A family business model is usually owned and, in part, run by the founding family or its dynasty. Family businesses can take on several business formats, from running a retail brand a mono-brand, or perhaps a multiple brand strategy, depending on the industry and market. Some family businesses have turned into multi-billion dollar companies.
The Inditex (Zara) Empire
Zara, owned by Inditex, primarily owned by the Ortega family, is a major family group that dominates fashion.
The company pioneered what’s called fast fashion.
Today Zara is a fashion giant which in 2021 generated almost €20 billion in revenue.
Brunello Cucinelli Human Enterprise
Brunello Cucinelli is an Italian luxury and casual-chic brand, which built its success around cashmere clothing. Brunello Cucinelli built its business around the Humanistic Enterprise model, which revolves around Italian Craftsmanship, Sustainable Growth, and Exclusive Positioning and Distribution. More than 50% of the company revenues come from the retail mono-brand, directly managed by the company.
Brunello Cucinelli follows three key distribution strategies:
- Retail monobrand where the company controls the direct distribution of stores to the end customer. Those are run and operated by Brunello Cucinelli.
- The wholesale monobrand channel is made of monobrand stores operated under commercial distribution agreements.
- The wholesale multibrand channel, consisting of independent multibrand stores and dedicated spaces within department stores (shop-in-shops).
Luxottica has built its whole success based on integrating the whole supply chain, thus connecting its sourcing and manufacturing process, wholesale capability and retail stores to reach the final consumers.
LVMH Multi-Brand Strategy
LVMH is a global luxury empire with over €46 billion in revenues for 2018 spanning across several industries: wines and spirits, fashion and leather goods, perfumes and cosmetics, watched and jewelry, and selective retailing. It comprises brands like Louis Vuitton, Christian Dior Couture, Fendi, Loro Piana, and many others.
LVMH follows a multi-brand integrated strategy, where each brand is managed independently. This enables each brand part of the group to keep its identity, while still keeping the advantage of economies of scale, deriving from the fact those brands belong to the holding group.
Prada Iconic Business Model
The family-owned Italian luxury brand, Prada generated over three billion euros in revenues for 2017. Europe represented almost forty percent of the total revenues. Among Prada brands, Prada made more than eighty percent of the company’s revenues, followed by Miu Miu, with more than fifteen percent, Church’s which generated two and a half percent of its total revenues. Instead, Marchesi 1824 (a luxury bakery) and Car Shoe (a shoe company) made about half a percent of the total revenues.
Among its products line leather goods represented more than fifty-six percent of the total Prada revenues. Followed by Footwear and Clothing. More than eighty percent of Prada revenues got generated via its directly operated stores. Miuccia Prada owns sixty-five percent of Prada Holding, while Patrizio Bertelli owns thirty-five percent. Prada holding owns eighty-percent of Prada.
Prada kept a tight ownership structure where the company is mostly in the hands of the family.
Kering Multi-Brand Group Strategy
Kering Group follows a multi-brand business model strategy (very similar to LVMH), where the central holding helps the brands and Houses part of its portfolio to leverage on economies of scale while creating synergies among them.
At the same time, those brands are run independently. This multi-brand strategy comprises brands like Gucci, Bottega Veneta, Saint Laurent, and Puma.
The two primary operating segments based on luxury and sport & lifestyle.
Walmart Empire Business Model
With over $495 in net sales as of January 2018, and over $4.5 billion coming from Membership and other income.
The company operates three primary units that in 2018 comprise Walmart U.S. (approximately 64% of our net sales), Walmart International (about 24% of net sales), and Sam’s Club (approximately 12% of its net sales) a membership-only warehouse clubs and operates in 44 states in the U.S. and in Puerto Rico, as well as eCommerce.
Walmart’s Mission can be summarized as “helping people around the world save money and live better – anytime and anywhere – in retail stores and through eCommerce.” While its vision is to “make every day easier for busy families.” Walmart defines “busy families” as the bull’s eye of its business strategy.
- Inditex (Zara) Empire: Inditex, primarily owned by the Ortega family, dominates the fashion industry with eight sister brands, generating over €27 billion in sales in 2021. Zara, its largest brand, contributed over 70% of the group’s revenue, and its fast fashion strategy revolutionized the industry.
- Brunello Cucinelli Human Enterprise: An Italian luxury brand known for cashmere clothing, Brunello Cucinelli follows a Humanistic Enterprise model with sustainable growth and exclusive distribution. More than 50% of its revenues come from retail mono-brand stores managed by the company.
- Luxottica Vertical-Integration: Luxottica’s success is based on integrating the entire supply chain, from sourcing and manufacturing to wholesale and retail stores, to reach the final consumers.
- LVMH Multi-Brand Strategy: LVMH, headed by Bernard Arnault, is a luxury goods conglomerate generating over €79 billion in revenue in 2022. It follows a multi-brand integrated strategy, allowing each brand to maintain its identity while benefiting from economies of scale within the holding group.
- Prada Iconic Business Model: Prada, a family-owned Italian luxury brand, generated over three billion euros in revenues for 2017, with most of the company in the hands of the family.
- Kering Multi-Brand Group Strategy: Kering, a luxury goods multinational, follows a multi-brand business model strategy, similar to LVMH, with brands like Gucci, Bottega Veneta, Saint Laurent, and Puma.
- Walmart Empire Business Model: Walmart, with over $572 billion in net sales in 2022, operates a differentiated Omni business model with primary units, including Walmart U.S., Walmart International, and Sam’s Club, along with Walmart+ subscription service. Walmart’s mission is to help people save money and live better through retail stores and eCommerce.
Family business models, just like other companies can take several forms that help them scale and yet keep the business successful. Some of the examples we saw, you can have a deeper look below:
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