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Gucci to face luxury market slowdown head-on

by LLB Reporter
28th Apr 24 11:42 am

While luxury fashion brands seem to be an immovable pillar at the forefront of global culture, 2023 saw challenges for the industry. In particular, Gucci owner Kering Group has seen revenue fall by 4% to €19.6 billion (£16.79 billion). Gucci’s full-year revenue fell by 6% to €9.87 billion (£8.46 billion), with Kering’s Yves Saint Laurent, Bottega Veneta, and Alexander McQueen also seeing a decline in sales.

Despite disappointing figures, however, Kering remains adamant about enhancing its strategies. Read on to learn more.

The luxury market slowdown

Over the past year, the luxury market has undergone sales challenges. The sector is projected to continue its decline into 2024, with the industry experiencing a dip. This dip came after the demand for luxury products stabilised, following an initial uptick after countries opened up to tourists following global lockdowns. In fact, in 2024, Kering’s revenue continues to slow, with sales in the first quarter going down by 10% year over year.

However, the case isn’t the same across the board as Hermès reports an increase in sales of €3.37 billion (£2.89 billion) by the third quarter of last year, surpassing analysts’ projections at 15.6%. In the same quarter, Kering’s Yves Saint Laurent sales decreased by 12% and Bottega Veneta by 7%.

Despite such figures, Kering CEO François-Henri Pinault says that they are focused on strengthening their organisation and enhancing the visibility and exclusivity of their Houses. In particular, Pinault states that they are “focused on revitalising Gucci, leveraging the unique blend of craftsmanship, Italian heritage, and modernity that characterises this iconic house.”

Gucci: a powerhouse in fashion

Since its establishment in 1921, Gucci has become a powerhouse in the luxury sector, known for its distinctive designs, iconic branding, and market visibility. Although Gucci falls in the ranks of Dior, Chanel, and Louis Vuitton, the brand has since reinvented itself by demystifying high fashion, thereby solidifying its position in popular culture.

Gucci sunglasses are a staple in their line, as more accessible luxury-starter pieces for younger generations. They’re also going green, with models made of 100% recycled pre-consumer acetate scraps that come in various shapes and sizes for virtually every face shape. Their designs go from elegant and understated, like the GG0035SN, to bold and adventurous, like the GG1624S. Gucci is also known for the recognisable GG Marmont Belt, which ranges from regal plain colours to bejewelled and striking variations. Another trademark in the House’s history is the Gucci handbag, with the half-moon silhouette famously sported by Jackie Kennedy in the 1960s. Today, Gucci Jackies flaunt subtlety, featuring prints and plain colours without its signature GG logo. Models like the Gucci Jackie 1961 and Gucci Jackie Notte mini shoulder bags exemplify the quiet charm of the line.

Gucci’s distinct branding is enough to resonate with the public’s consciousness, but today, it is expanding its engagement strategies—a valuable tactic for facing the slowdown in the luxury market.

Among these is Gucci’s Changemakers programme, established in 2019, which provides grants to organisations that catalyse positive change. Late last year, the brand partnered with the London College of Fashion and the University of the Arts London to provide multidisciplinary scholarships to low-income students, intending to give broader accessibility to higher education.

Since 2020, Gucci has also explored its approach to circularity with its Off The Grid collection, which is 100% recycled, bio-based, and organic materials. Moreover, in 2021, the House launched a regenerative wool programme in Patagonia and a regenerative cotton programme in Uruguay to ensure ethical sourcing of its materials.

Finally, Gucci has embraced cross-border trends via Roblox for its expansion strategy, having held fashion shows in multiplayer on the game. Gucci Town, a digital destination, allows Roblox users to discover more about the House and its heritage, connecting with diverse audiences worldwide.

Despite disappointing figures over the past year, the House is determined to keep reinventing itself. With its unforgettable branding and forward-thinking strategies, Gucci will remain a landmark in luxury.

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