Michael Kors is making moves toward the luxury space, recently closing in on a bold $2.4 billion deal to buy European fashion house Versace. On first glance, the two brands appear mismatched, but a deeper look reveals the move might not be as unexpected as it seems.
Michael Kors boasts affordable bags and sporty, wearable styles. Versace, on the other hand, touts glitzy gowns and daredevil designs. However, the former seems to have always had a penchant for high-quality representation. For example, one way Michael Kors has risen up Gartner L2’s Digital IQ Index: Specialty Retail is strong ad quality, achieved by paying the premium for ads promoting its VIP loyalty program to appear on top publishers such as The New York Times, Pitchfork, and Forbes. In fact, placements of the brand’s loyalty app displayed on an image of an iPhone accounted for a fifth of the brand’s impressions that month.
Versace has been able to maintain a luxury appeal reflected not only in its hefty price tags, but in its dazzling social media presence, as observed in Gartner L2’s Digital IQ Index: Fashion. The glam brand sees high interaction rates on Instagram and a larger following then Michael Kors, especially when leveraging influencers and celebrities. However, Versace stagnated last year, leaving it all dressed up with nowhere to go. In this way, Michael Kors might be able to keep the brand afloat while the latter could lend MK the leg up in luxury it’s been lusting after.