Michael Kors Acquires Versace for $2.1 Billion – Why are People Worried?!



Michael Kors Acquires Versace for $2.1 Billion - Why are People Worried?!
Image Source: The Hindu


While the entire fashion world is split between celebrating and mourning this epic move in the luxury fashion industry, here are my two bits about what I think this means for both these massive fashion houses.

American Luxury Conglomerate (in the making), Michael Kors… now known as Capri Holdings, according to Business of Fashion, outlined its plans for Versace, including increasing its global retail footprint from 200 stores to 300, building out e-commerce and expanding men’s and women’s accessories and footwear.

Now, a lot of people seem to think that this takeover will spoil the Versace brand name and democratize it to the level of Michael Kors… while a lot of others don’t seem to understand that if Donatella Versace is still the design head, why are people fretting about it.

According to me, the concern is real. Why? 3 major concerns:


Democratizing the ‘brand’ and not just the products:


‘Desire’ is the key word when it comes to luxury brands. You make a brand accessible, and you can be certain that it won’t last too long.

We’ve often seen luxury brands die a sad death in the hands of large corporates. They may make more money initially, but if the conglomerate / corporate doesn’t have luxury in its DNA, it’s very easy to democratize the brand in order to make it more affordable, which over a period of time makes people not ‘desire’ it anymore!

Michael Kors, the brand, hit gold with its design and price point… making it one of the most desired brands of ‘affordable luxury’ in its initial years. It was young, hip, luxurious and yet, not completely out of reach. However, the easy accessibility, outlet stores and the massive discounts available on the already ‘affordable’ items, made sure that the real luxury consumer, didn’t want to be seen with it anymore. Desire, was lost.


Now, I know that Michael Kors the brand, is not Capri holdings… and that each brand under the umbrella can and should stand for different values to tap different segments, but my point is that a lot of times, conglomerates look at optimizing their existing logistics and channels for all brands in order to expand reach and volumes. With Michael Kors and very recently, Jimmy Choo, Capri holdings has primarily been in the accessories business.

And, More Accessories make you more ‘Accessible’!

It’s really no wonder then that as per John D Idol, the chairman and CEO of Capri Holdings, one of the ways they plan to make Versace more profitable, is by expanding the Men’s and Women’s accessories line.

Now, when you take over a Luxury fashion brand with decades of legacy and decide to expand the accessory lines… with an existing strong-hold in ‘affordable luxury accessories’ space with Michael Kors… it will be very tempting to want to optimize all those existing channels for the accessories line of Versace too. After all, creating new channels is far more time-consuming and expensive than optimizing existing ones! And considering the amount of investment that has gone in to this deal, I’m sure Idol will want to start milking it as soon as possible!

And, that I believe is what will democratize the brand more than anything else.


Building E-commerce , is another one of the key things that John Idol mentioned, according to Business of Fashion.

According to me, Versace, the fashion and clothing brand is all about experience! Luxury clothing, in my opinion cannot, and will not be bought online… because 90% of the charm of buying a piece of luxury clothing, is the experience. So once again, e-commerce points towards the target of increasing purchases in the accessories segment, and the more affordable accessories at that. Besides, in my opinion, the e-commerce market in the high-end accessories market, isn’t driven by convenience to be honest, it is driven by a ‘better deal’! So what are we really looking at here?!


It’s an old grand-mother’s saying…. “Who you are, is defined by the company you keep!”


While in the company of the likes of Versace and Jimmy Choo, Michael Kors wants to be seen as the new-age ‘luxury’ conglomerate… I wonder how Michael Kors’ company, is going to affect the other two!


Let’s just wait and watch…



Thank you so much for reading. Do follow me on instagram: @pinkpeppercorn_sonal

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About Me

Sonal is a Post Graduate in Luxury Brand Management from Polimoda Institute of Fashion Design and Marketing, Florence (Italy) and has over 9 years of experience as a Brand Strategist working in the advertising industry.

She has also been a Consumer Insights Miner specializing in fashion and luxury brands.