Gucci: Staying relevant in luxury over a century

• Main Authors: KUMAR, Nirmalya, MITTAL, Sheetal
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2021
• Subjects: Luxury brands; Brand positioning; Marketing strategy; Digital marketing; Consumer motivations; Social networks; Marketing
• Online Access: https://ink.library.smu.edu.sg/cases_coll_all/350; https://smu.sharepoint.com/sites/admin/CMP/cases/SMU-21-BATCH%20%5BPDF-Pic%5D/SMU-21-0005%20%5BGucci%5D/SMU-21-0005%20%5BGucci%5D.pdf?CT=1623115554385&OR=ItemsView
• Institution: Singapore Management University

This case describes the journey of Gucci, a hundred-year-old luxury fashion brand, and how over the years it has reinvented its designs and marketing strategy to grow its market dominance world-wide. In 2015, Gucci’s dismal performance over two successive years led the fashion house to rejig its top management, and bring in Marco Bizzarri, as the new President and CEO, and Alessandro Michele as the new creative director. By end-2019, the duo had achieved a remarkable turnaround, having tripled Gucci’s sales and quadrupled its profits over 2015. In the process, they had redefined ‘luxury’, transformed the high-end fashion industry and contemporised the Gucci brand by being avant-garde and embracing new paradigms such as purpose-driven, gender-neutral, cross-generational and digital-oriented strategies. However, despite regaining its position as the world's fastest growing luxury brand, Gucci had clocked a much lower annual growth in 2019 than 2018 and 2017. Did this indicate that the brand was losing its relevance and needed to reinvent itself again? Could Gucci’s recent foray into beauty products, making it more accessible and affordable, be diluting its brand equity? Additionally, the outbreak of the global pandemic Covid-19 in 2020 had plunged the luxury industry and the fashion house to new lows. The only silver lining was Gucci’ strong digital capability, which helped the brand recover some of its lost ground through an increase in online sales. With the pandemic relenting in China, the luxury market in the country had begun to revive since March 2020. However, it was difficult to predict how other markets would behave post-pandemic. Would consumers be driven by the need to compensate for the lost opportunity to consume, or would the pandemic induce in them values that encouraged cutbacks in discretionary spending? Moreover, if the other markets did not pick up, what would be the effect of an increased dependence of the luxury brands on Chinese consumers? The case is a springboard for enriching discussion on various topics ranging from industry analysis to emergence of new consumer groups, democratisation of luxury, digitisation, innovation-led branding, adoption of higher purpose values, and the impact of external events. The students will learn how a shift in the core consumer profile necessitates brands to overcome their inertia and embrace change across multiple facets. They will also get to examine the impact of the pandemic and overreliance on one nationality on the luxury industry.