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. Based on this multi-brand strategy, Kering is a global luxury brand that made nearly €20 billion in revenue in 2023. Within Kering Group are brands like Gucci, Bottega Veneta, Saint Laurent, and many more—the primary operating segments based on luxury and lifestyle.
Kering multi-brand business model strategy
When you look under the hood of the Kering group, one of the most striking things is the variety of luxury brands it holds.
In fact, throughout the years, Kering has developed a business model strategy of aggregating several brands under the same corporate umbrella.
However, each of those brands is managed independently.
That allows the company to be diversified while at the same time guaranteeing the operations to be agile (via the separately managed brands) and to take advantage of synergies between those brands.
Another critical aspect is that the business model of the group is its family-owned structure, which guarantees a fast decision-making process.
Therefore, the change of direction can be steered quickly. Indeed, Kering didn’t start as a luxury company at all. Its beginnings were related to lumber trading.
Only in 1994, Kering started to reposition its brand.
This repositioning culminated with the war to acquire Gucci.
After that, Kering consolidated its position in the Luxury brand industry by buying several other fashion luxury brands.
This process is still ongoing, even though Kering is among the largest luxury holdings in the world.
Brands like Gucci, Bottega Veneta, Saint Laurent, Alexander McQueen, Balenciaga, Brioni, Christopher Kane, McQ, Stella McCartney, Tomas Maier, Boucheron, Dodo, Girard-Perregaux, Pomellato, Qeelin, and Ulysse Nardin are part of the Kering galaxy. Kering also develops Sports & Lifestyle brands PUMA, COBRA, and Volcom.
This multi-brand approach, similar to that of LVMH, allows them to be independent also at the creative level.
This decentralized model attempts to foster rapid growth for those brands.
The logic is to enable agility, balance, and responsibility across those Houses.
Indeed, while each of them keeps its identity expressed in its unique characters, the Group provides the infrastructure to support the operations of those brands while allowing them to scale up via distribution networks that leverage the Group’s economies of scale.
Also, the Group acts as the mediator that encourages the brands to form synergies with each other and share best practices to drive innovation.
The key three pillars of Kering’s multi-brand business strategy
The model moves around three pillars:
Agility: Kering provides its Houses with an organizational structure that unlocks their potential for excellence.
Balance: Now a fully integrated Group, Kering’s multi-brand model is reaching optimal efficiency.
Responsibility: All our operations are founded on a responsible economic model. A comprehensive, sustainable approach is a structural competitive advantage.
The primary aim is to drive organic growth via:
- Above-market performance in a growth industry
- Product innovation
- Sales efficiency
- Customer experience
- Omni-channel approach
Kering Group vertical integration
Another critical aspect is Kering vertical integration.
Just like Luxottica’s vertical integration strategy since 2013, the Group strengthened its upstream positioning in the Luxury Goods value chain.
For instance, the group purchased leather tanneries to secure raw materials sourcing. Also, logistics activities for Couture & Leather Goods brands have been centralized.
Why do companies choose vertical integration even when it implies a significant capital investment? Vertical integration allows to achieve more control over the whole process; it also helps the company to keep high-quality standards.
At the same time, it will enable an organization to maintain control over those processes. So, one of the main reasons for vertical integration is control!
Kering organizational chart
The vertical integration and multi-brand strategy are reflected in the Kering organizational chart.
On the one hand, the holding controls the major geographical areas. Kering Corporate controls two main segments: Luxury activities and Sports and lifestyle activities.
Kering key financial figures
In 2022 the companies made over twenty billion euros in revenues for the overall group.
Who’s going to be the next brand to add to the multi-brand strategy of Kering?
Customer Segments
Kering serves several key customer segments:
- High-Net-Worth Individuals:
- Luxury Shoppers: Affluent consumers who seek high-quality, exclusive, and prestigious products. These customers value the craftsmanship, heritage, and exclusivity associated with Kering’s brands.
- Collectors: Individuals who purchase limited edition and exclusive items for their uniqueness and investment value. Collectors are often drawn to the scarcity and historical significance of the products.
- Fashion Enthusiasts:
- Trendsetters: Consumers who stay ahead of fashion trends and seek the latest collections from luxury brands. These individuals are typically younger, more digitally savvy, and highly influenced by social media and celebrity endorsements.
- Brand Loyalists: Customers who have a strong affinity for specific Kering brands and consistently purchase from them. Brand loyalists often appreciate the unique identity and design ethos of their preferred brand.
- Global Consumers:
- Geographic Diversity: Kering’s brands cater to customers worldwide, including key markets in Europe, North America, Asia-Pacific, and emerging markets. Each region has its unique preferences and purchasing behaviors, which Kering adapts to through localized strategies.
Revenue Streams
Kering generates revenue through several channels:
- Luxury Goods Sales:
- Fashion and Leather Goods: Revenue from the sale of high-end apparel, handbags, shoes, and accessories. This segment is the largest revenue contributor, driven by strong demand for iconic brands like Gucci and Saint Laurent.
