Luxury conglomerate Kering has recently announced its plans to relocate a significant portion of its operations from Switzerland to Italy. This move comes shortly after Kering was hit with a record fine of €1.25 billion ($1.39 billion) for allegedly not declaring certain activities related to its Gucci brand in Switzerland. In an effort to regularize its situation with Italian tax authorities, Kering’s Swiss subsidiary, Luxury Goods International, agreed to pay the fine.
Despite this setback, Kering is now placing its attention on Italy as the new hub for its distribution platform. The company plans to gradually shift most of its activities from Switzerland to a logistics hub near Novara in northern Italy by 2022. Although the Swiss center will experience a significant reduction in activity, Kering plans to utilize the assets and expertise it has developed in the region.
While the number of employees at the Swiss center is expected to be cut in half, Kering is committed to finding solutions for those directly affected by the relocation. The company acknowledges that the current Swiss hub, which serves as both a stock management center and a distribution platform, no longer meets its needs. However, Kering remains optimistic about its growth prospects, with a 17.5% year-on-year growth experienced in the first quarter of 2019.
In the luxury industry, where the rapid availability of goods for both in-store and e-commerce channels is crucial, optimizing distribution and supply chain operations is becoming increasingly important. Other luxury brands, such as Guerlain, have already implemented new procedures in their supply chains to reduce replenishment time. By transferring its activities from Switzerland to Italy, Kering aims to improve efficiency and remain competitive in the ever-evolving market.
Useful links:
– https://www.bloomberg.com/news/articles/2019-07-25/gucci-parent-to-move-logistics-plans-from-switzerland-to-italy
– https://www.reuters.com/article/us-gucci-kering-taxavoidance/kering-gucci-parent-to-pay-1-25-billion-money-laundering-tax-settlement-idUSKCN0ZD188
