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Kering shifts its strategy on the luxury e-commerce segment in Asia
June 12, 2019
Abstract : Kering continues to bet on Asia, where it sees great opportunities for growth, and in the meantime is preparing to close its joint venture with the Yoox Net-a-porter group.
MILAN, Jun 10 (Class Editori) -- Kering continues to bet on Asia, where it sees great opportunities for growth, and in the meantime is preparing to close its joint venture with the Yoox Net-a-porter group. The French giant will report its e-commerce activities directly to the company in the second quarter of 2020 (see MFF of November 27, 2018).
According to chief client and digital officer Grégory Boutté, the luxury group is trying to increase online sales quotas through its websites.
"We are aware that e-commerce is destined to considerably grow, and rather quickly. This shift can be critical sometimes, but it would demonstrate the commitment of our brands. We want to make sure we have control on the experience we offer, so we will focus on expanding our online retail," said the manager.
In 2018, revenue from online retail, which excludes the wholesale business of e-tailers, was of 626 million euros, equal to 4.7% of Kering's total revenue, owner of brands such as Gucci, Saint Laurent, Bottega Veneta and Balenciaga.
Although Boutté has not set a target as a percentage of expected sales, it has nevertheless stated that the company is working to convert its wholesale accounts into a 'concession model', namely a move that would increase its profit margins once the initial investment phase is over.
In China, Kering has launched several local e-commerce sites for its brands, in an attempt to strengthen its position in a market that is still lagging behind the United States and Europe in terms of online luxury sales. Boutté specified that last year the Asia-Pacific region accounted for 32% of the company's revenues, but only 15% came from the online sales. In contrast, the United States accounted for 20% of the total turnover, with 40% coming from e-commerce sales.
"E-commerce in China as a whole is a very strong segment, anyway luxury e-commerce has not kicked off yet in the region. For this reason it represents a great opportunity for us to grow in the future," said Bouttè. In 2018, Kering's turnover increased by 22% (see MFF of April, 18). According to management consulting firm Bain & Co, e-commerce would represent a quarter of all luxury sales by 2025, compared to an industry average of 10% in 2018.
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