Gucci Road To Revival: Young Marketing Praises China'S Anti-Corruption

Young, adapt to China's anti-corruption...

After making a series of strategic adjustments, Italy

Gucci (Gucci) has brought some good news:

According to Bain Capital forecast, the whole luxury industry growth in 2016 is the second low since 2009.

However, in the first quarter, Gucci's growth rate reached 3.1%, much higher than the average of 1% of the industry. In contrast, its competitors Louis Vuitton (LV), Burberry (Bo Baili) and Dior (Dior) were not stagnant growth or retrogression.

"We are very optimistic and confident. Let's go to the store to see it. We are the only luxury brand store that has customers."

Marco Bizzarri, chief executive officer of Gucci revival, said.

"Gucci's future goal is to sell 6 billion euros a year."

Marco Bizzarri is optimistic that the brand will advance two times the average growth rate of the industry.

Brand relocation

Who would have thought that in 2013, the brand from Italy was criticized by the industry for its "old design, no consumers and slow growth".

Since 2013, Gucci has been in negative growth for two consecutive years. By the first quarter of 2015, its performance has been the worst in five years.

No longer can bear the sluggish Gucci's massive exchange of blood. In early 2015, when the new CEO Marco Bizzarri took office, Alessandro Michele was promoted to be the new creative director.

After repositioning the luxury brand in Italy, it hopes to attract more new consumers, especially the new generation who likes novelty and like social media. The brand also expands its product line to entry-level leather goods, jewelry and scarves.

CEO Marco Bizzarri stressed: "we are striving to win market share. To achieve this goal, we must have purposeful and differentiated nature."

Marco Bizzarri, the bold creative director, has brought Gucci a youthful flavor. The industry believes that Gucci's products are no longer as old as they used to be, but rather bright colors and fresh designs.

Media commented that the new creative director, Alessandro Michele, was "successful in breaking the past style, showing a young and clean new face".

The younger design also brought back some of the lost customers. Marco Bizzarri said that Gucci's design is winning a large number of young customers and Gucci's old customers in the 80s and 90s of last century: "we see that local consumers who have never visited Gucci in the past 20 years have returned to Gucci store, although the new creative director has only 15 months to take office, but word of mouth is very good."

Obviously, after changing the company, the Gucci, which is fully committed to personalized and young consumers, is back to the forefront of luxury brands.

Back to the top line

In business strategy, Marco Bizzarri also made many adjustments. In order to make Gucci return to the high-end line, in 2015, Gucci had reinstalled 34 stores and reinstalled another 50 in 2016. It is expected that there will be another 40-50 next year.

On the other hand, Gucci quickly abolished shops in low-end shopping malls.

Marco Bizzarri also said it would reduce discount stores and markdowns, and promote the development of tourism channels.

Gucci also moved its new strategy onto the Internet.

At the end of 2015, Gucci launched a new website in North America. The new website was rich in content, massive images, featured content and brand stories. The company created such a platform to establish a brand relationship with customers.

CEO Marco Bizzarri said: "no matter whether the customer will choose to buy products online, but the network is the first way that they receive the product information, the Internet has become the communication center.

I think from now on, the brand should put the website in the key position. After all, it is an important channel to pass the brand message, and it can establish an invisible connection with the brand audience.

Nowadays, how to establish a binding relationship with customers is playing an increasingly important role in online retailing.

Gucci also launched a joint product with many artists on its own online store, hoping to attract more young consumers.

Gucci said it would increase the budget of online advertising input, because online advertising can reach a wider population. Although its actual consumer groups are much smaller, it is necessary to communicate with more people.

Marco Bizzarri also expressed the hope that e-commerce business can triple, but the company has not disclosed the proportion of e-commerce business.

The above measures did bring results: as of the first quarter of March 31, 2016, the Western European market, which accounted for 28% of the 2016 fiscal year, was the biggest driving force for Gucci's brand growth in the first quarter, with an increase of retail revenue of 20% and an increase of 1% in the Japanese market.

However, the analysis is still not optimistic about some of the market's performance gains.

Mario, an analyst at Bernstein, warned that in the tough market environment, Gucci's revival growth will take time.

Data show that in the first quarter of 2016, the Asia Pacific (except Japan) market of Gucci's largest market was still down 2%, and the downturn in Hong Kong and Macao markets in the market was the main reason.

{page_break}

Support China's anti-corruption policy

Since China launched a series of anti-corruption policies in 2012, most luxury brands have been struggling in the Chinese market.

Paris's banking and securities department estimated that before that, the products sold by Gucci in China met the 2/3 demand of the Chinese market, which is now only 1/3 at the lowest rate.

For China's anti-corruption, Pinot Noir said that in the short term, it has a negative impact, but in the long run, it is the right decision.

"If you look at emerging economies, those who reach an upper limit and can not surpass the economy, usually because there is no rule of law," Xiao Pino said in an interview, "it has a negative impact in the short term, but in the long run, it is likely to be a very good decision for China and its investors in China."

In 2013, Francois, Henry Pino (little Pino), the chairman of Gucci's parent company, opened up to visit China with his father Francois Pino, and donated the two bronze artifacts of the twelve big water laws of Old Summer Palace to China.

Before returning the bronze beast to China, the famous Pino family controlled Christie's became the first foreign auction house to get an auction license in China.

This donation has become a hot topic in the media.

Foreign media commentators believe that the Pino family's move is aimed at drawing closer ties with China and helping the development of luxury goods in China.

Another challenge is that China increases taxes and strengthens Customs Enforcement for people who bring in more than one luxury product from abroad.

Pino admitted that these measures are likely to crack down on sales of Chinese customers in Europe and other markets.

But in this respect, he also sees something to be thankful for, because these taxes will also reduce the number of luxuries sold through the third party channels in the Chinese market.

"The tradition of gift giving in China is still going to continue," he said. "But in the past, some gifts and corruption have been linked together. You can't build business on this. This is not sustainable."

Although Pinot is optimistic, so far, Gucci has seen no major improvement in the Chinese market.

According to media reports, Gucci has halted shop plans in the mainland.

And shut down the store of Renhe Spring Department Store in Chengdu.

Industry analysts pointed out that if Gucci wants to get better results, it must turn off the extra stores and have no choice.

In China's Hongkong region, the parent company Kai Yun group has begun negotiations with local owners, hoping to reduce store rentals.

Mark Duplaix, CFO of Kai Yun group, also said: "if the negotiation is not successful, we will close several stores." Jean-Marc