3.1. Situation Analysis

3. CHAPTER ONE

3.1. SITUATION ANALYSIS In the post-Covid era, the fashion industry continues to see a shift in the retail environment and consumer demands. The Covid-19 pandemic caused the acceleration of digital strategies amongst businesses and a more critical, honesty-seeking consumer Figure 3.1. Luxury Consumer Profile emerged. The new luxury consumer values digital innovations and shopping environments, transparency from the brands they shop from, and their individual identity (See Figure 3.1). The retail industry experienced an increase in loungewear and sportswear purchases, as consumers did not have social plans due to pandemic restrictions. However, the demand for luxury has Figure 3.2. Business Model Navigator Framework, adapted by author increased post-Covid because consumers are engaging in social events and have plans for travelling (See Appendix 7.1). Online retailers like Farfetch and Revolve flourished during the pandemic, as their business models were built on a technology-first approach and their product offerings allowed for profitability and added-value amongst consumers (See Figure 3.2). The start of 2022 had shown prospects for profitability. As the global economy started to recover from the pandemic, supply chain shortages, restrictions in China, and the Russia-Ukrainian war determined a different outlook on the fashion industry (See Appendix 7.1). Supply chain blockages restrained inventory management for companies around the world, thus creating a shift to more agile operating models like nearshoring (McKinsey & Co and Business of Fashion, 2021). With China being the second largest luxury goods market (Statista, 2022), the maintained Covid lockdowns have been damaging to luxury brands, especially Farfetch, who invested in partnerships with Alibaba and Tmall Luxury Pavilion (Milnes, 2022).

3.2. FARFETCH Farfetch aims to be the global platform for luxury fashion, creating unique opportunities for customers and sellers that are driven by their core values (See Figure 3.3). The retailer creates added-value with the expansive product portfolio, Figure 3.3. omni-channel selling, technology innovations, and exclusive Farfetch Mission, Vision, & Values partnerships with brands and boutiques (See Appendix 7.6). With Farfetch’s mission at the forefront of their operations, the company is comprised of two business models, selling products through ‘Farfetch Marketplace’ and services provided to brands through ‘Farfetch Platform Solutions’ (FPS) (See Appendix 7.2). Farfetch Marketplace Farfetch operates as an e-concession model, not owning any of the inventory they sell on their website, but rather a marketplace for third-party sellers to make their own decisions on pricing and merchandising strategies (FARFETCH Ltd., 2022). However, the company has acquired brands like Browns, Stadium Goods, and New Guards Group (NGG) to expand their offerings, creating a competitive advantage. Farfetch profited during the Covid-19 pandemic not only as an e-commerce specialist, but also because the acquisition of the luxury streetwear and sneaker brands, NGG and Stadium Goods, proved to be favorable amongst consumers and their pandemic-driven shift to athleisure and loungewear (Deloitte, 2021). The company expands their product offerings beyond apparel, footwear, and accessories through their pre-owned, second hand and newly added beauty sections. Farfetch has acquired more brands that have expertise in these sectors to further their unique selling point, and thus their competitive advantage. For example, the 2021 acquisition of LUXCLUSIF facilitates the collection, authentication, and sale of second-hand goods, improving the Farfetch Second-Life initiative of selling pre-owned goods (See Appendix 7.2). Farfetch Platform Solutions (FPS) In addition to product selling on Farfetch Marketplace, the company uses their expertise in e-commerce technology to offer other brands/retailers digital capabilities through