Gucci’s identity crisis is a wake-up call for brands

At a recent investor conference in Asia, two questions kept surfacing: What’s wrong with Gucci? And when will Kering react? The concerns are valid—Gucci’s underperformance has wiped out billions in market value. The luxury industry has been closely watching Gucci's struggles over the last two years. Recent reports only confirm that the brand's issues are deep and far from resolved. In July 2024, Kering reported a 20% drop in Gucci's sales for the second quarter, continuing the brand's sharp decline from previous quarters. Kering's shares fell, and the company warned of a potential 30% slump in profits for the second half of the year. The luxury giant's performance highlights the challenges even top brands face during a market shift. By September, Kering's stock had hit a seven-year low due to concerns about weak demand in China. HSBC and Barclays downgraded Kering, noting Gucci's struggles in the crucial Chinese market. Despite a slight stock improvement after China’s stimulus package, Kering remains down over 30% YTD, far from its 2021 highs. The losses have effectively erased Gucci's gains since the Bizzarri-Michele duo revitalized the brand in 2015. This reset may go down as one of the worst brand repositioning efforts in history. High staff turnover, as reported by Miss Tweed, signals internal instability at Gucci. Stable, visionary leadership is essential for luxury brands, and Gucci's ongoing changes suggest deep-rooted issues. Despite Sabato de Sarno’s efforts to focus on higher-end products, Gucci has failed to generate the excitement necessary for a rebound. Gucci’s struggles reflect broader issues affecting many luxury brands: an inability to adapt to rapidly evolving consumer preferences. The Chinese market is a prime example—while some brands are thriving, Gucci is losing relevance, especially among discerning Gen Z consumers who demand value, storytelling, and unique experiences. Brand relevance in an evolving luxury market The deeper issue is brand relevance. Luxury brands must constantly evolve while staying true to their core identity—a balance Gucci seems to have lost. When Gucci was a star in luxury, it excelled at client-centric storytelling, celebrating diversity and radical self-expression. But since parting ways with Michele, Gucci has distanced itself from that identity, leaving behind its confident and bold brand narrative. Instead of building on its past success, Gucci now lacks a clear, client-centric story. Its swagger has been replaced by conformity, with campaigns that feel uninspired and derivative. The latest campaign, featuring Debbie Harry in a car, feels like a tired copy of Louis Vuitton’s campaign with Gorbachev from nearly 20 years ago. Gucci is trying to be everything to everyone, losing its north star in the process. Sabato de Sarno’s meticulous craftsmanship has earned praise, but critics find his vision conservative and lacking the boldness needed to revive the brand. Gucci has historically thrived when it embraced a provocative, edgy attitude—something it seems to have lost once again. While de Sarno’s collections are well-received, especially in China, sales continue to decline. The path forward: Embracing Gucci’s true identity Kering cannot be content with the status quo. Gucci, one of the greatest luxury brands, has the potential to return to the top, but it must first resolve its identity crisis. Bold, provocative, and inspiring—Gucci needs to embrace who it truly is and stop chasing the trends set by others. The brand needs a thorough, honest assessment of its strengths and weaknesses, followed by decisive action. A turnaround is possible, but it requires humility and a willingness to challenge every aspect of the current strategy. There are great things happening at Gucci, but the lack of a “wow factor” is fatal for a brand that was once synonymous with luxury. Gucci’s crisis serves as a warning to the entire luxury industry. In an era of rapidly changing consumer expectations, brands can no longer rely on beautiful products alone. Success lies in client-centric storytelling, creating value, and understanding consumer needs. As the luxury landscape evolves, those who fail to adapt risk following Gucci’s downward spiral. Bold, visionary leadership is now more critical than ever. This is an opinion piece by Daniel Langer, CEO of Équité, recognized as one of the “Global Top Five Luxury Key Opinion Leaders to Watch.” He serves as an executive professor of luxury strategy and pricing at Pepperdine University in Malibu and as a professor of luxury at NYU, New York. Daniel has authored best-selling books on luxury management in English and Chinese, and is a respected global keynote speaker. Daniel conducts masterclasses on various luxury topics across the world. As a luxury expert featured on Bloomberg TV, Forbes, The Economist, and others; Daniel holds an MBA and a Ph.D. in luxury management, and has received education from Harvard Business School. Sign up for his masterclasses at the Jing Academy. Follow him: LinkedIn and Instagram. All opinions expressed in the column are his own and do not reflect the official position of Jing Daily.

Gucci’s identity crisis is a wake-up call for brands

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Published September 30, 2024

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Gucci’s identity crisis is a wake-up call for brands