The move follows the luxury conglomerate assessment of the growth prospects of the eyewear market and the realisation that in order to maximise the potential for its brand portfolio it needed to set up a new business model that would allow it to fully control its eyewear offering, from design to product development and supply chain, and from branding and marketing to sales.
The global eyewear market for frames and sunglasses is significant and growing double-digit in the premium high-end segment. Kering’s eyewear business is currently valued at 350 million euros, making it one of the top five players in the industry. The company has 11 brands that are active in the eyewear category, of which nine are managed through license agreements with five different partners, generating consolidated royalties of approximately 50 million euros.
To bring the eyewear brands in-house, Kering and Safilo’s 20-year-long partnership will need to “evolve”, the company said. Both agreed to terminate the current Gucci license agreement two years early, by the end of 2016, with Kering paying 90 million euros to Safilo, in three instalments between 2014 and 2018.
Even though Kering wishes to bring the eyewear brands in-house it still realises it can benefit from Safilo’s expertise and production capabilities, so the two groups have also agreed a four-year “strategic product partnership” agreement, starting in January 2017, for Safilo to handle the product development, manufacturing and supply of Gucci eyewear products.
Details of Kering’s other licensing agreements with Safilo for Bottega Veneta, Saint Laurent and Alexander McQueen, were not disclosed, neither were the licenses with Luxottica for Stella McCartney, or Marcolin for Balenciaga.
Kering to take back control of eyewear business
This new in-house business model will be overseen by Roberto Vedovotto, Kering Eyewear CEO, who joined the company late last year from Safilo, where he served as chief executive. But Kering did clearly state that all brands would continue to control their own creative process under the leadership of their respective creative director.
Vedovotto, said: “Eyewear is a strategic category for Kering brands. Through this innovative project, Kering aims at helping them fulfil their full growth potential in this business segment while leveraging the unique appeal of each of them.”
The business model’s objective is to better support Kering brands in accelerating their development in the eyewear category, and it aims to grow the market by taking control of its external manufacturing suppliers, developing talent within both the brands and Kering Eyewear for internal design, product development and sales force, as well as enhance its distribution across all channels with specific focus on Kering brands’ directly operated stores network.
Images: Gucci Eyewear