relations to Bollywood. He also knows a thing or two about Swiss watchmaking and has a penchant for the French-speaking part of Switzerland.
Other articles by this author English Department
Regent said Thursday it had acquired Bally, the 173-year-old Swiss luxury shoe brand that has been owned by Luxembourg-based German conglomerate JAB Group since 2008. Regent already owns a portfolio of luxury brands including Escada, La Senza and Club Monaco.
“Their heritage of timeless design and unparalleled quality for more than 170 years is a testament to refined Swiss elegance and an unwavering commitment to craftsmanship. We are honored to be entrusted with shaping the next chapter of this incredible story,” Regent founder and chairman Michael Reinstein said in a press release.
>>>Here’s everything you need to know about Bally’s history.
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Bally came close to falling into Chinese hands: Chinese textile group Shandong Ruyi was close to acquiring a majority stake in 2018. But the deal fell apart due to the coronavirus pandemic, when the Chinese company was unable to raise the necessary financing and Bally stores were closed due to coronavirus restrictions.
The appointment of Simone Bellotti, formerly of Gucci, as design director last year stabilized Bally’s fortunes; its previous director, streetwear specialist Luigi Villasenor, stepped down after just a year in the role. It remains to be seen what Regent has planned next for the famous Swiss brand.
SWI swissinfo.ch spoke to luxury industry analysts Carine Szegedy of Deloitte and Jean-Philippe Bertschy of Vontobel to find out more about the future of Bally and the luxury industry.
SWI swissinfo.ch: Is it unusual for an investment firm to buy a luxury brand company?
Jean-Philippe Bertschy: There is nothing unusual about the acquisition. There are other investment funds that have done similar things, such as Qatar’s Mayhoola, which owns Balmain and Valentino.
Karine Szegedi: It’s not unusual, as there are several examples in the industry. Successful luxury brands require significant investments to scale. There are several models: large luxury conglomerates like LVMH, Richemont, Kering, family/independently owned companies like Audemars Piguet, Rolex, Chanel, Hermes, private equity-owned brands like Breitling and Bally.
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Bucherer: A Swiss luxury brand ahead of its time
This content was published on August 29, 2023. The news that Bucherer is being sold to Rolex has surprised the luxury industry, and the brand has a long history of surprising the industry.
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For private equity, owning luxury brands for sentiment and prestige is not the primary reason they need to turn the business around and make a profit in the short term, unlike family-owned brands that have a longer-term view.
SWI: Will the acquisition by Regent affect Bally’s Swiss DNA?
JP.B: “Swissness” is important to Regent. They would not want to change the brand identity. It would be like killing a golden egg, because tradition, history and heritage are important to luxury buyers. Luxury is a global business, but it is an industry that respects brand traditions.
KS: Not necessarily. Luxury is all about roots, history and tradition. Generally speaking, investors can help luxury brands focus and allocate resources on their core business and strengths, rather than over-diversifying.
When private equity buys a luxury brand, they make sure the people, processes and investments are in place to succeed, just like any other business. They need to understand the luxury business because the reality of the luxury business is different and it can’t be managed like, say, a volume-driven business with low margins.
SWI: How is the global luxury market changing?
JP.B: The aspirational market for young people buying luxury sneakers and T-shirts with big logos is suffering. But the ultra-rich are still buying. They are looking for “quiet luxury.” Brands that are succeeding in this segment include Hermes, Brunello Cucinelli, and Loro Piana.
Bally excels at understated Swiss style, but it’s extremely tough for smaller brands to compete: they need to appeal to millennials and Gen Z, who make up the majority of luxury buyers around the world.
KS: The luxury industry has been shifting towards putting the end consumer at the centre, not just the product, in order to get closer to buyers and understand their needs, purchasing habits and interest in personalised luxury goods.
Despite the growing importance of e-commerce, luxury brands still need a brick-and-mortar presence to shape their brand and get closer to the end consumer. In the long term, this means fewer stores overall, but more flagships. This requires significant investment and a strong sense of ownership, which is one of the reasons for the recent consolidation and acquisitions.
Editor: Mark Livingston
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