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.
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?
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