In the first quarter of 2024, Gucci’s revenue declined significantly to €2.1 billion, down 21 percent as reported and 18 percent on a comparable basis. The brand’s directly operated retail network saw a 19 percent decline, with the Asia Pacific region particularly affected.
These results suggest deeper issues than simply being affected by a market slowdown, especially considering that some competitors achieved double-digit growth in the same period. Therefore, it’s important to delve deeper into the fundamental challenges plaguing Gucci.
Gucci is a byword for Italian luxury. The brand has always stood for boldness, freedom of expression, and a lifestyle without boundaries. Alessandro Michele, Gucci’s previous creative director, widened the brand’s appeal and made it relevant for younger consumers by embracing collaborations and new categories.
Gucci grew significantly to approximately €10 billion and became the envy of practically every other luxury brand. Its brand storytelling was best-in-class, offering a bold expression of living life unapologetically, where every piece of content was inspiring and uniquely Gucci. The brand’s visual expression was so clear and distinct that it needed no logo.
Michele, according to several sources, rejected Kering’s mandate to grow Gucci beyond €15 billion by shifting his design expression to target more affluent luxury clients. Despite its popularity among Gen Z and millennials, Gucci wanted to change course, create more desirability for older, wealthier clients, and push the brand upmarket.
Following Michele’s departure, Sabato De Sarno, who joined Gucci from Valentino, was tasked with making the brand more relevant and positioning it higher. He called his era “Ancora.”
The financial results serve as an indicator that Gucci’s transition to Ancora, including the shift from Michele to De Sarno, was poorly managed. In my experience, when a brand reset resonates with clients, excitement and growth are immediate. However, Gucci’s worsening numbers suggest that current and potential clients are not feeling desirability towards the brand. And in luxury, the ability to create desirability is everything.
The problem goes beyond products#
According to the first-quarter result presentation, Gucci’s new collections, gradually introduced since mid-February, reportedly garnered positive client responses. However, the 20 percent revenue decline suggests that the brand’s issues extend beyond its products.
Successful brand resets hinge on maintaining the integrity of the brand’s storytelling and honoring its history. With Michele’s departure, it seemed as though the brand was grappling with an identity crisis and cutting ties with its past.
Gucci has undergone a complete transformation, moving away from engaging and inspiring brand storytelling to predominantly presenting product features. The once distinct brand imagery has now become indistinguishable among many others.
Without the ubiquitous logo plastered on practically every social media post, it would be almost impossible to distinguish the new Gucci from its competitors. What was once a celebration of life has now become “Ancora,” a term that means nothing in regards to creating client-specific value.
Gucci has shifted from being a client-focused storyteller to an internally focused product presenter. While the former creates excitement and desire, the latter feels boring and mundane. Until this approach is recalibrated, I don’t expect the brand to bounce back. What Gucci needs now is to create excitement and work on the basics.
Excitement is not created by paying an endless array of celebrities to be ambassadors of the brand. It’s also not created by posting — as happened recently — about an advertising campaign now being displayed in cities around the world. This may be appropriate for a small brand running its first campaign, but not for a brand like Gucci. Furthermore, excitement is not created by never-ending product shots.
Excitement demands innovation—something fresh, new, and distinctive that offers extreme value for clients. Importantly, it requires telling the brand story unapologetically and taking pride in the brand history.
Strategies to revamp#
In a recent focus group with Gen Z and young millennials at Pepperdine University, participants described the current approach of Gucci as “utterly boring,” “old-fashioned,” and “lacking excitement.” It’s a warning sign that needs to be addressed if the brand wants to return to the relevance and success it had until recently.
To reactivate the brand, Gucci should consider these three strategies:
- Revitalize brand storytelling: Where is the bold and confident Gucci of the past? Where is the freedom of self-expression, so clearly expressed by both Tom Ford and Alessandro Michele? Gucci needs to refocus on creating emotional connections rather than just selling products. And it needs to find its identity and core values again.
- Don’t lose touch with young audiences: Gucci was best-in-class in its appeal to Gen Z and millennials. This is particularly important in markets like China, where the average age of luxury clients is extremely young. While the brand tries to become more relevant to older clients, it needs to strengthen — and maybe even rebuild — its relationship with younger audiences.
- Dial up innovation, inspiration, and creativity: One of the clearest predictors of the success or failure of a brand is its ability to innovate, change, and inspire. Gucci needs to pivot from being one-of-many back to being one-of-one.
Gucci is one of the most valuable, storied, and iconic luxury brands in the world. To stop the decline and ignite the next phase of growth, excitement and desirability are needed. Fundamentally, Gucci needs to be Gucci again and not try to be some other brand. Ancora excitement! Ancora Gucci!
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. Follow him: LinkedIn and Instagram.
All opinions expressed in the column are his own and do not reflect the official position of Jing Daily.