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 brandstrategy, depending on the industry and market. Some family businesses have turned into multi-billion dollar companies.
Zara, owned by Inditex, primarily owned by the Ortega family, is a major family group that dominates fashion.
With over €27 billion in sales in 2021, the Spanish Fast Fashion Empire, Inditex, which comprises eight sister brands, has grown thanks to a strategy of expanding its flagship stores in exclusive locations around the globe. Its largest brand, Zara, contributed over 70% of the group’s revenue. The country that contributed the most to the fast fashion Empire sales was Spain, with over 15% of its revenues.
Fash fashion has been a phenomenon that became popular in the late 1990s, early 2000s, as players like Zara and H&M took over the fashion industry by leveraging on shorter and shorter design-manufacturing-distribution cycles. Reducing these cycles from months to a few weeks. With just-in-time logistics, flagship stores in iconic places in the largest cities in the world, these brands offered cheap, fashionable clothes and a wide variety of designs.
Today Zara is a fashion giant which in 2021 generated almost €20 billion in revenue.
Zara is a brand part of the retail empire Inditex. Zara is the leading brand in what has been defined as “fast fashion.” With almost €20 billion in sales in 2021 (comprising Zara Home) and an integrated retail format with quick sales cycles. Zara follows an integrated retail format where customers are free to move from physical to digital experience.
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.
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 Vertical-Integration
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
Bernard Arnault’s wealth is around $203 billion. Indeed Arnault is the CEO and chairman of the luxury goods conglomerate LVMH Moët Hennessy Louis Vuitton, a massive luxury group that generated over €79 billion in revenue ($83 billion) in 2022, spanning across wines, fashion, cosmetics, and retail. The Arnault family group owns 48.18% of the capital for LVMH with 63.9% voting power, making Bernard Arnault the principal owner and decision-maker. His stake is worth over $203 billion.
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 is a luxury goods multinational founded in France by François Pinault in 1963. The company, which initially specialized in timber trading, grew via acquisitions and was listed on the Paris Stock Exchange in 1988. Two years later, Kering merged with a French conglomerate interested in furniture, department stores, and bookstores.
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 $572 billion in net sales in 2022, Walmart operates a differentiated Omni business model with three primary units comprising Walmart U.S., Walmart International, and Sam’s Club (a membership-only warehouse club), together with Walmart+. This subscription service includes unlimited free shipping, unlimited delivery from its stores, and discounts launched in 2021.
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.
Key Takeaways
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.
Connected Stories
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:
Case Study
Family Business Model
Description
Mitsubishi Group
Family-Owned Conglomerate
Mitsubishi Group is a family-owned conglomerate with diverse interests, including automotive, industrial, and financial sectors. Founded in the 19th century, it’s one of Japan’s oldest and largest family-controlled businesses.
H&M Group
Family-Controlled Multinational Fashion Retailer
H&M (Hennes & Mauritz) is a family-controlled multinational fashion retailer. The Persson family has played a significant role in the company’s global expansion and fast fashion success.
BMW Group
Family-Controlled Global Automotive Manufacturer
BMW Group is a family-controlled global automotive manufacturer. The Quandt family has been instrumental in BMW’s development as a luxury carmaker and continues to hold significant stakes in the company.
Samsung Group
Family-Owned Chaebol (Conglomerate)
Samsung Group is a family-owned South Korean conglomerate known for electronics, shipbuilding, and more. The Lee family’s leadership has been a driving force behind the company’s transformation into a global tech giant.
Vivint
Family-Owned Smart Home Services Provider
Vivint is a family-owned smart home services provider. The Pedersen family founded and leads the company, which offers home security, automation, and energy management solutions.
Swatch Group
Family-Controlled Global Watch Manufacturer
Swatch Group is a family-controlled global watch manufacturer. The Hayek family’s leadership has been pivotal in the watch industry, with brands like Omega, Longines, and Swatch under its umbrella.
Kikkoman Corporation
Family-Owned Global Food Manufacturer
Kikkoman Corporation is a family-owned global food manufacturer, renowned for its soy sauce products. The Mogi family has guided the company for centuries, focusing on quality, tradition, and global expansion.
Tata Group
Family-Owned Indian Conglomerate
Tata Group is a family-owned Indian conglomerate with interests spanning steel, automobiles, technology, and more. Founded by the Tata family, it’s one of India’s oldest and most respected business conglomerates.
