Group

In times of crisis: Maintain business continuity and prepare for the future

Jean-François Palus, Group Managing Director

Jean-François Palus, Group Managing Director

2020 was a year of unprecedented, multiple challenges. Faced with the evolution of the Covid-19 pandemic, our top priority was to protect employees and customers by introducing strict health measures at our boutiques and other sites. First deployed in China, these protective measures were gradually extended to other regions as the coronavirus continued to spread.

 

At the same time, we had to ensure business continuity and safeguard the tens of thousands of jobs that our activities sustain, both directly and indirectly, without sacrificing our long-term strategy, vision, and values. As a result, we were able to maintain business activity throughout the value chain.

 

In early March 2020, the introduction of lockdowns in Europe was soon followed by the cancellation of the Milan and Paris Fashion Weeks. Physical showrooms could no longer be used, and alternative solutions were needed to present our collections to buyers. Drawing on past experience, the Group’s IT and innovation teams responded by working with the Houses to create virtual showrooms. These efforts achieved their objective to perfection—to the extent that this approach is destined to continue once the crisis has passed.

 

We also demonstrated our agility and ability to respond when it came to launching the production phase of the Fall-Winter 2020 collections. Unable to have all our teams working on-site—particularly in Italy, where most of our Houses’ workshops are located—we prioritized essential activities and reorganized our workshops to produce collection prototypes in a Covid‑safe environment.

 

 

Solutions deployed in just a few weeks

The closure of boutiques provided yet another challenge. Here too, it was vital to ensure the safety of our employees, while also sustaining the business activities of our Houses.

 

To help our sales personnel maintain their links with customers, we provided solutions in just a few weeks that enabled them to carry out sales remotely. In addition, to cope with the near-total curtailment of international tourism, our Houses deepened their relationships with local clients through the use of advanced clienteling and CRM systems. In both cases, the Group was able to draw on development work that was already well advanced, with the associated benefits quickly becoming clear. Throughout the year, we showed flexibility and our ability to respond by reallocating inventory across different markets and distribution channels, based on the restrictions faced by both our boutique network and by tourists. These efficiencies were made possible thanks to a series of projects that have been carried out in recent years to increase our logistics capacity.

 

Together, all these developments also made us even more determined to maintain our investments in digital tech and innovation, so that by exploring new solutions and new business models we can be ahead of future market trends.

 

Kering’s resilience in 2020 was based on the Group’s women and men who all distinguished themselves for their ability to respond, their agility, their creativity and their self-discipline. Our resilience was also helped by strategic projects that have been underway for several years.

The new global logistics platform in Trecate, Italy.

The Houses used innovative approaches to maintain their relationships with clients. Pictured here, the Gucci 9 hub.

Balenciaga boutique in Rome.

Boucheron boutique in Beijing.

Alexander McQueen boutique in London.

Pomellato boutique in Shanghai.

Giant installation designed b Alexander McQueen boutique in London. y Bottega Veneta, based on its iconic gold chain, seen here in Chengdu, China.

Ongoing projects boosted resilience 

The crisis has amplified trends that we had already identified and embedded in our strategic planning. While the crisis in 2020 undoubtedly prompted our customers to switch to online purchases, we still had to accommodate such a change. By internalizing e-commerce platforms in 2019, we were able to provide a quick response to lockdown the following year, with the Saint Laurent and Alexander McQueen websites being transferred to our internal platform. The effects were felt immediately, in the form of new functionalities, a more seamless digital experience and improved performance.

 

At the same time, e-commerce also requires a significant logistics capacity. It was another need that we had anticipated by deciding to develop our logistics structure. In 2019, we relocated our distribution center for North America to new, ultra-modern facilities. Last year, we opened a new central hub in Italy, replacing a previous network of about 20 sites that had reached saturation point. The new platform offers several competitive advantages when it comes to meeting the expectations of e-commerce customers: providing greater availability of products, a reduction in delivery time, and the ability to offer omnichannel services. For the Group, it also reduced the cost per item and optimized our inventory management.

 

These platforms required ambitious investments that were designed to prepare us for the future and they proved extremely useful in 2020, contributing directly to our performance. Further logistics centers are planned to open in the next two years in Asia-Pacific and the Middle East.

 

 

Trends that reflect our strategic direction

Another trend confirmed in 2020 was the ever‑greater demand from clients in terms of innovation and the customer experience, both online and in-store.

 

We are convinced that bricks-and-mortar boutiques will remain the dominant way to deliver the ultimate luxury experience, enabling Houses to express their creative vision in a way that is totally free, authentic and controlled. This is why we are continuously improving our Houses’ network of boutiques, while at the same time enhancing the quality of our wholesale channel, where we deliberately focus on the highest-quality and most complementary third-party distributors. This focus has led to our increasing presence in Mainland China in recent years, and enabled us to seize the opportunities of a market that was particularly dynamic in 2020 and compensated for a reduction in activity in Europe.


Meanwhile, our Houses also adapted to new ways of operating and new opportunities by increasing their use of pop-up stores, and by also staging regular in-store events designed to maintain a constant conversation with a local clientele.

 

Lastly, the crisis also accelerated another deep‑lying trend in Luxury: the growing expectation among clients for brands to provide meaning, responsibility and commitment. We will not rest on our laurels as a pioneer and leader in terms of sustainability. In 2020, we raised the standards of what we expect, making highly practical commitments to support biodiversity. More generally, Kering has believed since its foundation that the Group’s role goes beyond the pursuit of business performance. In 2020, it was this founding belief that lay behind our willingness to provide financial and material support to fight the pandemic.

 

The solidity of our business model enables us to be a company with genuine commitments and a clear sense of its responsibilities. Taking care of our Group and our Houses also means taking care of our partners, our communities, and our environment. The fact that our strategic direction, our investments, and the trends shaping the Luxury market are all perfectly aligned proves that our business model is a sound one—and gives us confidence in the future.

Discover the other sections of our Activity report

What were the key challenges of 2020? How did our teams respond to the situation? What are our proudest achievements? What are our priorities? Our objectives? Read interviews with Jean-François Palus, Group Managing Director, Béatrice Lazat, Chief People Officer, Grégory Boutté, Chief Client & Digital Officer and Marie-Claire Daveu, Chief Sustainability and Institutional Affairs Officer.