It is among the few fashion companies able to translate the creative director’s bizarre vision into affordable products that sell a lot
In June, Marco Bizzarri, CEO of the Gucci fashion company, said that the 2020 sales target would be 10 billion euros, close to that of the two most influential fashion companies in the world: Chanel, which in 2017 had sold for 8.6 billion euros, and Louis Vuitton, which in 2018 had exceeded 10 billion euros (LVMH, the luxury group that controls it, does not provide more accurate data).
It is a result within reach but that a few years ago, before Bizzarri’s arrival in January 2015, would have been unimaginable: Gucci was an ancient and prestigious Florentine fashion company that in the 1990s had been on the verge of bankruptcy, had regained success under the creative direction of designer Tom Ford, from 1994 to 2004, only to stagnate in years of crisis and uncertainty under that of designer Alessandra Facchinetti and then Frida Giannini. Things were overturned by the arrival of Bizzarri, who had the intuition to choose the then-unknown Alessandro Michele as his new creative director: he had started designing accessories at Fendi and had arrived at Gucci in 2002, where he held the same role before becoming a close collaborator of Giannini. Michele designed the women’s collection for the spring/summer of that year in a concise time, turning Gucci’s aesthetics upside down and launching an unmistakable, highly imitated style that has become dominant in the fashion world: a juxtaposition of styles from distant eras and tastes, colourful, excessive, that always stops a thread before the jumble and kitsch, at a time when the dominant flavour was the sober and refined taste of designer Phoebe Philo of Céline.
In 2014 Gucci’s sales were 3.5 billion euros, but after the arrival of Bizzarri and Michele they increased at a very high rate, reaching 45 per cent more in 2017 than the year before; 2018 closed with revenues of 8.3 billion euros, equal to 80 per cent of those of the luxury group Kering, of which Gucci is part. Since this year, the company’s growth has returned to normal: in the first quarter of 2019 sales were €2.3 billion, 20 per cent more than in the first quarter of 2018, which was 37.9 per cent higher than in the first quarter of 2017. In the first half of this year, sales grew by 16 per cent compared to 2018, reaching €4.6 billion: to give an idea, sales in the first six months of this year exceeded those of 2016 as a whole. This year the brand is experiencing a slowdown for the first time: in the second quarter, there was a 2 per cent decrease in sales in North America, also due to a dispute over a balaclava reminiscent of blackface (the practice of white people, considered racist, to paint their faces black), while in Asia Pacific growth went from 47 to 23 per cent. It is a normalization that would sooner or later arrive and not a moment of crisis, to which Michele has already tried to react by designing a different collection.
This economic but also cultural success, which has led Gucci to become one of the coolest brands in the world, is attributed to the management of Bizzarri and Michele’s creativity, but is often forgotten, writes the fashion website Business of Fashion, the central and decisive role of merchandising, managed by the manager Jacopo Venturini. Gucci’s selling strategy is, in fact, very different from that of most fashion companies and has contributed centrally to the sales and success of the brand.
The first thing to know is that the revenues of luxury companies do not rely so much on clothes seen at fashion shows as on accessories and products that are cheaper and easier to wear, designed to be sold quickly: sneakers, keyrings, handbags, belts, scarves, hats (at Gucci, for example, leather goods cover 57% of sales). On the one hand, there is the work of the creative director and his team, which creates a vision of the brand, builds a world around it, directs it, on the other hand, there is the work of the merchandising offices, which work on the products that the company expects to sell more and take care of all aspects: analysts identify the market demands and the designers translate them into objects that are then promoted and distributed always taking into account data, calculations and forecasts. In most companies these two worlds work separately: the creative director designs his collection, has it on the catwalk and then those who work in merchandising translate what he has seen into the objects that will end up in the stores. At Gucci, on the other hand, they work in an integrated way, developing in two different directions – one more artistic and extravagant, the other more pragmatic – Gucci’s vision as imagined from time to time.
The first thing to know is that the revenues of luxury companies do not rely so much on the clothes you see at fashion shows as on accessories and products that are cheaper and easier to wear, designed to be sold quickly: sneakers, keyrings, handbags, belts, scarves, hats (at Gucci, for example, leather goods cover 57% of sales). On the one hand, there is the work of the creative director and his team, which creates a vision of the brand, builds a world around it, directs it, on the other hand, there is the work of the merchandising offices, which work on the products that the company expects to sell more and take care of all aspects: analysts identify the market demands and the designers translate them into objects that are then promoted and distributed always taking into account data, calculations and forecasts. In most companies these two worlds work separately: the creative director designs his collection, has it on the catwalk and then those who work in merchandising translate what he has seen into the objects that will end up in the stores. At Gucci, on the other hand, they work in an integrated way, developing in two different directions – one more artistic and extravagant, the other more pragmatic – Gucci’s vision as imagined from time to time by Michele. It also helps that Michele himself started working as an accessories designer and thus has a clear understanding of the central role they play in a brand’s economy.
This double-track – creative eccentricity on the one hand, and commercial concreteness on the other – is the key to Gucci’s strategy, which, without foreclosing any market, has managed to expand its customer base around the world. Bizzarri himself explained that writes the Business of Fashion website, “the big trend today is not exclusivity. A product may be exclusive, but the exclusivity of a brand is something very different. Today, inclusiveness is the trump card of a brand, in all its aspects: in shops, in advertising, in communication and above all in people. […] What is important is that we do not target an age group. We have never wanted to address only the Millennials [those born from the early eighties to the mid-nineties, editor’s note]. We have always tried to address a state of mind”. But it’s not just age that discriminates: Gucci tries to intercept both the most experimental and fashionable clients and those who want an excellent product that lasts over time. This is one of the most challenging things a fashion company has to do: on the one hand, always inventing something new and embodying trends without breaking them, risking losing hundreds of thousands of euros; on the other hand, protecting the brand and guaranteeing sales with the great classics that remain the same from season to season. So far Gucci has tried to propose an idea of the world and at the same time a lot of concrete trends, to gain new customers and keep the old ones, who prefer the classic moccasin without the decoration of pearls or fur.
In 2015 Bizzarri explained Gucci’s merchandising strategy saying that “in the past, it had been handled with a lot of attention to data. I had tons of data available; if I asked how the handbags were doing, they gave me two thousand performance indicators. The strategy was very number oriented and little about product sensitivity and sentiment. So I decided to change the structure and called Jacopo at Valentino’s. I wanted to work with him because I understood that he was someone who felt the products. Since then Venturini has been working with Michele’s designers to translate the bags, shoes and accessories into more commercial versions, instead of doing it after the show was over: “I didn’t want”, Bizzarri always explains, “for Alessandro to design the collection and then say at the end of the season “the things that sell best you have to do in a different colour and size”. It’s too late; you have to develop everything together. The three of us work in this way”.
The result concludes BoF, is that the simpler pieces still reflect Michele’s vision and don’t look like “a secondary line of watered-down products”. Each collection features around 30 per cent of entirely new products and 70 per cent of classics, all designed together and in accordance. Some of these new additions can also become great classics such as, among the most recent successes, the Dionysus handbag, Ace sneakers and Princetown leather moccasins, which represent the heart of sales while Michele continues to amaze with more bizarre and seasonal pieces, such as luxury hiking shoes and gold earpads.