Koch Industries
Family-Owned Multinational Conglomerate
Koch Industries is a family-owned multinational conglomerate involved in various industries, including chemicals, energy, and manufacturing. The Koch family’s business philosophy emphasizes market-based management.
C&A
Family-Owned Global Fashion Retailer
C&A is a family-owned global fashion retailer. The Brenninkmeijer family, descendants of the founders, has overseen the company’s expansion across Europe and its commitment to affordable fashion.
Mars Food
Family-Owned Food Manufacturer
Mars Food is a family-owned food manufacturer known for brands like Uncle Ben’s. The Mars family’s values, sustainability efforts, and commitment to providing quality food products have been central to the company’s identity.
Tetra Laval
Family-Owned Packaging Solutions Provider
Tetra Laval is a family-owned global provider of packaging solutions for food and beverages. The Rausing family’s innovations, such as Tetra Pak, have revolutionized the packaging industry with a focus on sustainability.
Votorantim Group
Family-Owned Brazilian Conglomerate
Votorantim Group is a family-owned Brazilian conglomerate involved in various sectors, including cement and metals. The ErmÃrio de Moraes family’s commitment to business diversification and sustainability has driven the company’s growth.
LEGO Group
Family-Owned Toy Manufacturer
LEGO Group is a family-owned toy manufacturer renowned for its interlocking plastic bricks. The Kirk Kristiansen family’s dedication to creativity, education, and play has shaped the company’s global success in the toy industry.
Porsche AG
Family-Controlled German Sports Car Manufacturer
Porsche AG is a family-controlled German sports car manufacturer. The Porsche and Piëch families are central to the company’s legacy and leadership, contributing to its iconic sports car lineup and motorsport successes.
J.M. Smucker Company
Family-Owned Food and Beverage Company
J.M. Smucker Company is a family-owned food and beverage company with iconic brands like Smucker’s and Jif. The Smucker family’s commitment to quality and innovation has fueled the company’s growth in the industry.
Family-Controlled Multinational Building Materials Company
Saint-Gobain is a family-controlled multinational building materials company. The De Pont family has played a significant role in the company’s growth and innovation in the construction industry, providing sustainable solutions.
Aldi Nord
Family-Owned Global Discount Supermarket Chain
Aldi Nord is a family-owned global discount supermarket chain. The Albrecht family’s focus on cost-cutting and simplicity has allowed the company to expand worldwide while offering affordable products to consumers.
Aldi Süd
Family-Owned Global Discount Supermarket Chain
Aldi Süd is another branch of the Albrecht family’s global discount supermarket chain. Like Aldi Nord, it shares a commitment to cost-effective retail operations, maintaining consistency in the family’s business approach.
Patanjali Ayurved
Family-Owned Indian Consumer Goods and Ayurvedic Products
Patanjali Ayurved is a family-owned Indian company specializing in consumer goods and Ayurvedic products. The Balkrishna family’s emphasis on natural and traditional remedies has contributed to the brand’s success in India.
Bertelsmann AG
Family-Controlled German Media, Services, and Education Group
Bertelsmann AG is a family-controlled German media conglomerate. The Mohn family’s leadership has driven the company’s expansion into diverse sectors, including publishing, broadcasting, and education services.
Reliance Industries
Family-Controlled Indian Conglomerate
Reliance Industries is a family-controlled Indian conglomerate with interests in petrochemicals, telecommunications, and retail. The Ambani family’s vision and entrepreneurial spirit have guided the company’s growth and diversification.
Murdoch Family Holdings is a family-owned media and entertainment conglomerate. Rupert Murdoch and his family have been influential in the media industry, owning companies like Fox Corporation and News Corp.
Rockefeller Group
Family-Founded Real Estate Development and Investment Firm
Rockefeller Group was founded by the Rockefeller family and is involved in real estate development and investment. It’s known for iconic properties like Rockefeller Center, showcasing the family’s legacy in real estate.
Slow fashion is a movement in contraposition with fast fashion. Where in fast fashion, it’s all about speed from design to manufacturing and distribution, in slow fashion, quality and sustainability of the supply chain are the key elements.
Patagonia is an American clothing retailer founded by climbing enthusiast Yvon Chouinard in 1973 who saw initial success by selling reusable climbing pitons and Scottish rugby shirts. Over time Patagonia also became a fashionable brand also for its focus on slow fashion. Indeed, the company sells high-priced clothing items built to last which it will repair for free.
