<p style="text-align: justify;">Kering is a French-based multinational corporation specialized in luxury goods. The company was founded as a timber trading company in 1963 by François Pinault. The group started to diversify its portfolio by investing in retail distribution, and in the late 1990s group shifted to the luxury industry (Kering, 2021). It is a global icon for luxury goods which manages a series of renowned Houses in Fashion, Leather Goods, Jewelry, and Watches. It operates through many of its brands, including Gucci, Saint Laurent, Bottega Veneta, Balenciaga, Alexander McQueen, Brioni, Boucheron, Pomellato, Dodo, Qeelin, Ulysse Nardin, Girard-Perregaux, and Kering Eyewear (Kering, 2021). It is one of the biggest fashion group in the world. Porter&#8217;s five forces model is used to identify threats and business opportunities faced by Kering.</p>
<h2 style="text-align: justify;">Kering &#8211; Competitive Rivalry in The Market</h2>
<p style="text-align: justify;">The European region is home to multiple leading fashion industry groups. The fashion industry was growing steadily in the last two decades. However, 2020 proved to be a devastating year for the fashion industry. Pandemic hit the business hard the global fashion industry&#8217;s profit was expected to befall 93% in 2020 (Mckinsey, 2020). The European market is competitive, and other groups are competing with Kering, including LVMH and Inditex. LVMH posted annual revenue of €44.651 B in 2020 (Statista, 2021), while Inditex posted yearly revenue of €20.402 B in 2020 (Statista, 2021). Kering posted an annual revenue of €13.10 B in 2020 (Statista, 2021). Its leading brand was Gucci, with a revenue of €7.440 B in 2020 (Statista, 2021). The competition is increased recently to new heights due to the saturation of products in the region and worldwide.</p>
<h2 style="text-align: justify;">Kering &#8211; Threat of Substitutes</h2>
<p style="text-align: justify;">The threat of substitution is high when there are alternative products available in the market. The fashion industry evolves day by day. The demand for luxury goods is increasing due to the financial condition of the developing country. The luxury brands are shifting from onsite stores to digital stores. The pandemic is the latest driving force behind e-commerce growth. Luxury brands do not like to sell their products online because they make them look casual, and customers lose the experience (Srivatsa, 2021). The group needs to evolve with time and innovate a digital platform to keep its exclusivity intact. The threat of substitution is moderate shortly, but retail giants can pose a higher-level threat in the long run.</p>
<h2 style="text-align: justify;">Kering &#8211; Threat of New Entrants</h2>
<p style="text-align: justify;">The threat of new entrants is high for now in the fashion industry. The threat is always there because of the evolving style and increases in demand. The cost of entry into the industry is high, and the profit margin is more than the investment, which paves the way for the new entrant. It can increase the competition in the market, resulting in a decline in the profit margin for the industry leader. New entrants can force the existing firms to be more effective and efficient. It forces them to explore the new business channel (Oregon State, 2021). The customer&#8217;s loyalty can restrict the new entrants from getting easy access to the clientele. In the fashion industry, clients are price sensitive. The cost and quality of the product with good marketing can dent the business of well-established fashion brands. The threat level is high at the moment.</p>
<h2 style="text-align: justify;">Kering &#8211; Bargaining Power of Buyers</h2>
<p style="text-align: justify;">The buyer’s power is high in this case. The consumer holds power when there is plenty of available options in the market, and they can switch easily. (Martin, 2019). They can impact the companies’ bottom line by driving down the selling price. The deciding factor for any consumer in the luxury goods industry is the style, quality and cost of the product. These brands act as a status symbol in society. There are plenty of options available, and e-commerce makes it easier for them to view and compare each other&#8217;s products. It increases the competition within the industry, and they can switch between the products easily. To compete in this business environment, companies should keep their quality at best. If they can do it, it will provide them business safety in the market. The buyer power is higher because of the market saturation and availability of the product.</p>
<h2 style="text-align: justify;">Kering &#8211; Bargaining Power of Suppliers</h2>
<p style="text-align: justify;">The major suppliers in the fashion industry are providers of raw materials and human resource. The raw material used in the industry is of various types, including textile material such as wool, silk and cotton, whereas Leather and synthetic materials for shoes and other products. The supply chain is complex and specific material is required to produce a good quality product. The sector is horizontally integrated. The supplier can exert its power if its future is combined with the company and other options are available for its supplies (Porter, 1979). Companies have multiple suppliers around the world. The quality of raw material also dictates the bargaining power. The human resource, which is designer and technician are a big force. They act as the backbone of the industry. The supplier holds significant bargaining power in this case.</p>
<h2 style="text-align: justify;">References</h2>
<p style="text-align: left;">Kering. (2021). Discover Kering. Available at: https://www.kering.com/en/group/discover-kering/<br />
Kering. (2021). Group history. Available at: https://www.kering.com/en/group/culture-and-heritage/group-history/?page=2<br />
Martin., M (2019) How Porter&#8217;s Five Forces Can Help Small Businesses Analyze the Competition. Available at: https://www.businessnewsdaily.com/5446-porters-five-forces.html<br />
Mckinsey. (2020). The State of Fashion 2021: In search of promise in perilous times. Available at: https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion<br />
Oregon State. (2021). Strategic Management. Available at: https://open.oregonstate.education/strategicmanagement/chapter/3-analyzing-the-organizations-microenvironment/<br />
Porter., E. M (1979) How Competitive Forces Shape Strategy. Available at: https://hbr.org/1979/03/how-competitive-forces-shape-strategy<br />
Statista. (2021). Global revenue of the Kering Group from 2012 to 2020, by brand. Available at: https://www.statista.com/statistics/267476/global-revenue-of-the-kering-group-by-brand/<br />
Statista. (2021). Inditex Group&#8217;s sales worldwide from 2004 to 2020. Available at: https://www.statista.com/statistics/268817/sales-of-the-inditex-group-worldwide/<br />
Statista. (2021). Revenue of the Kering Group worldwide from 2008 to 2020. Available at: https://www.statista.com/statistics/267466/global-revenue-of-the-kering-group/<br />
Statista. (2021). Total revenue of the LVMH Group worldwide from 2008 to 2020. Available at: https://www.statista.com/statistics/245852/total-revenue-of-the-lvmh-group-worldwide/<br />
Srivatsa. KR. (2021). How E-Commerce Is Penetrating the Luxury Market. Available at: https://www.entrepreneur.com/article/363251</p>