Although Kering Group commented that Gucci has positive business results in 2021, the brand is still quietly preparing for the reform of business and advertising strategy.
Growth rate slows down, gucci must refresh its business strategy
In 2015 when Alessandro Michele became the creative director of Gucci, the Italian brand had a spectacular rebirth. The creative director’s combination of vintage Italian motifs, contrasting colors, Gucci’s GG logo and streetwear silhouettes create an unmistakable style. That style has brought remarkable growth for Gucci over the years.
However, Gucci’s attraction since the beginning of the pandemic has somewhat declined. Especially in China, its key market. Gucci’s growth slows compared to its competitors in the luxury sector. And now, Gucci once again has to change its business strategy to maintain its appeal.
When Alessandro Michele came to Gucci, he created an unchanging signature style, incorporating the latest trends. Gucci grew the most in the period 2016 – 2019, with sales increasing by 30 to 40% per year. The Italian brand contributes half of the total revenue of the entire Kering parent group.
However, in the two years 2020 – 2021, Gucci is also more severely affected by the pandemic when compared to many competitors.
In the first year of the pandemic, most of the fashion houses faced a drop in sales due to social distancing, consumers stopped spending during the first half of the year because of stress and anxiety. However, Gucci had a worse sales decline (-22%) compared to Chanel (-18%), Burberry (-10%) or Hermès (-7%).
In 2021, the luxury fashion industry thrives, as consumers put their money into shopping instead of traveling. Gucci’s sales also rebounded. However, the increase is relatively slight when compared to competitors. Specifically, Gucci sales increased only 1% compared to 2019*, while Burberry increased by 7%, Chanel increased by 27% and Hermès increased by 30%.
Mainly, Gucci’s hit products are considered trendy. During the pandemic, customers tend to prefer classic, beautiful products that are hard to go out of fashion, and have high investment value.
For example, at the end of 2021, Gucci reported a strong increase in sales thanks to the year’s special projects – limited edition collections in partnership with Balenciaga and The North Face. Meanwhile, Chanel and Hermès do not have the same feverish handshakes. Their sales come mainly from classic style products.
As can be seen, Gucci must constantly promote special collections to maintain sales. And this is extremely draining of gray matter and creative energy.
“The difficulty for Gucci is constantly creating new things, making customers say, ‘Wow, I don’t have this. I need to own it,'” says luxury financial advisor Luca Solca.
Besides, information from China shows that this market is gradually saturated with the design style of Alessandro Michele.
According to a report from Business of Fashion’s Danielle Berstein, the crowd that once loved the madness of Alessandro Michele has now begun to be indifferent to the new collections, commenting that “the designs are nothing new. “. It can be seen that Gucci’s recent collections, although trendy, always maintain the familiar maximalism style as a way of creating identity.
To sum up, if 7 years ago, Alessandro Michele’s style was thought to break barriers in the world of luxury fashion, now it is considered to be in the way.
Undeniably, Alessandro Michele has taken the role of creative director so wonderfully. Continuously driving the brand for 7 consecutive years and creating fevers beyond expectations. But now, he needs more help. Gucci’s new business strategy is to create a team to support him.
In early 2022, the newly promoted character is Maria Cristina Lomanto. Formerly an assistant to Alessandro Michele, she will now be in charge of commerce (merchandising for the collection, for the store and store decor), licensing for cosmetics and eyewear, and field training. retail. She was also appointed to the position of Deputy General Director in charge of the Gucci brand.
Maria Cristina Lomanto is experienced in the luxury sector. She held the positions of vice president of Tod’s, brand manager of Miu Miu, and director of merchandising of Prada.
The appointment of Maria Cristina Lomanto shows Gucci’s investment in the commercial category. Gucci’s goal is to grow its total revenue to 15 billion euros, from the current 9.7 billion.
Besides, the company will also experiment with diversifying product lines, especially with high-end designs. “In 2021, Gucci will be successful with high-end jewelry and high-value fashion accessories,” said François-Henri Pinault, president of the Kering group. He explains that “these products are priced higher than the average Gucci value. They will play an important role next year.”
Gucci is one of the brands with respectable vitality. Every time there is a change, the brand always brings fever in the fashion village. 1990s with Tom Ford and minimalism; 2000s with Frida Giannini and the ability to transform skillfully to bring products that best suit market needs; and the 2010s with maximal style by Alessandro Michele. Therefore, let’s see what other trends Gucci’s next change in business strategy, advertising and design will create.
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