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Kering-case-study-2
- 1. KERING: LUXURY IN THE DIGITAL WORLDBYSHANNON LINDEE, JADE SCOTTE, DISHA NAGI, AURÉLIE DIAS, MARION SIMONGIOVANNI
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- 3. KERING CEO: François-Henri Pinault Establishedin 1963 by François Pinault as a timber trader Entered the luxury retail sector in late 1990s Recognized a need for a strategic vision and streamlined the conglomerate to concentrate on the luxury industry Luxury Brands: Alexander McQueen, Balenciaga, Bottega Veneta, Boucheron, Brioini, Christopher Kane, Dodo, Girard- Perregaux, Gucci, Jeanrichard, McQ, Pomellato, Qeelin, Saint Laurent, Sergio Rossi, Stella McCartney, Ulysse Nardin
- 4. BUSINESS MODEL Knowledge andresource sharing between brands • Extremely helpful for newly acquired brands • Allowed for conglomerate to create economies of scale and increase network of suppliers Company’s internal talent – pool of candidates for new project leadership Focus on collaboration between creative teams and business teams
- 5. ONLINE PRESENCE Had experiencein online sales since 1996 with Redcats and FNAC Online luxury sales much slower Gucci was a pioneer in online with first e-commerce site in US in 2002 Recognized the need to grow its online presence Launched “Digital Academy” in 2011 • Group-wide change management program to instill a digital culture in Kering owned brands
- 6. ISSUES The luxuryconglomerate was sluggish in one key aspect: its online presence. How Kering should capitalize on the benefits of a web presence, trying not to stray away from the luxury strategy of its brands? Which is the ideal approach for Kering to successfully grow the digital presence of its luxury brands? Strong online presence of luxury goods competitors. Online retailers became direct competition to traditional retailers. Online retailers benefit from having fewer overheads than physical stores: Very difficult to beat on price.
- 7. ISSUES Sales declinedsince 2003: Slow expansion of some of company’s luxury brands (e- commerce): Bottega Veneta, Alexander McQueen, Balenciaga… Trends that caused the premium sector to overlap luxury entrants in price: growing lack of separation between luxury and premium goods. The market is differentiated between “mass luxury” and “premium luxury’’. Luxury sector was dominated by a couple of brands that were defined by Bernard Arnault, CEO of LVMH, as “star brands”. Star brands should be timeless, modern, fast-growing and highly profitable: very hard to balance all four characteristics at once.
- 8. ISSUES Inability toafford many luxury goods Some people of accessible market turn to counterfeit goods to fill the void. How luxury brands needed to market their goods in order to secure the highest sales while simultaneously ensuring they did not hurt their brand image? Should it focus on only one of the groups or target each group? Should it execute its online strategy for the different segments differently or roll out with one strategy?
- 9. ISSUES Biggest weaknessin online shopping: not being able to physically see the items. “There were a lot of affluent people who were intimidated or annoyed by shopping at luxury retail stores.” People used online resources to save time. Customers now expected retailers to have an online app. (Website is nowadays not enough) How could luxury retailers apply the multi-sensory luxury experience in the online market? Luxury brands could not depend on the strength of their names alone: Necessary to recreate the luxury shopping experience online without compromising efficiency of a few clicks.
- 10. ISSUES Benefit ofthe Internet to reach all regions through one channel differences in priorities and tastes of the different regional groups. Should the brand stick to advertisement and social media for some of its brands or should it make online shopping possible for all? How should it take advantage of its portfolio of companies to efficiently and effectively grow its online presence? Did Kering have the internal resources it needed to grow this new market successfully? What would be the ideal timeline to ensure that Kering establish an online presence in a timely manner while avoiding disastrous mistakes that could hurt the images of its brands? Should it take a different online approach for its various brands? Were some of its brands too luxurious to sell online?
- 11. RECOMMENDATIONS Online shopping • Theyshould sub-divide the brands and display videos as well as images • They offer customers trail and payment method, for those who want to try before purchasing (COD) • Offer personalization as an option to the customers • more of a virtual reality where they can try products by scanning online
- 12. RECOMMENDATIONS Different mediums • keringshould take the help of social media and use It as a medium to reach the customers and make them feel their presence • They can even come up with online events for the brands that are not doing well in e- commerce • They should use CRM to make customers aware about their presence
- 13. RECOMMENDATIONS Competitors • Kering hasgot a vast hold on people, now it needs to concentrate on making people well aware about its existing brands which are not well known • Come with the mobile app, give all the features which is currently trending • Use of more different patterns on the website • Less amount of history, more about the trending collections • Be digitally advanced and socially active
- 14. RECOMMENDATIONS Counterfeits • They shouldgenerate a small post on this topic on every brand page • make a post before payment “I don’t use counterfeits” which the customers can click and accept Sales • give variety of options to mix and match the brand online • let the customers create their own model by using various kering brands
- 15. RECOMMENDATIONS • As managementof Kering planned their online strategy, they needed to consider how the company would use the Internet to target each of the three distinct groups. • Creating only ONE Kering website having subparts with the three different groups, divided by each brand present inside the group • Investing on Augmented reality to allow the customers to try the products as the most real as possible • Kering App: Easily to use, possible order directly from the App, fast • Perfect packaging first contact between the client and the product • Impeccable after sale services • Availability of retailers by phone or even interactive chat from the website/App to help and advise the customer if needed
Editor's Notes
- #7 Kering management recognized the need to grow its online presence.
- #8 Star brands should be timeless, modern, fast-growing and highly profitable . . . There are fewer than 10 star brands in the luxury world, because it is very hard to balance all four characteristics at once
- #10 When you enter a luxury shop, no price is visible at first glance; if you want to find the price of a product for yourself, it is necessary to undertake complex research . . . you are left with the impression, rather, that you have wandered into an art exhibition, where objects are displayed, and not a “point of sale.” It’s essential to “re-create the emotional and creative world of the brand, containing the cultural and psychological references that justify the price.” Customers now expected retailers to have an online app. A simple company website was no longer enough for retailers to stay competitive; customers wanted to be able to look to the Internet to get a variety of product and service information.
- #11 “The problem for real luxury brands is that they can’t be everywhere. The Web allows them to change that. There are some markets that have high levels of broadband and an appetite for luxury goods, like Korea. It’s a huge market, very sophisticated, very brand-aware, and yet very few luxury brands have gone there.”