- Jewelry and Watches: Sales of luxury jewelry and watches under brands such as Boucheron, Pomellato, and Girard-Perregaux. This segment has been growing rapidly, reflecting the increasing consumer interest in high-end jewelry.
- Eyewear: Income from branded eyewear collections through a partnership with Kering Eyewear. The eyewear segment benefits from the strong brand recognition and fashion-forward designs of Kering’s brands.
- Licensing and Royalties:
- Brand Licensing: Revenue from licensing agreements for categories such as eyewear, fragrances, and home goods, allowing other companies to produce and sell products under Kering’s brand names. Licensing helps extend the brand reach while ensuring quality control and brand integrity.
- Royalties: Earnings from royalty agreements with third-party manufacturers and distributors. These royalties provide a steady income stream and leverage the brand equity of Kering’s portfolio.
- Retail and E-commerce:
- Direct Sales: Revenue from sales in owned retail stores and through the brands’ official online stores. Direct sales provide higher margins and enable better control over the customer experience.
- Wholesale: Income from selling products to third-party retailers, department stores, and boutiques. Wholesale distribution helps expand the brand’s reach and accessibility.
Market Strategy
Kering’s market strategy focuses on brand differentiation, digital transformation, and sustainability.
- Brand Differentiation:
- Distinct Brand Identities: Ensuring each brand in the portfolio maintains its unique identity, heritage, and market positioning. This approach allows Kering to cater to diverse consumer preferences and reduces brand cannibalization.
- Creative Direction: Hiring renowned designers and creative directors to lead each brand’s vision and design direction. Creative leadership is crucial for maintaining the artistic integrity and innovation of the brands.
- Digital Transformation:
- E-commerce Expansion: Investing in robust e-commerce platforms for each brand to reach a global audience. E-commerce is a critical growth driver, especially in markets with high digital adoption rates.
- Digital Marketing: Utilizing social media, influencer partnerships, and digital advertising to engage with consumers and promote collections. Digital marketing allows for targeted and measurable campaigns, enhancing customer engagement and brand loyalty.
- Sustainability:
- Environmental Responsibility: Implementing sustainable practices across the supply chain, including responsible sourcing, reducing carbon footprint, and using eco-friendly materials. Sustainability initiatives align with the growing consumer demand for ethical and environmentally friendly products.
- Ethical Practices: Ensuring fair labor practices and transparency in production processes. Ethical business practices are essential for maintaining brand reputation and consumer trust.
Distribution Strategy
Kering’s distribution strategy involves a mix of direct-to-consumer and wholesale channels.
- Direct-to-Consumer (DTC):
- Flagship Stores: Luxurious brand stores in major cities worldwide that offer an immersive brand experience. Flagship stores serve as brand ambassadors, showcasing the latest collections and providing a premium shopping experience.
- Online Sales: E-commerce websites for each brand, providing a seamless online shopping experience and exclusive online offerings. Online sales are supported by advanced logistics and customer service capabilities to ensure a high level of customer satisfaction.
- Wholesale:
- Department Stores and Boutiques: Partnerships with high-end department stores and specialty boutiques to distribute products widely. Wholesale partners are carefully selected to ensure alignment with the brand’s image and standards.
- Authorized Retailers: Working with select retailers who meet the brand’s standards for luxury service and presentation. Authorized retailers expand the brand’s geographic reach and accessibility.
Competitive Advantages
Kering’s competitive advantages lie in its strong brand portfolio, strategic acquisitions, and commitment to innovation and sustainability.
- Strong Brand Portfolio:
- Diverse Brand Range: A portfolio of renowned luxury brands catering to different market segments and consumer preferences. The diversity of brands allows Kering to mitigate risks and capitalize on various market opportunities.
- Market Leadership: Leading positions in key luxury segments such as fashion, leather goods, and jewelry. Kering’s brands are recognized for their quality, innovation, and desirability.
- Strategic Acquisitions:
- Targeted Acquisitions: Acquiring brands with strong growth potential and market positioning to enhance the portfolio. Strategic acquisitions enable Kering to enter new market segments and strengthen its competitive position.
- Brand Integration: Successfully integrating acquired brands into the Kering ecosystem while preserving their unique identities. Effective integration maximizes synergies and enhances brand value.
- Innovation and Sustainability:
- Innovative Design: Continuously pushing the boundaries of design and creativity through collaboration with top designers. Innovation drives consumer interest and maintains the brands’ relevance in a dynamic market.
- Sustainable Practices: Commitment to sustainability and ethical practices, which resonate with modern consumers and enhance brand value. Sustainability initiatives are integrated into the core business strategy, driving long-term growth and resilience.
Key Highlights
- Kering’s Multi-Brand Business Model:
- Strategy Overview: Kering Group employs a multi-brand business model, gathering various luxury brands under its corporate umbrella while ensuring each brand’s independent management.
