Gucci key factors of success
2017 will remain the year of all records for the famous Italian brand Gucci. Founded in Florence in 1921, it is today, according to Forbes, the second luxury brand behind Louis Vuitton. Its turnover is €6.2 billion, and it represents nearly 1/3 of Kering’s (parent company) turnover.
Since Gucci is considered as indispensable at the moment, it must face major challenges: the most important would be to increase production to cope with the boom in demand. Indeed, the company’s growth was twice that of the labour market. According to BFM Business, the 2018 targets would be even more explosive.Gucci predicts a sales volume of around €10 billion, an operating margin of more than 40% and a turnover of around €45,000 per square metre.
The process of internalization of the brand is also to be taken into account in the evolution of the brand: 25% of the leather items are manufactured in-house. Gucci wants to raise this share to 60%. As far as footwear is concerned, the results are on the rise: in fact, they represent 65% of manufacturing in-house, which means that Gucci has increased the internalization of its production to meet more easily its explosive demand. It’s a figure that must be maintained according to the famous Italian brand. Gucci would also like to introduce vertical integration, that is to say a 50% reduction in the time it takes to get products to market so as not to miss sales, to further drive innovation and adopt best practices.
For Gucci, creativity is at the heart of its strategy. You have to be able to create a new demand for a new luxury and culture is at the heart of the model, so it’s something symbolic that can’t be copied.
E-commerce is a trend that has developed enormously, and the brand has benefited from it. Indeed, GUCCI made it a priority: in 2018, the brand reached 224 million visitors on its website. The goal is now to multiply by 3 the revenues linked to the internet to bring them to 10% of the turnover. There is also a desire to better control its stores (529 stores in its possession). The objective would be to remove barriers between products and customers. The big trend is no longer exclusivity but inclusiveness, which is creating a community around the brand. At the end of the first half of 2018, 31% of stores adopted it.
Finally, Gucci is a brand committed by its sales and ads, as we can see for example in its “on the streets” advertisement, where the brand took back photos and videos from May 68. In 2017 she also stated that she no longer sells products with fur for the sake of animal ethics. Gucci uses its notoriety to send messages to people on topics that it considers important.
