Before Easter there was one key piece of news in the fashion and finance sections of many newspapers and online publications - the Yoox and Net-A-Porter merger. The operation between the global Internet retailing partner for leading fashion brands and the Compagnie Financière Richemont SA, controlling shareholder of the world's premier online luxury fashion retailer The Net-A-Porter Group Limited, was announced with an official press release (dated 31st March 2015) on the Yoox Group site.
The transaction and transformational merger will create the YOOX Net-A-Porter Group with combined 2014 net revenues of €1.3 billion, and adjusted EBITDA of approximately €108 million.
Federico Marchetti, Founder and CEO of YOOX, will be the CEO of YOOX Net-A-Porter Group; Natalie Massenet, Founder and Executive Chairman of Net-A-Porter, will serve as Executive Chairman of YOOX Net-A-Porter Group with defined responsibilities (and will receive a 4% stake in Net-a-Porter, worth €64m under the terms of the merger), while Raffaello Napoleone, Chief Executive Officer of Florence-based trade show organizer Pitti Immagine, is expected to be named interim president of the Yoox Group (the final decision will be taken by the company's board on April 30) until September, when the merger agreement between Yoox and Net-a-porter is finalised (the Board of Directors intends to approve the merger in the second half of April; the merger is expected to close - subject to regulatory approvals - in the first half of September 2015).
The immediate response of the fashion media was one of uncontrolled enthusiasm shared by the Italian Prime Minister Matteo Renzi. Yet there are things happening in the fashion industry at the moment that should make us sit and ponder, rather than just shout about new industrial revolutions at the intersection of art, design, creativity, commerce and entertainment.
The luxury market started morphing in the '90s, when family-owned companies passed in the hands of a few corporate groups owned by business tycoons who thought they were maybe playing a game of Monopoly rather than rediscovering what went on in the historical ateliers they were buying. Little by little, fashion turned into finance and what we are witnessing now is just a new transformation and a final confirmation that the fashion industry is definitely not about creativity and inspirations, but about money. And a lot of it as well.
There are points, though, that the system regulating the modern fashion industry has failed to explain us: one main point is where all the money invested in fashion and luxury ventures comes from. You wonder indeed if a proper investigation into the fashion industry would uncover not just tax evasion, but also dirty money from criminal organisations being laundered into fashion projects. Think about it - this would finally explain a lot of things including the bizarre and unlikely success of specific accessory collections allegedly designed by high profile bloggers (but actually copied from other more famous brands...) who have inexplicably gone interstellar, despite the fact the people involved could be filed under the category "dubious designer with even more dubious entrepreneurial skills".
But while trying to understand where all the money fluctuating in the fashion industry comes from is probably too difficult even for the authorities, there is a story directly linked with Yoox that could be more easily investigated if only it were mentioned more often in the news. Yoox tendered its logistic operations to a cooperative called Mr Job that manages the workers employed in the Interporto Bologna (Bologna Freight Village).
Last Summer, workers claimed they were subjected to threatening, abusive and insulting behaviour; they were asked to do jobs they hadn't been assigned to in their contracts and obliged to follow stressful working schedules such as packing an item in 32 seconds (and not being allowed to go to the toilet if the worker missed this target time). Blackmail, harassment and assorted punishments also seemed to be the norm, and workers were also sent back to the previous level they were assigned to rather than advancing, if they dared complaining.
Despite the major responsible of these abuses - Mr Federico Gatti, who worked for Mr Job and managed the Interporto warehouse - was removed, not much has changed and the main working rhythms remain unsustainable since, when Yoox increased the volume of work, Mr Job never followed with adequate measures improving the structures and offering better working conditions. So, while the cooperative is the one to blame for creating an exploitative system, Yoox didn't actually do much to prevent them from exploiting the workers.
Last Friday (3rd April 2015) the Yoox/MrJob workers organised another strike to ask for full-time contracts (see image of the workers' requests written in Italian at the end of this post) and for proper and fair promotions based on skills and not on fear and silence. Yoox and Mr Job blame Mr Gatti for the harassment, alarm and distress he caused, but they don't seem to have done anything to change the unsustainable working conditions and production rhythms.
The Yoox/Net-A-Porter "game-changing" merger was greeted on the Italian stock exchange with an increase of +30,7% and, while the fashion media enthusiastically talked about luxury, pioneering companies, stronger partnership with brands, growth potential and opportunities, maximum balance sheet flexibility, strategic investors, stores without geographical borders, and more than two million style-conscious global high-spenders accessing to the finest designer labels in fashion, the other side of the luxury coin wasn't even mentioned.
If the conditions of the workers do not change, there will be a collapse in the fabulous merger as the working conditions will be even more unsustainable in case of major growth.
Fashion is an elitist industry, but this merger may take it towards a much clearer division between the Eloi and the Morlocks, a division that has already been marked by the fact that while everybody is talking about the kings and queens of online luxury, not many are keen on investigating on the slaves generated by online luxury.
Did Richemont ever visit the Interporto Bologna premises and if they did visit them, what were they allowed to see? Who knows. In the meantime, you wonder if it would be possible to find a "glamorous" solution: Net-A-Porter used to arrange dinners where designers such as Mary Katrantzou met and dined with the women who bought their products. If Yoox/Net-A-Porter would keep on offering such a service, it would be interesting to raise enough money to buy a gown and then have a dinner about new forms of businesses and the future of fashion with young fashion designers and young exploited workers (as most of them aren't much older than the new and talented stars of the fashion industry...). Maybe between one exquisite dish and another, they could explain us why in an industry that splashes so much money on parties, models, catwalk shows, private jets and vapid celebrities, there are still people who are mistreated and are not paid a fair wage, or why, in 2015, asking not only for bread, but for roses too, still sounds like an impossible request.
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