New technologies and emerging business models are reshaping the Luxury sector and impacting every stage of its value chain. To master these changes and integrate them into Kering, working with startups is essential. How does Kering identify and collaborate with those companies? And what is their impact? Benjamin Bouygues, Kering’s Ventures and Innovation Director, explains.
Guiding transformation at Kering’s Houses
What do 3D design, artificial intelligence (AI), blockchain and conversational agent have in common? They all impact Luxury’s value chain. They also are emerging topics, and knowledge about them is concentrated primarily in startups. For Kering, working with such companies is not an end in itself, but rather a key aspect of its innovation strategy and a means of promoting transformation within the Group and its Houses. “Having contact with startups gives us visibility about what’s going to happen in the future,” explains Benjamin Bouygues, Kering’s Ventures and Innovation Director. “Collaborating with them lets Kering more fully understand a subject and its potential impact, and
to then find the best possible partner for a given project.” For years, the Group has been in constant dialogue with key players in innovation. Thanks to proactive monitoring in Europe, the United States and Asia, strategic partnerships forged with networks and innovation platforms such as Fashion for Good, or investment in venture funds like Cathay Capital, the Group can identify the most promising startups.
Investing to anticipate transformation
Through Kering Ventures, Kering invests directly in startups by taking a minority stake. “It’s a solution that lets us work with management teams, keep a close eye on the creation and development of projects, and more effectively anticipate the ways in which innovation might impact Kering’s activities,” notes Benjamin Bouygues. Such investments are a starting point for mutually beneficial collaborations that range from simply sharing experiences to strategic or commercial relationships. Recently, Kering invested in VitroLabs, a lab-grown leather startup that works with stem cells from cows — a development with real potential for making progress on a key issue for the Group and for the Luxury sector in general.
As a co-investor in these collaborations, Kering’s aim is always to “make the most of the partnership in strategic terms, without impeding on the startup’s success or performance,” Benjamin Bouygues emphasizes. And while it is essential to understand and respect the characteristics of startup operations, understanding the specificities of local ecosystems is just as important. For that reason, Kering formed a team in China to identify investment opportunities in an environment that is very different from European or North American ecosystems. Working with Kering’s sustainable development personnel in China, and in partnership with Plug and Play, that effort notably contributed to a call for projects at the Kering Generation Awards, to identify innovative startups in sustainable development.
Web3 and Resale
In recent months, two major trends have shaped Kering’s collaboration with startups: the secondhand market and Web3. The former, which just a few years ago was perceived as being Luxury-adjacent, is now becoming fully integrated. By investing in Vestiaire Collective in 2021, Kering has accelerated in this market, establishing several pilot projects at Houses wishing to offer customers a new service. The other key topic, Web3, concerns the many possibilities offered by blockchain technology. That horizon suggests numerous applications for Luxury, which was one of the first sectors to take an interest in that technology. Why are luxury players intrigued by Web3? For its potential in terms of data security, and because it enables creatives to reclaim control of their work, re-establishing both value and rarity in the digital space through NFTs, digital assets that are unique and can only be held by a single owner. Watch this space…