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Business Model

Organic growth and enhancing synergies between Houses are the guiding principles of Kering’s strategy for harnessing the full potential of Luxury, and for growing faster than the market in general.
Kering brings together a coherent ensemble of complementary Houses, each with a distinctive positioning and creative universe. Each has the creative freedom to express its own unique personality in an authentic way, while at the same time benefiting from the Group’s expertise and power to develop its businesses.
Promoting
organic growth
The luxury market is a structurally buoyant one, which is why Kering has focused on the sector over the past decade. All the Group’s Houses have enormous potential for organic growth. Kering’s role in this is to provide the initiatives and resources needed to optimize their performance. The internalization of e-commerce activities, which was completed in 2021 with the integration of the Balenciaga and Bottega Veneta websites, along with the support provided by the Group’s innovation teams in developing solutions for remote sales, all contributed to the Houses’ resilience during the pandemic.

For Kering, bricks-and-mortar stores are still the ideal setting for offering the best possible client experience, because they enable Houses to deploy their creative universes in the freest, most authentic and controlled way possible. Each House seeks to continuously improve its distribution network, whether that involves opening stores in cities that are new to the luxury market, increasing the floor area of existing stores, creating experiences that resonate with the new behaviors of luxury clients, or staging events with pop-up stores.

In recent years, Kering has increased its Houses’ presence in Mainland China, enabling them to capitalize on a market that was particularly dynamic in 2020 and 2021, and to partially compensate for reduced activity in Europe due to the absence of Chinese tourists. The Group is also monitoring new opportunities in the US market.

At the same time, Kering has consciously sought to reduce its wholesale distribution channel by focusing on the most qualitative and complementary distributors, initially for Gucci and subsequently for Saint Laurent, Balenciaga and Bottega Veneta. This approach also applies to online platforms.
Created in 2013 and based in Milan, the Material Innovation Lab has more than 4,000 samples of sustainable fabrics and textiles available to help Houses and their suppliers include sustainable materials in their supply chains. A similar platform was launched in 2020 for the Group’s Jewelry activities.
“The pandemic vindicated our strategy of taking control of distribution by significantly reducing our use of third-party distributors. All our Houses share this objective and each is delivering in a way that reflects its respective stage of development. While this approach may have an impact on revenues in the short term, it will nevertheless be very beneficial over the medium and long term.”
Jean-Marc Duplaix,
Chief Financial Officer
Strengthening synergies
and developing growth platforms
Strengthening synergies and developing growth platforms is the other key area of Kering’s strategy. While Houses are free to concentrate on the essentials, such as their creative energy, their excellence in craftsmanship, the client experience, and communications, the Group centralizes several strategically important functions: logistics, legal counsel, real estate, media buying, IT systems, and the development of new digital tools. In 2014, this approach led Kering to develop an internal and transversal expertise in eyewear with Kering Eyewear – a genuine success story. In July 2021, Kering Eyewear announced the acquisition of Lindberg, a Danish company renowned for its titanium optical frames, innovative technology, and tailor made offerings.
The global logistics platform in Trecate, northern Italy, was opened in 2021. A key strategic and operational asset, the hub illustrates the Group’s overall approach of bringing together innovation, shared resources, environmental responsibility and the creation of sustainable value.
“The pandemic has accelerated and amplified current trends in the luxury market, which we had already identified and integrated into our strategic plans. This has enabled our Houses to win new clients and new markets, and to achieve exceptional levels of business performance. The alignment between our vision, our investments and the trends that are now shaping the luxury market gives us confidence for the future.”
Jean-François Palus,
Group Managing Director
To adapt to changes in modes of consumption and client expectations, the Group also launched an ambitious project focusing on its supply chain and logistics. This culminated in July 2021 with the opening of its new global platform in Trecate, Italy. The hub guarantees greater product availability, shorter delivery times, and a range of omnichannel services, while also optimizing inventory. Kering is continuing to invest in logistics expansion, notably in the Asia-Pacific and the Middle East.

In terms of innovation, the Group and its Houses are constantly monitoring the market to anticipate trends and changes that will transform the luxury sector. In the past, this involved the rise of e-commerce. Today, it concerns data science and the development of new, more sustainable materials. In the future, it will involve the metaverse and Web3 in general.

An example of adaptability to new trends came in 2021 with Kering’s announcement of its acquisition of a minority stake in Vestiaire Collective, the world leader in online resale of second-hand luxury products. The aim is threefold: to support the development of an innovative business model whose importance is destined to grow in the years ahead; to be open to new market trends; and to explore new services.

This investment also illustrates Kering’s desire to always achieve a convergence of innovation and sustainability. By doing so, the Group will be able to accomplish its objectives for reducing its environmental footprint, while also responding to the growing needs of its clients and stakeholders. More than ever, Kering’s ambition is to be the world’s most influential luxury group. The goal is to drive lasting change in the luxury sector and beyond.