“We abandoned the licensing business model and have no intention of returning to it,” said Roberto Vedovotto CEO of Kering Eyewear last Thursday. Kering also announced the renewal of its production agreement with Safilo for Gucci’s eyewear. It was scheduled to expire in 2020, and has been extended until the end of 2023
“We revolutionised the market by jettisoning the licence-based model in order to produce our eyewear internally. We will not step backwards. Having factories doesn’t interest us. We prefer to remain flexible by resorting to different suppliers. We have been asked frequently to manage collections under licence, but we want to dedicate ourselves solely to our shareholders’ labels,” said Vedovotto, the founder and brains behind this start-up, which turned a profit in three years, reaching a revenue of €495 million in 2018 – up 45% over 2017 – and generated sales in H1 2019 worth €320.8 million. “We are currently the second-largest group in luxury eyewear after Luxottica,” claimed Vedovotto.
Kering currently holds a majority stake (63%) in Kering Eyewear, with another 7% held by the executive committee members. In March 2017, Richemont too became a shareholder, with a 30% interest. At that time, Cartier’s eyewear factory in Sucy-en-Brie, France, became part of Kering Eyewear, as its factory specialised in ‘jewellery’ eyewear. The group started to operate the eyewear licences for Cartier and, more recently, for Alaïa and Montblanc, two other brands owned by Richemont.
Kering Eyewear’s brand portfolio also includes Kering’s 10 maisons (Gucci, Saint Laurent, Balenciaga, Bottega Veneta, Alexander McQueen, MCQ, Courrèges, Brioni, Boucheron and Pomellato), plus Puma and Stella McCartney, brands which are no longer controlled by the French luxury group but whose eyewear business remains in the hands of Kering Eyewear. Gucci is the company’s best-seller, followed by Cartier.
Kering Eyewear currently has a staff of 1,300 people, between its headquarters in Padua, its Milan offices concentrating on communication, marketing and sales, and its overseas designers based in London, Hong Kong and Seoul. It operates an extensive distribution network servicing over 16,000 clients and 30,000 retailers in approximately 100 countries.
Kering Eyewear products are manufactured by 40 partner sub-contractors, 65% of them located in Italy, at most one hour away from the Padua headquarters, and the rest by producers in Japan, China and France.
Previously run via a series of regional centres, logistics is now wholly internalised, and is centrally operated at a hub not far from Padua, at Vescovana, where last year Kering Eyewear built a huge, 15,000 m2 warehouse, with the option of extending it by another 7,500 m2. The hub has room for handling 5 million units, and a daily delivery capacity of 35,000 units. Quality control is also carried out on-site. The facility enables Kering Eyewear “to control the entire process with a higher level of quality, to be faster and more flexible and to offer greater service, including personalised deliveries,” said the managers in charge of the hub.
One of the eyewear group’s main assets is its highly motivated and engaged workforce, also and especially at the design studio and prototyping centre in Padua, where 48 people work under the supervision of Nadia Rossi, product development director, and creative directors Massimo Zuccarelli and Nicola Bonaventura.
Vedovotto emphasised how “design is at the heart of our organisation. Our business model is innovative because it’s wholly internalised, meaning the relationship with labels is totally different. We work like colleagues, striving for the same objectives. For example, we have a designer in Rome who takes care of Gucci, another in Paris for Saint Laurent, there are people in Asia who create products suited to the local markets, and so on.” Operating so close to the markets enabled Kering Eyewear to considerably reduce lead times, now approximately 10 weeks between initial briefing and industrialisation, as opposed to 20 weeks in the past.
“Proximity to labels also allowed us to tap communication, digital and marketing synergies to their full extent. One of the other advantages of this new business model is that we are no longer dependent on a fixed-term contract. We are no longer exposed to the risk of an abrupt change in direction by a label, as often happens with the licensing system,” said Vescovotto.
Kering Eyewear also entirely overhauled its distribution network, streamlining it and picking and segmenting its distributors more selectively. Based on the positioning of its partner clients, the group offers them different segments of its collections, as well as bespoke marketing tools and materials.
“The outcome of this strategy is that our products are available at top retailers, and the latter have become more profitable. We cut down the number of doors by 30%. The opticians’ channel remains the most important, followed by multibrand chains, specialist stores and department stores,” said Vescovotto. The Kering group’s labels’ eyewear collections, now that they are internally managed, are selling more and growing faster.
Kering Eyewear’s geographical footprint is well-balanced: Europe ranks first with 40-45% of total sales, followed by the USA (30-35%) and Asia. Of total sales, 70% are generated by sunglasses and 30% by eyeglasses, while 55% of end-consumers are women.
In terms of sustainable development, Kering Eyewear is working notably on its packaging. In 2017, it joined forces with Italian company Bio-on, a specialist in bio-plastic, to create innovative, bio-degradable plastic materials. Finally, it is working on a blockchain-based solution that will enable its suppliers to make each product fully traceable, from its component materials to all its supply-chain elements
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