Summary of Key Points
After the appointment of new CEO Luca De Meo at Kering Group, two executives from unrelated industries were swiftly appointed: Romain Spitzer, with a background in the beauty industry, was tasked with leading the luxury leather goods brand Bottega Veneta (BV), and Tancredi Vitale, from the sports sector, was responsible for Gucci's new Racing platform. These unconventional moves reflect Kering's attempt to break through the growth bottleneck of traditional luxury brands, which have relied on "creativity and store expansion," amid ten consecutive quarters of declining performance. However, such radical reforms carry risks: the introduction of efficient business practices from outside industries may undermine the core values of luxury, such as scarcity and brand identity, and could even lead to internal turmoil.
I. Two Unrelated Appointments: What Exactly Is Kering Doing?
The surprise of these appointments is akin to asking someone who sells bubble tea to manage LV bags—a complete departure from their usual scope of work:
- BV hires a perfume expert as CEO: BV primarily makes leather goods, such as woven bags, and only released its first perfume last year. They chose Romain Spitzer, who previously served as the CEO of LVMH's perfume division for ten years. His greatest achievement was turning Dior's "Wild Men" perfume into a bestseller, proving his ability to transform high-end brands into products that appeal to a wider audience.
- Gucci Racing brings in a sports industry expert: In May, Gucci announced a partnership with an F1 team to launch the Gucci Racing platform. Initially, it seemed like a simple marketing initiative, but they actually hired Tancredi Vitale, former general manager of a Venice football club (who also worked at Nike for 13 years). This move clearly indicates Kering's intention to turn racing into a sustainable long-term business.
What's more significant is that both appointments were personally approved by Luca De Meo and represent a shift from Kering's traditional practice of promoting executives from within the company. In the past, CEOs of brands like Saint Laurent and Balenciaga came from within the group; now, they are seeking talent from outside, indicating a complete change in strategy.
II. Why Choose Outsiders Instead of Internal Candidates?
The answer is simple: traditional luxury business models are no longer effective.
Kering has struggled for the past ten quarters, facing growth challenges:
- BV's Dilemma: Although BV has gained popularity with its "sophisticated yet understated" luxury approach and can compete with brands like Hermès and Chanel in terms of craftsmanship and reputation, its products (especially expensive woven bags) are out of reach for most consumers. As a result, growth has been minimal, failing to meet the company's financial goals.
- Gucci's Issues: Gucci once thrived on hit products like the Baguette Bag but has struggled to find new buzzwords. It also relies heavily on high-net-worth customers, leading to slow growth among younger and female consumers.
Traditional luxury executives focus on launching hit products and opening new stores, but these tactics have reached their limits. Kering needs individuals who can turn brand potential into tangible profits. The beauty industry is adept at making high-end brands more accessible (e.g., with perfumes), and the sports industry excels at connecting with young consumers and building communities—both areas where Kering lacks expertise.
III. Can Cross-Industry Strategies Really Save Kering?
These appointments are not random; they serve a specific purpose:
- The Beauty Expert to Save BV: BV has a good reputation but struggles to sell non-leather goods (such as perfumes and clothing). Romain Spitzer brings expertise in converting luxury products into more affordable, widely desirable items, helping to increase the proportion of non-leather business and potentially doubling BV's performance.
- The Sports Expert to Boost Gucci: F1 is becoming increasingly popular among younger and female audiences, which Gucci aims to target. Tancredi Vitale can turn the partnership into a long-term asset by creating racing-themed products, offering exclusive experiences for high-end customers, and building communities, similar to how Nike uses basketball events to engage with fans.
Additionally, Luca De Meo comes from the automotive industry and has brought in professionals from Renault to improve Kering's human resources and customer service management, adopting standardized practices commonly used in the automotive sector.
IV. Risks of Cross-Industry Strategies
The potential drawbacks of these strategies outweigh the benefits:
- Brand Identity Conflict: Luxury is associated with uniqueness and scarcity; for example, Hermès bags are delayed to maintain their premium image. The fast-paced and scaled-up approaches of the beauty and sports industries could dilute Gucci's core values.
- Internal Turmoil: Kering already faces internal conflicts among different factions (Luca De Meo's strategies, CEOs with traditional luxury backgrounds, and creative directors like Demna). Different perspectives on brand direction may hinder transformation efforts.
- Employee Disorientation: Traditional luxury employees are accustomed to a focus on brand narrative over sales targets; suddenly shifting to consumer-oriented KPIs could leave them unsure about their roles. This internal confusion could affect customers, as luxury brands rely on a stable value system.
V. The Crucial Question: Can Kering Preserve Its Luxury Essence?
The success of Kering's experiment depends on whether it can preserve its brand essence while embracing change.
Luxury is valued for its stories, history, and sense of identity. If cross-industry strategies dilute these elements, short-term sales gains may be achieved at the cost of long-term brand value. Kering has little room for error; a misstep could result in the loss of decades of accumulated heritage.
In summary, Kering is taking drastic measures in desperation. However, whether this strategy will work depends on whether it can preserve the very essence of luxury. The success of this gamble hinges on whether the "remedy" does not harm the brand's fundamental values.
*(The translation maintains the original structure and tone, using clear language suitable for financial journalism, while adapting expressions to the target audience.*