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Why Kering's Business Model is so successful?

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Kering’s Company Overview


Kering is a global leader in luxury, providing world-class craftsmanship and unparalleled design through its distinguished portfolio of renowned fashion houses and lifestyle brands, including Gucci, Saint Laurent, Bottega Veneta, Balenciaga, and Alexander McQueen. With a commitment to sustainability and innovation, Kering continually redefines the luxury industry by merging heritage and modernity, catering to discerning customers in over 120 countries. The company's mission is to empower imagination in a sustainable manner, fostering creativity while preserving the planet's resources.

Kering's unique business model centers around a house-centric approach, where each brand retains its distinct identity and creative vision while benefiting from the group's shared services and expertise in areas such as supply chain management, marketing, and digital innovation. This decentralized structure allows for agility and responsiveness to market trends while leveraging economies of scale. Additionally, Kering prioritizes the principles of sustainability, nurturing long-term relationships with stakeholders, and promoting responsible business practices across its operations. The company's commitment to sustainable luxury is evident through initiatives like the Kering EP&L (Environmental Profit & Loss) account and numerous partnerships aimed at reducing environmental impact.

Revenue for Kering is primarily generated through the direct sale of luxury goods including apparel, accessories, footwear, and jewelry, distributed through a combination of owned retail stores, e-commerce platforms, and a network of wholesale partners. The company also benefits from licensing agreements and brand collaborations, which further extend its market reach and influence. By continuously investing in digital transformation and customer experience, Kering ensures robust and diversified revenue streams, maintaining its position at the pinnacle of the luxury industry while driving sustainable growth and profitability.

www.kering.com

Headquater: Paris, France, EU

Foundations date: 1963

Company Type: Private

Sector: Consumer Goods

Category: Retail

Digital Maturity: Fashionista


Kering’s Related Competitors



Kering’s Business Model Canvas


Kering’s Key Partners
  • Luxury Fashion Brands
  • Raw Material Suppliers
  • High-End Retailers
  • Logistics and Distribution Partners
  • E-commerce Platforms
  • Fashion Designers and Creative Directors
  • Financial Institutions and Investors
  • Marketing and Advertising Agencies
  • Technology and IT Providers
  • Environmental and Sustainability Organizations
Kering’s Key Activities
  • Brand Management
  • Product Innovation
  • Supply Chain Operations
  • Marketing and Sales Activities
  • Customer Relationship Management
  • Sustainable Development Initiatives
  • Talent Acquisition and Management
  • Financial Planning and Analysis
  • Corporate Governance and Compliance
  • Digital Transformation and IT Management
Kering’s Key Resources
  • Brand Portfolio
  • Design Expertise
  • Global Distribution Network
  • Sustainable Innovation
  • E-commerce Platforms
  • Retail Stores
  • Strategic Partnerships
  • Financial Capital
  • Luxury Manufacturing Capability
  • Talent Acquisition and Development
  • Intellectual Property
  • Customer Data and Analytics
Kering’s Value Propositions
  • Luxury fashion and accessories
  • Exceptional craftsmanship
  • Exclusive brand portfolio
  • Sustainable and ethical fashion
  • Innovative designs
  • Heritage and tradition
  • Personalized shopping experiences
  • High-quality materials
  • Unique brand stories
  • Cutting-edge creativity
  • Timeless style
  • Superior customer service
  • Exquisite product detailing
  • Iconic fashion houses
  • Unparalleled prestige and status
Kering’s Customer Relationships
  • Customer loyalty programs
  • Personalized services
  • VIP customer service
  • Exclusive previews and events
  • Direct communication channels
  • After-sales support
  • Customized offers and promotions
  • Customer feedback systems
  • Social media engagement
  • Community building initiatives
Kering’s Customer Segments
  • Luxury Consumers
  • High Net-Worth Individuals
  • Fashion Enthusiasts
  • Sustainable Product Seekers
  • Millennials & Gen Z
  • Global Shoppers
  • Online Shoppers
  • Boutique Retail Clients
  • Collectors of Luxury Goods
Kering’s Channels
  • E-commerce
  • Retail Stores
  • Luxury Fashion Boutiques
  • High-end Department Stores
  • Online Marketplaces
  • Social Media Platforms
  • Fashion Shows
  • Brand Websites
  • Email Marketing
  • Mobile Apps
Kering’s Cost Structure
  • Employee salaries and benefits
  • Supplier contracts and sourcing costs
  • Marketing and advertising expenses
  • Retail store leases and related expenses
  • IT infrastructure and software solutions
  • Research and development costs
  • Logistics and distribution expenses
  • Compliance and regulatory costs
  • Maintenance and operational expenses
  • Corporate social responsibility initiatives
Kering’s Revenue Streams
  • Luxury goods sales
  • Royalties and licensing fees
  • E-commerce revenue
  • Wholesale revenue
  • Retail store sales

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Kering’s Revenue Model


Kering makes money by combining different business models. Below, you will find the list of the different monetization strategies identified for this company:

  • Brands consortium
  • Ultimate luxury
  • Culture is brand
  • Archetypes of business model design
  • Cross-subsidiary
  • Direct selling
  • Make and distribute
  • Best in class services
  • Bundling
  • Cash machine
  • Niche retail
  • Remainder retail
  • Spectrum retail
  • Customer loyalty
  • Customer relationship
  • Channel per purpose
  • Demarketing
  • Digital
  • Discount club
  • eCommerce
  • Experience
  • Experience selling
  • Fast fashion
  • Fashion sense
  • From push to pull
  • Ingredient branding
  • Integrator
  • Layer player
  • Long tail
  • Online marketplace
  • Orchestrator
  • Regular replacement
  • Shop in shop
Analytics


Market Overview
  • Patterns
  • Sectors
  • Categories
  • Companies
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Kering’s Case Study


Kering's Case Study


As we delve into the universe of luxury, there is one name that continues to redefine the apex of sophistication and innovation—Kering. Established in 1963 and headquartered in Paris, France, Kering has metamorphosed from a regional player into a global leader in the luxury sector. This journey is a testament to strategic foresight, impeccable execution, and an unwavering commitment to sustainability. Today, we explore the architecture of Kering’s success and dissect the elements that make this conglomerate unique.

