Luxury conglomerate is the combination of two or more corporations engaged in entirely different businesses that fall under one corporate group, usually involving a parent company and many subsidiaries. Often, a conglomerate is a multi-industry company. Luxury Conglomerates are large and multinational.
In the last 15 years their establishment is one of the most interesting phenomenon in terms of governance and business models. In fashion and luxury there are known:
- Gucci group/PPR (conglomerate in past)
- minor player Prada group (conglomerate in past)
Them are a diversified groups, or holdings, with a very wide portfolio of brands in different product categories, that manage their portfolio in order to enjoy economies of scale backward while maintaining brands independence in the front-end.
LVMH French luxury conglomerate (Louis Vuitton Moët Hennessy) was formed in 1987. the biggest of all conglomerates. The oldest of the LVMH brands is wine producer Chateau d‘Yquem, which dates its origins back to 1593. Main holding company is Christian Dior. CEO: Bernard Arnault. Holding owns:
- Louis Vuitton, Loro Piana, Fendi, Kenzo, DonnaKaran, Loewe, Marc Jacobs, Moët&Chandon, Bvlgari, Emilio Pucci etc.
Richemont, Swiss luxury goods holding, founded in 1988, third largest luxury goods company in the world. CEO: Johann Rupert.As of 2014, Richemont is the second-largest luxury goods company in the world after LVMH.Company owns:
- Cartier, AlaÏa, van Cleef & Arpels, MontBlanc, Dunhill, Chloe etc.
PPR, founded in 1968, was known previously as Pinault-Printemps-Redoute. It acquired Gucci in 1999 and made its entrance in luxury goods sector. At 2013 company was renamed to Kering to highlight their focus on luxury and sport/lifestyle divisions. (Today Kering is a third largest luxury conglomerate in the world).
Kering, (previously PPR) is the French luxury goods holding company, owner of Alexander McQueen, Balenciaga, Brioni, Gucci, Puma, Saint Laurent Paris, Pomellato and other luxury, sport & lifestyle brands distributed in 120 countries. CEO: Francois-Henri Pinault
Prada, italian group, was quite a powerhouse at 90s, at one point owning 51% of Helmut Lang, Jil Sander and Fendi. But by 2006 the brands has been sold and it appeared to be independent brand owned by family Prada. Today Prada is an italian luxury fashion house, specializing in leather handbags, travel accessories, shoes, ready-to-wear, perfumes and other fashion accessories. So we can place it to independent luxury company. As a business and a label, it was founded in 1913 by Mario Prada, and today the helm of the brand holding his granddaughter Miuccia Prada as a Head designer. Prada owns:
- Prada, miu miu eyewear, Car shoe, Churchs
Some of luxury brands remain independent:
- Ermenegildo Zegna
- Giorgio Armani
- Salvatore Ferragamo
Advantages in luxury conglomerates:
- Savings on media spending
- Better accessibility/negotiation on retail location
- Professional management available for different brands
Disadvantages, we may say, that brands are less autonomous in design, managment of budgeting directions and positioning.
A key success factor is How to manage portfolio