FASHION LEATHER GOODS & ACCESSORIES!JUNE 2014 | IMLB INTAKE 2!

Juliana GRUBER Alba ROMERO VILLA

COMPANY OVERVIEW

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• Italian luxury leather goods house founded in 1966 and purchased in 2001 by the Group Kering!

• With headquarters in Italy, the brand has about 3.000 employees!

• In middle/late 90’s the brand almost goes to bankrupt, due to its products with logo, what changed completely its image !

• They began as a leather goods house, and today they have a full range of leather good product (handbags, luggage and small leather goods ) women's and men's ready-to-wear, shoes, jewelry, accessories, perfumery and beauty products, furniture and home home collection. !

BRIEF DESCRIPTION OF THE BRAND

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• Became famous thanks to its signature "intrecciato", a unique leather weaving technique created by the Bottega Veneta craftsmen. !

• Elegant and discrete, the brand is synonymous of highest craftsmanship, and innovative design: the brand introduced soft, deconstructed handbags as opposed to the traditional French school.!

• The company creates luxury goods based on its core values of !

• quality, !

• craftsmanship, !

• exclusivity; and !

• discrete luxury.

FIGURES

• The average number of employees is 2.891.!

• Revenues amount to €1.016 million in 2013 and has a recurring operating income of €331 millions.!

• Category of product : high dependance to leather!

• Inside the Kering group, the brand is the 2nd most profitable (16%) behind Gucci (55%). YSL arrives ·rd with 8%.!

• There are 221 directly-operated stores around the world. A significant part of them are located in the emerging countries!

• Around 21% of the stores are located in Europe where 28% of the profits is allocated and 12% in the US, corresponding to 13% of the profits.

FIGURES: REVENUES EVOLUTION

YSL Bottega Venetta Gucci

BRAND STATEMENT

BRAND POSITIONING !

• Outstanding craftsmanship, know-how and masters of technique, high quality raw materials, !

• Timeless, understated and elegant yet simple actual designs. !

• Chic consumers seeking for high-end quality products but looking for a more anonymous and discrete luxury consumption in terms of brand recognition. !

• Its core customers embody modernity and timeless elegance.

COMPETITORSExclusivity!

Fashionable!Traditional !

Accessibility!

Hermès!

Louis Vuitton !Dior!

Celine!Bottega Veneta!

Gucci! Prada!

Murberry!

Michael Kors!

Ralph Lauren!

Coach!

Dolce Gabanna!

Miu Miu!

Armani!

Loewe!

Chloe!

Chanel!

5 FORCES: LUXURY & LEATHER GOODS INDUSTRY

http://www.lucintel.com

Threat of New Entrants Not need of large investments to set up a company, but high marketing & communication expenses. Brand loyalty (possibility to leverage) in luxury and existence of iconic shapes & models. Some brands benefit from tradition, heritage and specific know-how. Limited economies of scale and country of origin effect.

(MEDIUM)

Bargaining Power of Buyers Consumption is growing and brands still have room to expand, as they aren’t present in every country. Consumers are fragmented and influenced by opinion leaders. Low information regarding quality, origin… reduce perception of product differentiation. Price sensitivity depends on buying experience and the raise of new acceptable social values such austerity or conscious consumption.

(MEDIUM)

Bargaining Power of Suppliers

Limited number of quality suppliers with strong reputation, if we’re aiming to the effect ‘Made in Europe’, combined with high demand for exotic and good raw materials with low profitability. Relative low switching costs because of a regular flow of new designers and brands, even if big names may represent high volumes. Change of suppliers may lead to different quality perceptions in consumers mind.

(MEDIUM)

Threat of Substitutes Strong competition leads to many substituable products and alternative materials available in the market that may influence selling prices. More speficic, luxury leather goods and fashion face threats come from (basto) counterfeits and premium brands offerinf good value for money (attrative relation price-product).

(HIGH)

Rivalry among Existing Competitors

High concentration with domination of lage conglomerated makes it difficult for independent labels. Conglomerates may

share possibles outsourcing of raw materials, reducing costs. In-home production. High degree of product differentiation,

especially for iconic shapes and luxury educated consumers. The industry estimated growth:to reach $91.2 billion by 2018,

with a CAGR of 3.4%, over the next five years.