Patagonia has a particular organizational structure, where its founder, Chouinard, disposed of the company’s ownership in the hands of two non-profits. The Patagonia Purpose Trust, holding 100% of the voting stocks, is in charge of defining the company’s strategic direction. And the Holdfast Collective, a non-profit, holds 100% of non-voting stocks, aiming to re-invest the brand’s dividends into environmental causes.
Fash fashion has been a phenomenon that became popular in the late 1990s and early 2000s, as players like Zara and H&M took over the fashion industry by leveraging on shorter and shorter design-manufacturing-distribution cycles. Reducing these cycles from months to a few weeks. With just-in-time logistics and flagship stores in iconic places in the largest cities in the world, these brands offered cheap, fashionable clothes and a wide variety of designs.
With over €27 billion in sales in 2021, the Spanish Fast Fashion Empire, Inditex, which comprises eight sister brands, has grown thanks to a strategy of expanding its flagship stores in exclusive locations around the globe. Its largest brand, Zara, contributed over 70% of the group’s revenue. The country that contributed the most to the fast fashion Empire sales was Spain, with over 15% of its revenues.
LVMH is a global luxury empire with over €79 billion ($83 billion) in revenues for 2022, spanning several industries: wines and spirits, fashion and leather goods, perfumes and cosmetics, watches and jewelry, and selective retailing. It comprises brands like Louis Vuitton, Christian Dior Couture, Fendi, Loro Piana, and many others.
Kering Group follows a multi-brand business model strategy. The central holding helps the brands and Houses part of its portfolio leverage economies of scale while creating synergies. At the same time, those brands are run independently. Kering is today a global luxury brand that made over €20 billion in revenue based on this multi-brand strategy. Within Kering Group are brands like Gucci, Bottega Veneta, Saint Laurent, and many more—the primary operating segments based on luxury and lifestyle.
Kering is a luxury goods multinational founded in France by François Pinault in 1963. The company, which initially specialized in timber trading, grew via acquisitions and was listed on the Paris Stock Exchange in 1988. Two years later, Kering merged with a French conglomerate interested in furniture, department stores, and bookstores.
The Ultra Fashion business model is an evolution of fast fashion with a strong online twist. Indeed, where the fast-fashion retailer invests massively in logistics and warehousing, its costs are still skewed toward operating physical retail stores. While the ultra-fast fashion retailer mainly moves its operations online, thus focusing its cost centers on logistics, warehousing, and a mobile-based digital presence.
ASOS is a British online fashion retailer founded in 2000 by Nick Robertson, Andrew Regan, Quentin Griffiths, and Deborah Thorpe. As an online fashion retailer, ASOS makes money by purchasing clothes from wholesalers and then selling them for a profit. This includes the sale of private label or own-brand products. ASOS further expanded on the fast fashion business model to create an ultra-fast fashion model driven by short sales cycles and online mobile e-commerce as the main drivers.
Real-time retail involves the instantaneous collection, analysis, and distribution of data to give consumers an integrated and personalized shopping experience. This represents a strong new trend, as a further evolution of fast fashion first (who turned the design into manufacturing in a few weeks), ultra-fast fashion later (which further shortened the cycle of design-manufacturing). Real-time retail turns fashion trends into clothes collections in a few days or a maximum of one week.
SHEIN is an international B2C fast fashion eCommerce platform founded in 2008 by Chris Xu. The company improved the ultra-fast fashion model by leveraging real-time retail, quickly turning fashion trends in clothes collections through its strong digital presence and successful branding campaigns.
Zara is a brand part of the retail empire Inditex. Zara is the leading brand in what has been defined as “fast fashion.” With almost €20 billion in sales in 2021 (comprising Zara Home) and an integrated retail format with quick sales cycles. Zara follows an integrated retail format where customers are free to move from physical to digital experience.
Wish is a mobile-first e-commerce platform in which users’ experience is based on discovery and customized product feed. Wish makes money from merchants’ fees and advertising on the platform, and logistic services. The mobile platform also leverages an asset-light business model based on a positive cash conversion cycle where users pay in advance as they order goods, and merchants are paid in weeks.
Poshmark is a social commerce mobile platform that combines social media capabilities with its e-commerce platform to enable transactions. It makes money with a simple model, where for each sale, Poshmark takes a 20% fee on the final price for sales of $15 and over and a flat rate of $2.95 for sales below that. Its gamification elements and the tools offered to sellers are critical to the company’s growth as a mobile-first platform.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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