Gucci gang, Gucci gang, Gucci gang (Gucci gang!) How did Gucci gain a following rapid enough to incite rappers and consumers alike to promote their brand? In an industry where trends are fleeting, sustaining healthy profit margins is no easy feat. This difficulty is exacerbated when even more shifts are occurring. Evolving consumer demographics and the move to digital are other variable these companies must consider: millennials currently reign with the greatest spending power, and firms should be more proactive with customer engagement and presence on online platforms (Knowles, 2018). Exploring the strategies previously utilized by Gucci and how they have resurfaced in recent years with minor adjustments to capitalize on their target market, such as selecting a creative director whose works resonate with millennials, heavily investing in marketing efforts, and making corporate social responsibility a priority provides useful insight on the ways in which luxury retail landscape has transformed a matter of years.
I. Changes in CEO/Head Designer and their Implications
Italian luxury brand Gucci was founded by Guccio Gucci in Florence in 1921 (“Gucci,” 2012). Originally a distributor of leather goods, the company later expanded to include silk, cotton, and other materials in their product offerings to sustain the increasing demand of consumers. By the 1990s, Gucci was no longer a leading player in the luxury market. At that point, Gucci lost over 22 million dollars on revenues of 23 million dollars (“Gucci's 4 Billion Dollar Man,” 1999). Maurizio Gucci, grandson of founder Guccio Gucci, was head of the company during this time before being replaced by Domenico de Sole, a Harvard Law School educated lawyer who previously represented the former head of the company, Aldo Gucci. When de Sole assumed Maurizio's role in 1995, he promoted Thomas Ford to head designer of Gucci as his first effort to save the company. De Sole believed, “Ford is that rare designer who combines creative talent with a strong sense both of business and of self” (“Gucci's $4 billion dollar man,” 1999).
De Sole's next attempt to rescue Gucci centered around using Milan's spring and fall ready-to-wear shows as a marketing campaign. To maximize the potential of this opportunity, Gucci produced ready-to-wear men's and women's collections for Milan's semi-annual show. This endeavor would be the company's first time producing ready-to-wear designs that featured “asymmetrical lines and touches of color” and embodied a “Retro 1960s style” (“Gucci's $4 billion dollar man,” 1999). The vintage designs were well-received, exciting consumers— many of whom had lost interest in previous years—to flock to the stores for an initial purchase that would reestablish their spending and brand loyalty. That same year, Gucci Group experienced record profits of $83M, from revenues of $500M (“Gucci's $4 billion dollar man,” 1999).
Less than twenty years later after de Sole became chairman of Gucci, Marco Bizzari assumed the role as the company's CEO and selected Alessandro Michele to serve as his creative director. Bizzari's choice alone was indicative of an underlying transformation of Gucci. Although Alessandro had already worked with Gucci for twelve years and at Fendi prior, he was unknown to those outside these companies. The move seemed reckless, given the men's fashion show was happening within just five days after the decision. Alessandro confidently accepted the challenge and took the risk showcasing unique content of his own instead of presenting the existing collection. This attitude mirrored Thomas Ford's confidence in showcasing Gucci's first ready-to-wear collection at the semi-annual fashion show in 1995. The vibrant patterns, inspired by vintage Gucci designs, were worn by models of both sexes with unconventional appearances. Besides their fearless personalities, Alessandro's designs for the show shared similar features with Thomas Ford's initial ready-to-wear pieces. Like Thomas Ford, Alessandro's designs were also highly praised, quite an impressive feat accomplished shortly after his promotion. More importantly, this demonstrated the return of the company's bold streak. In face of adversity, Gucci found solace in embracing innovation and seeking adventure once again, a trait their competitors were too afraid to adopt.
II. Gucci is a Brand, not a Retailer
Another distinguishing feature of Gucci is their refusal to classify themselves as a retail company, a surprising philosophy that has guides their business decisions. Instead, Gucci strictly labels themselves as a brand. Both previous CEO de Sole and current chairman Bizzari's management styles have engaged in pursuits that align with this belief. Whereas retailers concentrate their efforts on their role as a distributor of goods, Gucci has always prioritized their main responsibility as a brand in investing heavily in marketing efforts to continually build their company image. “Communications” expenditures, consisting of mostly advertising with some public relations, was previously a neglected segment of the company. This category “rose to $28M in 1995, $61M in 1996, to $69M in 1997, and exceeded $80M [in 1998]” (“Gucci's $4 billion dollar man,” 1999). To further the development of the brand, Gucci dedicated “over $200M [from 1995 to 1999] to buy out franchisees, open new Gucci-operated stores and refurbish older ones,” resulting in the ownership and operation of “124 stores, twice as many as in 1995” (“Gucci's $4 billion dollar man,” 1999). The locations of these newly opened stores were scattered across the globe, from “Milan [and] Vienna” to “Zurich [and] Hong Kong and Tokyo” (“Gucci's $4 billion dollar man,” 1999). This strategy accelerated the growth of Gucci worldwide, rather than isolating its successful business performance within one region.