(HIGH)

SWOT ANALYSIS

S WO T

1. Strong leather goods category and Extraordinary craftsmanship & technique (intrecciato)!

2. Popularity among important markets in luxury consuming!

3. Growth rate and profitability!4. Brand recognition in Asia!5. Skilled work force!6. Reduced labor costs

!1. Overuse of brand codes (bee and intrecciato)!2. High dependance on leather goods !3. Recent expansions that need further investment

and risk of brand dilution !4. Damaged image as a consequence of the “fashion

approach” during 90’s that made the company lose loyal customers;!

1. Further investment in new activities!2. Continue expanding into emergent market!3. Diversifying!4. Financial, know-how etc… support from the Kering

group

1. Competitive environment!2. Austerity!3. Growth estimate decreases!4. Rising costs and scarcity of raw material

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HELPFUL to achieving the objective

HARMFUL to achieving the objective

WHAT’S NEXT?

2 DIFFERENT STRATEGIES:

Bottega Veneta should enlarger their recent investments to continue their brand re-positioning and secure their existing and recently created brand extensions before entering into further new activities. !Furthermore, as Bottega Venetta is key in terms of revenues for Kering group, challenging the rules of the game of the company could be risky for the conglomerate. !

Investment in a new category of products inspired by OUTDOOR LIFESTYLE & NATURE. !PRINCIPLE: PRODUCT - LIFESTYLE. From a focus on product to a lifestyle proposition. !Indeed, this initiative makes sense within the current strategy of the brand - sticking to their Italian expertise & know-how as a return to the roots. !Furthermore, it represents a new ground for the brand and shakes the mindset within the company while keeping a strong relation with its core competences - Italian traditional roots. !Wide range of products for different price points. Our aim is to create a complete lifestyle experience to engage consumers in a higher level:!

Terroirs, outside table wear and art de vivre, outside living related goods, gardening tools and products, seeds, outdoor furniture and inspired clothing and accessories line.

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BUSINESS PROPOSITION: OUTDOOR CATEGORY

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Key activities Green (not so ‘eco’ since we’re a leather goods company) but our products are inspired in nature and Italy iconic locations. Revival and treatment of old local, rural & classic environments.

Value propositions !High design performance products inspired by natural environments. Unique outdoor lifestyle concept thanks to different categories of offer such: specific furniture and lighting, small gardens in glass, art de vivre and table-wear, flowerpots, seeds, nature inspired clothing, candles, etc. A whole Vuelta a las raíces The aim is to transform a local garden center into a chic celebration of nature by the idea of merging house and garden to create an experience for the senses, !

Customer relationships

Emotional attach to the product due to its strong positioning and its high degree of differentiation. A new business area dedicated to build brand image positioning our strengthen our brand essence and its origins.

Customer segments !!• Bobo’s and wealthy chic

consumers, but discrete consumption of luxury goods.

• People that enjoys nature and outdoor lifestyle.

• Individuals seeking for authenticity, a back to the roots.

• People searching for new leisure activities involving working with the hands.

• People that likes fashion & style, however, search for differentiation and is looking to communicate their personality by the consumption of specific products and brands.

Cost structure !Usual cost of operating a business (rent, salaries, raw material, machines, maintenance, etc). Store / Ateliers costs. Partners costs.

Revenues streams Sale of products full of added value to customers: the concept is rather creative and full of vivid principles; yet perfectly aligned with Bottega Venetta’s brand DNA. The product range includes several price positioning from entry products (seeds, candles, etc.) to more expensive ones (high designed furniture) and is driver by have high quality standards. Higher price justified by a specific know-how, artisanal work and environmental sustainability of products that are all imported from local partners in Italy. It will bring differentiation to our brand and a market personality in a specially saturated competitive environment.

Key partners !Local gardening centers and all around the word exotic species. Local raw materials for furniture and production centers. Partner with design and architecture firms to collaborate to develop our exterior universe concept. Workshops and in-store ateliers. !!

Channels Retail stores starting by historic markets: Italy (Venezia and Toscana) regions, also France. Second stage: bring nature to urban environments: Paris, Milan & London. Concept stores: Merci, 10 Corso Como or Societé Anonyme. Pop-up stores.

Key resources Good possible local designers able to understand the customer taste & artistic / creative. !Sales & market team that interacts with target audience adding value proposition. !

MOOD BOARDS & COLOR COMBINATIONS

2 DIFFERENT THEMATICS:

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Venezia!

Toscana

Playful!Bright colors !

combined with beige and sand!Carnaval & Murano!Modern & Elegance

Traditional !Warm & earth colors!

Grapes and field!Wood & Intrinciatto!

Elegance

“Simple design is always complicated”

TOMAS MAIER, CREATIVE DIRECTOR

Thank you for your attention