A House-Centric Approach: The Bedrock of Kering's Strategy


At the core of Kering’s strategy is its house-centric business model, which allows each brand within its portfolio to maintain its unique identity while benefiting from the synergies of shared services. Imagine a grand mansion where each room (brand) possesses distinct decor and atmosphere, yet all rooms enjoy the centralized amenities like heating, internet, and security. This framework enables the brands to be agile and responsive to market trends while enjoying economies of scale.
The efficacy of this model is validated by financial metrics. In 2022, Kering’s revenue surged to €17.6 billion, up from €13.1 billion in 2020 (Kering Annual Report, 2022). This remarkable growth is not merely a statistic but a narrative of how a balanced decentralization can drive financial performance.

Market Segmentation: Catering to Connoisseurs


Kering’s customer segmentation is as diverse as its brand portfolio. From fashion enthusiasts and high net-worth individuals to Millennials and Gen Z, the company tailors its offerings to meet the multifaceted needs of luxury consumers. Crucially, Kering is tapping into the growing demand for sustainable products. According to a survey by McKinsey in 2021, 57 percent of consumers are willing to change their purchasing habits to help reduce environmental impact. Kering has listened, with initiatives like the Kering Environmental Profit & Loss (EP&L) account, which measures the environmental impact of its operations and sets benchmarks for sustainable practices.

Supply Chain: Craftsmanship Meets Sustainability


We cannot discuss Kering without emphasizing its unparalleled commitment to craftsmanship and sustainability. Kering's supply chain is a seamless blend of heritage and modernity, involving raw material suppliers, luxury fashion brands, and logistics partners to offer high-quality materials and unique product stories. According to Kering’s 2022 Sustainability Progress Report, the company has reduced its environmental impact by 40 percent compared to its 2015 baseline.
Digitalization also plays a critical role here. From predictive analytics in demand forecasting to blockchain for transparency in raw material sourcing, technology underpins the company's supply chain innovations. "In luxury, trust is paramount, and trust is built with transparency and authenticity," says Francesca Romana Rinaldi, a luxury fashion industry expert.

Revenue Streams: Diversification & Digital Thrust


When it comes to revenue streams, Kering leaves no stone unturned. From direct sales through their owned retail stores to robust e-commerce platforms and a network of wholesale partners, Kering’s diversified approach ensures a steady flow of income. The company also sees considerable revenue from royalties and licensing agreements. Statista reported in 2022 that Kering's e-commerce revenues grew by an impressive 25 percent year-on-year, a clear indicator of its successful digital initiatives.

High-Growth Brands under Kering Portfolio


Let’s spotlight the crown jewels in Kering's portfolio: Gucci, Saint Laurent, Bottega Veneta, Balenciaga, and Alexander McQueen. Each brand, rich with iconic fashion narratives, has been instrumental in the group’s profitability. For example, Gucci's revenue alone was €9.7 billion in 2022, contributing over 50 percent to the group's total earnings (Kering Financial Report, 2022). Notably, Alessandro Michele’s creative direction at Gucci has positioned the brand as a torchbearer of modern luxury.
Moreover, Saint Laurent saw double-digit growth, reinforcing the value of creative autonomy within Kering's strategic framework. "A brand like Saint Laurent thrives under a decentralized management system, enabling rapid market responsiveness while preserving creative integrity," notes Peter Ernest, a renowned luxury goods consultant.

Customer Relationship Management: Building Loyalty & Engagement


Building and nurturing customer relationships form the crux of Kering's operational ethos. Through tailored loyalty programs, VIP services, and exclusive previews, the organization ensures that its customers feel valued and engaged. The luxury experience extends beyond the purchase, with after-sales support and direct communication channels reinforcing customer loyalty.
For instance, the company employs social media platforms and community-building initiatives to maintain a continuous dialogue with customers. According to Bain & Company, social media platforms account for 16 percent of luxury sales influences, highlighting their growing importance.

Kering's Unyielding Commitment to Sustainability


Kering's dedication to sustainability stands out as a cornerstone of its long-term strategy. Through partnerships with environmental organizations and internal initiatives, Kering exemplifies responsible luxury. The Kering EP&L, for instance, provides a comprehensive overview of the company's environmental footprint, setting a blueprint for future sustainability efforts.
The recent partnership with The Fashion Pact underlines this commitment. Launched in 2019, The Fashion Pact aims to mitigate the negative environmental impacts of the fashion industry. Kering, as a founding member, leverages this platform to drive systemic change in how luxury and fashion intersect with sustainability.

Conclusion: The Quintessence of Sustainable Luxury


In closing, Kering’s illustrious journey epitomizes the harmonious blend of heritage and modernity, all while championing sustainability. Through a unique house-centric approach, diversified revenue streams, and unwavering commitment to craftsmanship, Kering stands as a beacon of luxury excellence. Its strategic foresight and operational agility ensure that it continues to lead, not just in fashion, but in setting benchmarks for responsible business practices.
Indeed, as we look to the future of luxury, we can't help but view Kering as a paragon of what is possible when imagination is empowered sustainably.
For more details on their recent initiatives, visit their official website at [Kering](http://www.kering.com).
In a world where luxury and sustainability often seem at odds, Kering demonstrates they can not only coexist but thrive together.


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