BUSINESS Kering’s New Approach Is Underway, Creating Its Own Luxury, Sport & Lifestyle Brand Eyewear Company By Marge Axelrad Monday, September 14, 2015 12:00 AM FRONT LINES NEWSMAKER/Kering Eyewear Kering’s New Approach Is Underway, Creating Its Own Luxury, Sport & Lifestyle Brand Eyewear Company NEW YORK—The strategic plan and the significant company investment in a new eyewear business model is now officially underway for the Kering Group. Kering Eyewear, a new global initiative of the €10 billion Kering Group (FR 0000121485, KER.PA, KER.FP), one of the world’s largest luxury companies, has previewed its “Collezione Uno” of nine portolfio brands to key retail partners, established a corporate management sales and marketing team, assembled its own creative and product development group as well as a global network of production and distribution, which will give it direct control of its brands in the eyewear sector. The new Kering Eyewear company, headed by Roberto Vedovotto, CEO, reflects the Kering Group’s decision to take control of its brands and forego future licenses, which has been the traditional approach to brands in the eyewear segment for many companies. When the announcement to embark on this course was made in September 2014, Kering said, “After assessing the growth prospects of the eyewear market and the business potential of its brands in this category, Kering has initiated a strategic move aimed at building in-house eyewear expertise.” The company noted at that time, “The global eyewear market for frames and sunglasses is significant and growing double-digit in the premium high-end segment. The current size of the Kering brands’ business is roughly 350 million euros and makes Kering one of the top five players in this industry. “The 11 Kering brands that are active in the eyewear category, of which nine are managed through license agreements with five different partners, generate consolidated royalties of approximately 50 million euros. In order to maximize the extraordinary potential of its brand portfolio, the Group is setting up a new business model through which, together with its brands, Kering will fully control the eyewear value chain, from design to product development and supply chain, and from branding and marketing to sales.” In an exclusive interview with VM this month, at Kering’s U.S. office here, Vedovotto reiterated, “We are very happy to have this opportunity to be able to build this new company in this industry. I could not be more lucky to find a boss like Francois-Henri Pinault [Kering’s Group CEO], a great entrepreneur. The company’s overall philosophy and mission is to empower imagination, and we believe that Kering Eyewear is demonstrating that, empowering the creation of something completely new and different. We are building not just another eyewear company but a luxury company dedicated to eyewear.” At the official debut of the first nine brands to a select group of international key accounts, guests previewed the collections at Kering Eyewear’s Padova, Italy headquarters in a restored Renaissance villa. Then the group celebrated the debut at Venice’s Palazzo Sassi confirming, Vedovotto said, Pinault and the Group’s commitment to the initiative. “After our first campaign, the response to the first group of brands far exceeded our expectations.” In addition to the Padova previews, Kering Eyewear organized local showings to others in France, Spain, the UK, Hong Kong, China and the U.S. Those first nine collections include Bottega Veneta, Brioni, Saint Laurent, Alexander McQueen, Stella McCartney, Boucheron, Pomellato, McQ and Puma. The initial group of selected retail partners will receive their first deliveries in November/December of this year. And, at Vision Expo West and in other previews around the world, Kering Eyewear is taking appointments to open up the ranges to another select group of opticians. In early November, Kering will begin to show second collections as well as debut two additional new brands in the Kering Group portfolio, which will be announced later this month. Vedovotto said, “When Mr. Pinault took on this new enterprise, three things were strategically key for him. First, to make sure our eyewear products were more in line with the brand DNA of the Group; we are part of the same family, can work closely with the creative directors of each Kering brand. Second, to make sure the product was bringing a higher qualitative standard to the final consumer. And, third, to be more selective in terms of distribution.” The definition of “select” distribution, he explained, “depends on the individual brand and the size of the business and the character of business in each market. The range of class A+ doors around the world is probably somewhere between 3,000 and 5,000 doors; while for other brands, which can go wider, you can probably go up to 10,000 doors or so and still be focused in your plan.” Vedovotto, who has also joined the Kering Group’s executive committee, said the Group has not provided specific details about its investment into the establishment of the eyewear business. But, he noted, “It is very substantial, if you take into account what we are developing in terms of staffing up, investing in product and systems capabilities to service our customers, to set up offices and distribution. And, in terms of what we have committed to pay to Safilo in anticipation of the termination of the Gucci license, as previously announced.” As reported by VM last September, Kering and Safilo agreed to evolve their 20-year-long partnership and jointly agreed to terminate the Gucci license on Dec. 31, 2016. In compensation, Kering will pay Safilo €90. In order to benefit from Safilo’s expertise and production capabilities in manufacturing, the two groups have also agreed to formulate a strategic product partnership agreement for four years starting in January 2017. In addition to its work with Safilo, for its current and future portfolio of eyewear brands, Kering Eyewear has established a “highly selected network of suppliers.” The majority of these suppliers are within Italy; the second largest group of them are based in Japan, with the remainder of spare parts and some components coming from China. Overall, the company anticipates a sales balance of optical and sunwear. One year ago, said Vedovotto, there were four people in the group; today, Kering Eyewear’s employees number over 150. The company has also established direct subsidiaries in most of the countries that they wanted to be in, including the U.S. and Canada, Hong Kong, China, Japan, France, the UK, Spain, Germany and Italy. Other subsidiaries will still be established and Kering Eyewear will work with distributor agreements in other markets. Kering Eyewear is taking a new approach with the traditional notion of sales representatives and is bringing in to all markets, including North America, a number of select “brand ambassadors” to serve accounts. In North America, as previously reported, Kering Eyewear is headed by Antonio Bortuzzo. He is working with Ken Liming, COO-Americas, Fernando Silva, VP of sales, Kristin Kelly, director of marketing, and a team who will be working from the company’s distribution facility in New Jersey and later this fall, from a new, dedicated Kering Eyewear showroom. n maxelrad@jobson.com SEPTEMBER 14, 2015 VISIONMONDAY.COM Facebook.com/VisionMonday 48564.png @VisionMonday 48595.png MARGE AXELRAD / EDITORIAL DIRECTOR Fran%c3%a7ois-Henri%20Pinault_Roberto%20Vedovotto.tif Kering Group’s CEO, Francois-Henri Pinault (l) with Kering Eyewear’s CEO, Roberto Vedovotto, mark the launch of Kering Eyewear’s Collezione Uno, in Venice at Palazzo Grassi, in June. Continued on page 18 FRONT LINES NEWSMAKER/Kering Eyewear Kering Takes New Approach in Building Luxury Eyewear Company SEPTEMBER 14, 2015 VISIONMONDAY.COM Facebook.com/VisionMonday 51575.png @VisionMonday 51604.png Continued from page 16 Kering%20Eyewear%20hq%20in%20Padova%20Italy.tif Kering Eyewear’s HQ in Padova, Italy.