Today, Gucci maintains this trend, as seen by their intention to update 165 stores by the end of the year with their revamped brand image (Gucci 25.0). Gucci's purpose with these changes is to emphasize the company's commitment to inclusivity, whereas the traditional notion of luxury goods has been exclusivity. Though there are many consistencies among all of Gucci's individual stores, the product availability at each one is specifically curated to meet the needs and wants of the consumers in that region. This is to maximize customer interactions and cross-selling opportunities within stores, thus boosting key performance indicators such as units per transaction and total sales.
Gucci is also still intensively investing in marketing, but the methods for doing so have transformed. No longer are they solely relying on print ads, as they had once done (Gucci 25.0). With the growth of the internet and the changing demographics of consumers, Gucci has shifted to focus more on the digital aspect of retail. Between 2015 and 2017 alone, sales more than doubled (Gucci 25.0). Aware that their customer base is tending to shop more online, Gucci has spent more on this sector in recent years than they had previously. In 2018, “55% of total media spend” was dedicated to digital efforts (Gucci 25.0). This amount continues to grow year after year and “for the first time, in 2018, Gucci's aggregated digital media investment will exceed the investment in traditional media channels” (Gucci 25.0). However, this does not mean Gucci is less reliant on traditional forms of marketing. “Gucci has landed the most spring 2016 magazine covers,” indicating that they intend to dominate multiple forms of media. One of their most innovative marketing efforts includes the Art Wall project in New York, a hand painted mural covering 2,000+ square feet. This form of advertising was distinctive because it was unlike campaigns other luxury brands had launched, was disguised as a public art display, and had been strategically timed to appear at the same time as the New York Fashion Show (Lockwood, 2017). The logo is evident in the Art Wall, but is not at the forefront of the viewer's attention. If anything, it is an afterthought. One of Gucci's core values is self-expression, a characteristic demonstrated by the images selected for this campaign. This trait also appeals to one of their main demographics—millennials—who view luxury differently than other generations. A Deloitte Report found that “younger consumers are purchasing products to make themselves happy, rather than to impress others”. This sentiment is reflected in the changing designs of Gucci that use historical prints as inspiration, but add a splash of contemporary newness.
Another differentiating marketing effort of Gucci was their opening of the Gucci Garden as an alternative way to engage authentically with their consumers. Since so many are shopping online, Gucci provides an incentive for the customers to interact with the brand by incorporating experiences, another value of their largest target demographic, millennials (D'Arpizio, Lavato, Kamel, & De Montgolfier, 2017). Gucci Garden is a “living, collaborative space” that was designed by Alessandro Michele that features exclusive products, a Michelin-star culinary experience (Gucci Ophelia), and an art exhibition room (Lockwood, 2017). This immersion into culture further delineates Gucci's position as a brand rather than a retailer.
The “Gucci Tribe” is also reeled in through the company's celebrity collaborations. They design custom creations for celebrities, such as Lady Gaga's red suit at the Super Bowl, and partner with artists to further align the brand with their consumers' interests.
III. Gucci's Position as More than just a Luxury Retailer
Aside from “Guccification”—what the company refers to their unique and innovative marketing—Gucci prides themselves on their company values that align with interests of their customer base. Gucci is a member of Kering, the most influential luxury conglomerate that also owns brands such as Yves Saint Laurent, Balenciaga, Alexander McQueen, and Bottega Veneta. Kering has prioritized corporate social responsibility that involves efforts of their brands to significantly reduce their impact on the environment and support social causes.
In 2013, Kering's commitment to their sustainability efforts was recognized when they were “named the top sustainable textile, apparel and luxury goods corporation” (Gucci 25.0). The accolade is also an indirect promotion of the brands as it is an additional distinguishing characteristic that also serves as a competitive advantage. No other luxury fashion house matches up in this regard. Commitments to social responsibility also appeal to the demographics like millennials, who prefer to support firms that engage in these such efforts (“Millennials Driving Brands to Practice Socially Responsible Marketing”). Gucci specifically demonstrated their support for the anti-gun movement with a $500,000 donation to March For Our Lives (Sandler, 2018). Recently, Gucci announced their decision to go fur-free (Alleyne, 2017), which is significant because fur-lined detailing was so long a trademark of their goods. Additionally, they were the first to launch a voluntary Corporate Social Responsibility certification process (“Gucci Announces the Launch of Worldwide Eco-Friendly Initiative,” n.d.).
The luxury industry prides itself on providing customers with exclusive quality goods with logos that signify status, and many of its constituents have embedded tradition into its very core. Gucci's current strategy, however, is challenging previous notions of luxury and embracing societal changes to appeal to a wider target market. And their method is working. If Gucci's competitors such as Chanel, Hermes, and Louis Vuitton intend to regain market share, they should consider repositioning their brand to reflect the change in their customer needs. Louis Vuitton, for example, is now deemed “too ordinary” in comparison to Gucci's bold and flashy patterns (“Hierarchy of Luxury Brands Around the World”). Prada's items are also failing to resonate with their customers, as shown by their rank decreasing from 81 to 94 in 2016 (“The Ranking of Fashion Brands Around the World”). Their product offerings are generally the same, so they must distinguish themselves by providing exclusive in-store experiences and promoting causes their customers care about, like corporate social responsibility. These value-added activities will be the true drivers of future growth and inspiration for rappers, not the craftsmanship and quality of leather of a handbag.
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