Fran?ois-Henri Pinault discusses PPR's strategy. Photo credit: InDigital Media Group
NEW YORK ? The dynamic growth in Asia and other emerging markets?in terms of wealth, population and aspiration?has created a new dynamic for French multinational holding company, PPR. The way to company chose to take advantage of this was by focusing on the luxury and sports and lifestyle markets, said Fran?ois-Henri Pinault, chairman and CEO.
Pinault said that for 50 years the growth in population and wealth in the world (800 million consumers) was centered in the U.S. and Japan. However, in 2006 the company identified that economic growth has shifted to emerging markets?particularly China, India, Brazil, and more recently, Indonesia?bringing 3 billion consumers to the worldwide market, and that this trend will continue.
?It means that in the next 50 years the growth is amazing,? Pinault said. ?We don?t have any idea what it will be. We are always referring to the past but it?s no use. We cannot compare 3 billion people with more and more purchasing power to 800 million in the past? The question is what should we do to take advantage of this opportunity??
Pinault discussed his company?s strategy and goals during a breakfast presentation Wednesday at the Consulate General of France and in a brief conversation with reporters afterward.
He said that consumers in these emerging markets are spending freely on luxury and lifestyle than those in Europe and the U.S. and are doing so at a younger age.
?Things are moving much faster than they used to. They are becoming richer faster. They love brands. They are very strong in aspiration,? he said. ?This is just the beginning. (China) is already the biggest market in the world for consumer goods.?
It was at this time that the holding company?which began in wood and electrical industries and eventually retail distribution?decided to focus on the luxury sector (a direction it had begun in 1999) and an area it defined as ?Sports & Lifestyle.?
It began making a number of changes to its brand portfolio. The big ticket item was the purchase of a majority stake in Puma in 2007, which gave the company a stronghold in the sports and lifestyle market and a premiere brand as the centerpiece of its new strategy.
Then, he said, the company needed to identify areas of growth in this segment that would not compete with the footwear and sportswear company. Pinault said the company identified action sports, which led to the 2011 acquisition in Volcom, and in the outdoors segment of the market.
?This is where we want to express ourselves,? he said.
In 2011, identifying what Pinault described as a portfolio weakness in the growing men?s luxury segment, PPR took control of the Sowind Group, which owns the Swiss watch brands, Girard-Perregaux and JeanRichard. Then it acquired the Italian men?s fashion brand, Brioni.
He said the company will continue to pursue hard luxury brands. ?We are looking to any opportunities in jewelry and watches, particularly in Asia,? he said. ?It is very important in Asia.?
Today the luxury division of PPR consists of Gucci, Yves Saint Laurent, Sergio Rossi, Boucheron, Bottega Veneta, Stella McCartney, Alexander McQueen, Brioni, and Sowind Group with Girard-Perregaux and JeanRichard.
The ?Sport & Lifestyle? division comprises of Puma, apparel brand Tretorn, golf equipment specialist Cobra Golf, action sport brand Volcom, and Electric, a sunglass and snow goggle brand.
?We think that by addressing those markets through luxury brands and sports brands we are building a group that is very significant in terms of role, in terms of size, and for the future.?
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