- Synergy and Independence: This approach allows for economies of scale and synergies while maintaining agility and brand independence.
- Family-Owned Structure: Kering’s family-owned structure ensures quick decision-making, facilitating rapid changes in direction.
- Repositioning and Growth: Originally focused on lumber trading, Kering repositioned itself in 1994 and acquired Gucci, beginning its journey into luxury fashion.
- Expanding Portfolio: Kering continued its expansion by acquiring several other renowned luxury fashion brands, solidifying its position in the industry.
- Diverse Brand Portfolio: Brands like Gucci, Bottega Veneta, Saint Laurent, Alexander McQueen, and others are part of Kering Group, along with Sports & Lifestyle brands like PUMA, COBRA, and Volcom.
- Brand Independence and Creative Autonomy:
- Decentralized Approach: Similar to LVMH’s model, Kering’s decentralized strategy maintains the creative independence of each brand.
- Fostering Growth: This model aims to facilitate rapid growth for individual brands, offering agility, balance, and responsibility across the various Houses.
- Shared Infrastructure: While retaining unique identities, Kering Group supports brands with infrastructure, leveraging economies of scale for distribution networks.
- Key Pillars of Kering’s Strategy:
- Agility: Kering’s organizational structure empowers Houses to excel.
- Balance: Integration and efficiency drive optimal performance.
- Responsibility: Sustainable practices offer a competitive advantage and are foundational to all operations.
- Driving Organic Growth:
- Vertical Integration and Control:
- Securing Value Chain: Kering pursued vertical integration, securing raw materials sourcing by acquiring leather tanneries.
- Logistics Centralization: Logistics activities for Couture & Leather Goods brands were centralized, ensuring quality standards and control.
- Kering Organizational Chart:
- Geographical Control: Kering Corporate oversees key geographical areas.
- Segment Control: Kering has two main segments: Luxury activities and Sports and Lifestyle activities.
- Financial Success:
- Revenue and Profits: Kering generated over €20 billion in revenue and €3.6 billion in profits in 2022, reflecting the success of its multi-brand strategy.
| Element | Description |
|---|---|
| Value Proposition | Kering Group offers the following value propositions for its customers: – Luxury Brands: Providing access to luxury fashion, accessories, and lifestyle products. – Quality and Craftsmanship: Offering products known for quality and craftsmanship. – Sustainability: Commitment to sustainable and responsible business practices. – Brand Diversity: A portfolio of diverse luxury brands catering to different tastes. – Innovation: Incorporating innovation in design and materials. – Heritage and History: Brands with rich heritage and history. – Exclusivity: Exclusive and limited-edition products for discerning customers. |
| Core Products/Services | Core products and services provided by Kering Group include: – Luxury Fashion Brands: A portfolio of luxury fashion and lifestyle brands. – Accessories and Footwear: High-end accessories, handbags, and footwear. – Jewelry and Watches: Luxury jewelry and watch collections. – Eyewear: Premium eyewear products. – Sustainability Initiatives: Commitment to sustainable and responsible practices. – Brand Collaborations: Collaborations with artists and designers. – Retail and E-commerce: Physical boutiques and online shopping platforms. – Customer Experience: High-end customer service and shopping experience. |
| Customer Segments | Kering Group targets various customer segments: – Luxury Shoppers: Affluent individuals seeking high-end fashion and lifestyle products. – Fashion Enthusiasts: Individuals with a passion for luxury fashion and accessories. – Collectors: Collectors of limited-edition and exclusive luxury items. – Global Audience: International customers across regions and demographics. – Retail Partners: Partnering with upscale retailers and boutiques. – Fashion Industry: Professionals and stakeholders in the fashion industry. |
| Revenue Streams | Kering Group generates revenue through several revenue streams: – Product Sales: Earnings from the sale of luxury fashion, accessories, and lifestyle products. – Retail Boutiques: Revenue from physical boutique sales. – E-commerce: Earnings from online sales through e-commerce platforms. – Licensing and Franchising: Revenue from licensing and franchising agreements. – Brand Collaborations: Earnings from collaborations and special collections. – Sustainability Initiatives: Investments in sustainability with long-term financial benefits. – Customer Experience: High-end customer service and loyalty programs. – Investments and Divestments: Capital gains from investments and divestments. |
| Distribution Strategy | The distribution strategy for Kering Group focuses on exclusivity and brand presence: – Physical Boutiques: Operating upscale boutiques and stores in key global locations. – E-commerce Platforms: Maintaining online shopping platforms for global reach. – Luxury Department Stores: Partnering with luxury department stores and retailers. – Brand Collaborations: Collaborations with artists and designers for exclusive collections. – Fashion Shows and Events: Participating in fashion shows and events to showcase new collections. – Sustainability Initiatives: Promoting sustainability through products and practices. – Customer Engagement: Offering high-end customer service and loyalty programs. – Global Brand Promotion: Global marketing and brand promotion campaigns. |
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