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 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.
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.
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.
- 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.
|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.|
Read Also: Kering Business Model.
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