¹ú²úAV

One hundred years ago, in Florence¡¯s scenic Tuscan city, Italian artisan?Guccio Gucci?began building a leather-goods business. Along with his sons, he established the company and built a solid reputation. Before long, they began diversifying their leather offerings to include fashion pieces, and the iconic??was born.?

Acquired in 1999 by the second-largest luxury conglomerate globally,?Kering,?Gucci?enjoys a position among the hottest luxury brands in the world and keeps its spot on the??podium almost every quarter.
Gucci?has always known how to differentiate itself from its peers and achieve massive growth.?Whether??of Tom Ford and Domenico De Sole in the 1990s or today, with CEO Marco Bizzarri and creative director Alessandro Michele at the helm.

In 2019, the Italian luxury house??in turnover for?Kering, continuing the double digit-growth it had seen since Michele and Bazzari took over in 2015.
Gucci?has been hard-hit by the?crisis and has seen sales decline more than 22%. But Fran?ois-Henri Pinault and his team at?Kering?have the know-how to keep?Gucci?continuously attractive to consumers. How has the Italian brand stayed relevant to generation after generation of luxury customers?

³Ò³Ü³¦³¦¾±¡¯s strategy: offer exclusivity through a culture of inclusivity

³Ò³Ü³¦³¦¾±¡¯s status as an established fashion house doesn¡¯t make it outdated ¡ª quite the opposite. As Gucci CEO Marco Bazzarri told the?, ¡°The idea from the very beginning was to have a product that is exclusive but to create a culture of inclusivity.¡±?³Ò³Ü³¦³¦¾±¡¯s approach requires producing offerings that appeal to many different segments of the population.?

The company¡¯s goal is to??¡ª similar to that of mass-market brands. Accomplishing this requires the Italian house¡¯s assortment mix strategy to include more ready-to-wear articles than its competitors, such as?Christian Dior?and?Yves Saint Laurent.?

Nevertheless, luxury brands, which depend on sales of core groups of largely unchanged staple products season after season, trend-driven items can provide the much-needed relevance and buzz that helps brands stay at the center of the cultural conversation.?

This tactic isn¡¯t without risk. Companies risk cheapening the brand¡¯s integrity, which could make consumers less likely to purchase staple items. That was the risk?³Ò³Ü³¦³¦¾±¡¯s strategy?took over the past five years ¡ª and it paid off.?

Then came Covid-19.

As?Kering?chairman and CEO Fran?ois-Henri Pinault said during an annual review meeting,?Gucci?needs to find the right balance to appeal to old-money customers and the younger generation. With this in mind, should we expect more timeless, traditional products in the coming seasons??

?

Classic vs. fashion-focused

According to the?,?³Ò³Ü³¦³¦¾±¡¯s strategy?is about finding the right balance between fashion-oriented products and classic, staple pieces. The Italian company stays true to its brand heritage ¡ª producing timeless, always-in-style articles ¡ª while adapting key pieces to keep up with the latest trends.

It is how?Gucci?has responded to conservative devotees for decades ¡ª those consumers who may not choose to buy a logo-embellished loafer but see a backless style of the staple shoe as an appealing?kind of stylistic risk.?Whether one looks for timeless classics or fashion-oriented products, everything is possible at?Gucci.?

?data show that?Gucci?has the highest share of fashion-oriented articles than its competitors ¡ª especially in shoes.

Moreover, Bizzarri stated that the fashion house tries to follow the 30-70 ratio rule for new vs. carryover. Some originals can become carryovers, and some carryovers with low stock turnover can go out. Gucci has followed this strategy to ensure it stays relevant and appealing to consumers of all ages.

?

Speaking the younger generation¡¯s (Trendy) language

³Ò³Ü³¦³¦¾±¡¯s strategy?is to capitalize on trends and appeal to all genders. However,?Kering?and?Gucci?have figured out how to speak to the younger generation ¡ª a value-driven cohort searching for inclusivity and empowerment.?In terms of style,?Gucci?beat out its competitors to capitalize on the mini- to nano-bag trend.?

Reimagining its iconic bags in smaller sizes and balancing classic colors with fashion-forward hues,?Gucci?put its inclusivity objective on display.

?

Sustainability: the reality is way better than it looks

It can be challenging to define what exactly??means in the context of fashion. Should we consider only the raw material used to make an article or examine the entire production process?
If we look solely at the ¡°eco-responsible¡± products labeled by the fashion house in ³Ò³Ü³¦³¦¾±¡¯s case, one could state that the Italian company isn¡¯t doing much in sustainability. However, results are even gloomier from its competitors¡¯ side.

However,?Kering?is among those companies spearheading the fashion industry¡¯s efforts when it comes to sustainability. Since 2018,?Gucci¡®s operations and supply chain have been entirely?, and it has earned multiple other sustainability certifications. This week,?Gucci?announced its investment in the online resale platform?, taking another step toward sustainability.

To this end,?Gucci?uses more wool ¡ª considered a more ¡°²õ³Ü²õ³Ù²¹¾±²Ô²¹²ú±ô±ð¡± fabric than cotton ¡ª? than its competitors as one of the most-used materials for its ready-to-wear collections.

Combined with a firm??regarding ethics, standards for raw materials, and sourcing,?Kering?is well on its way toward its goal of making?Gucci¡¯s garment production process 100% sustainable.

One question arises: Shouldn¡¯t?Gucci?make it easier for its consumers to quickly find out which articles are sustainable and which ones aren¡¯t?

?

Conclusion

2020 has revealed the weaknesses in?³Ò³Ü³¦³¦¾±¡¯s strategy, relying too much on non-local customers. As Fran?ois-Henri Pinault stated during Kering¡¯s annual meeting, the brand continually works on being relevant for its local target market. A good example is the collaboration capsule between?Gucci?and Detroit vs. Everybody ¡ª only available for the US market.

Still, if one were to only look at annual reports and raw numbers, one could come to an incorrect conclusion about assortment. Indeed, the ready-to-wear division only generates 18% of?Gucci¡¯s revenue but accounts for 30% of its assortment. Could there be an opportunity to optimize?Gucci¡¯s assortment? Perhaps ¡ª but fashion isn¡¯t all about numbers.?

Fashion is about style, self-expression, and ¡ª as??said ¡ª ¡°Fashion is the aphrodisiac of consumption.¡±
Gucci?is not going to stop us from wanting more.