François-Henri Pinault

PARIS — At its annual shareholder gathering, Kering chairman and chief executive officer François-Henri Pinault ran through plans for its vast stable of luxury brands and touted the company’s push into the realm of artificial intelligence.

New technology, he predicted, will free up resources for focusing on planning stages of business and give it an edge on competitors.

“Today we’re in a production phase, that is to say we’re using artificial intelligence techniques through the use of algorithms, not only for client relations to improve the pertinence of our messages and client relations — the most visible, known part — but also in other areas, in particular for planning our future needs,” he said.

Without delving into specifics, Pinault outlined areas where the company is making use of new technology, noting it has been about two years since it set up a department geared to online commerce, client relations and services as well as innovation — led by chief client and digital officer Grégory Boutté.

“It is very difficult to predict sales,” said Pinault, noting that the technology could be used to improve sales predictions and, accordingly, fine-tune production.

Initial use of the technology on handling historic data has proven “entirely satisfactory,” he added, noting a “significant difference in efficiency.”

The executive was quick to note that the idea was not to replace people but rather use the technology as a means of support, freeing up time for executives to concentrate on interpreting data.

Pinault estimated that certain early stages of the company’s processes — related to merchandising and the retail supply chain, for example — take up the bulk of its experts’ time, between 60 percent and 70 percent, but that this time could be reduced with the help of technology. 

“With artificial intelligence, we’ll be able to reduce this 70 percent in a very significant manner to leave a lot more room for the action plan part of the job — what we do with this knowledge in terms of commercial operations, or in terms of dealing with supply chains,” he said.

“That’s the essential of what we’re doing; the perspectives are very encouraging,” he added.

In 2017, the company embarked on a major transformation project, involving e-commerce sites, logistics infrastructure and information systems, as well as integrating new technology, including artificial intelligence, into operating models, Pinault explained.

“Initial use is very promising,” he said.

“These transformation projects will allow us to benefit from a major competitive advantage and open a new cycle of development, gaining efficiency, accelerating in times of growth and allowing fast reaction in less favorable periods,” he said. 

The Kering executive has shown a new openness to external acquisitions recently, which he repeated Wednesday, noting the company would be “well placed to seize opportunities of external growth that create value, if they present themselves.” 

This would not mean branching out into new areas, like wine and spirits, he noted in answer to a question from a shareholder.

“We can’t do everything,” he laughed, before launching into an explanation of its focus.

“We have decided to focus on our luxury businesses, on our product categories that have very significant structural growth on a worldwide level — we are lucky…to have a portfolio of brands that are among the largest in their categories on an international scale,” he added.

“Growth potential, as you’ve seen in the figures for the past few years, is very significant, so it would not be useful to try to go into another sector — when you measure the potential in front of us,” he added. 

Running through each of the group’s main fashion houses, Pinault said Gucci’s potential remains significant — in all product categories, including new types of products. He cited the potential to “do much better” for the label’s beauty offer and the upcoming June launch of its first high jewelry line, which will “reinforce its high-end positioning.”

Gucci expects to increase its sales per square meter in shops, and overtake the 40,000 euros a square meter level achieved last year, thanks in part to improved conversion rates and retention rates. 

Around half of its store networks have been renovated, and Gucci expects to complete the process in the two or three coming years, presenting more products in a store setting designed to be more inclusive and more attractive.

The size of the Gucci store network will remain stable, he predicted, in terms of size, while the brand plans to increase the proportion of travel retail points. 

Online sales of the label, should overcome the billion-euro mark in the medium term, he added.

Gucci’s success on social networks is “absolutely impressive,” Pinault added, and the group plans to increase the share of investment in digital communications again in the coming year. 

At Saint Laurent, the company also plans to increase its digital communications investments significantly in the coming year.

Bottega Veneta — which named a new creative director, Daniel Lee, last June — is working on a new store concept to roll out in the coming year, he added. The company has invested significantly in the label’s digital communications, and results should begin to show in the second half of the year, Pinault predicted.

Outlining plans to significantly accelerate growth of Balenciaga and Alexander McQueen, Pinault said he expects Balenciaga to surpass the 1 billion euro mark for sales this year, thanks in part to a focus on leather goods, men’s products and improvement of the brand’s productivity.

At McQueen, the company is rolling out a new store concept unveiled at Bond Street in London, and plans to increase the store network over the next several years.

As for the company’s watch businesses, Ulysse Nardin and Girard-Perregaux, Pinault said there were synergies to reap between the two prestigious labels and suggested the company is considering other moves in the sector. 

“We are in a period of observation of the sector to evaluate its future potential, and in the short term, we will reinforce the manufacturing synergies between the two brands, while respecting their respective positioning in the sector,” he said. 

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