Gucci Is Getting Older, The Impact Of Innovation Has Not Yet Been Completely Released.

It is no exaggeration to say that in the past five years, no luxury brand has achieved Gucci like phenomenal success.

Abandoning the burden, changing the team's bottom line, quickly turning around and maintaining high growth for more than a dozen consecutive quarters, luxury brands are always given the expectation of replicating Gucci's rejuvenation legend, but at least, at present, such a miracle hasn't happened second times.

The British luxury brand Burberry, who was given the revival of expectation, only showed a bit of energy after being in the Riccardo Tisci for a year. As of the first quarter of June, Burberry revenue increased 4% to 498 million pounds, even though it was a low single digit growth rate, which is two times that of analysts.

Star designer Hedi Slimane has been in Celine for a year. It seems that it is not very hot. The impact of innovation has not yet been completely released. In addition to the fact that Celine, which is under the control of Hedi Slimane, has officially entered the field of men's wear, LVMH has not disclosed Celine related performance data in its earnings report.

Even inside the Gucci company's Kai Yun group, Italy's old Bottega Veneta has changed its creative director and CEO, but it has not yet been out of the mire of performance. Sales in the first half of the year dropped by 3.8% to 549 million euros, while the same quarter sales in the second quarter only showed a slight increase of 0.8% under the stimulation of the first series of products responsible for the new director Daniel Lee.

The luxury industry has changed its skin for 35 years, and Gucci is getting older.

Last week, the most interesting news in the luxury industry was that the growth rate of Gucci slowed down significantly. When the first half financial year results were released in July 25th, the opening price of the cloud began to drop by 10% on Friday, and the market value evaporated more than 5 billion. This Monday's opening continued to drop 1.29% to 467 euros, which continued to cause investors' concern.

In the first half of June 30th, total sales of Kai Yun group rose 18.8% to 7 billion 638 million euros, a marked slowdown compared with 26.8% in the same period last year. In the first half of the fiscal year, the growth of its core brand Gucci sales continued to slow down, showing an increase of 19.8% to 4 billion 617 million euros, an increase of 44% over the same period last year, while sales growth in the second quarter was 12.7%, far behind the 35% in the same period last year, the lowest growth rate in three years.

The LVMH fashion leather industry is catching up with Gucci again. The sector benefited from the promotion of Louis Vuitton and Dior. Sales rose 21% to 10 billion 425 million euros in the first half of the year, and double-digit growth has been recorded for 11 consecutive quarters. The first half of this year's revenue reached 10 billion euros, a record high.

The new modern luxury brand is a collective effort. Bloomberg analysts believe that the performance of the LVMH fashion leather sector is actually a microcosm of the luxury industry, which means that the traditional luxury brands are moving closer to the young people through the introduction of street wave elements and star effect, and gaining new growth momentum.

The embarrassment of Gucci's situation has been seen from the end of last year, and executives seem to be worried. Last October, Marco Bizzarri, chief executive of Gucci, told a staff member that the slowdown in brand growth after the explosive growth of revenue is normal. It is impossible for brands to maintain a 50% to 60% increase in turnover every month. I hope employees will not feel depressed because of slower growth or performance changes.

However, the capital market is voting with feet and investors are sniffing, which is the undisputed cruelty of business. The real panic in the capital market is that although the slowdown in Gucci has become an inevitable trend, Reuters and Bloomberg analysts have pointed out that the growth of Gucci has slowed down faster than expected. It is hard for investors not to tighten their nerves either in the uncertain global economic environment or in a competitive environment. According to fashion business Express monitoring, Gucci's search index on Baidu has fallen 30% over the past six months.

In any case, Gucci is faced with the ultimate paradox of fashion business, a brand, a style, and how to face the new and loathing young consumers in the fierce competition.

Two years ago, WeChat public number LADYMAX was already in "why did consumers not get tired of Gucci? In this article, the problem is analyzed. From the more practical brand management, Alessandro Michele is also contending with the instability of luxury industry. Compared with other brands that are distinctly differentiated according to the inspiration of each quarter, although Gucci has set the theme for each series, it has followed a coherent aesthetic system in fashion style, and has not distinguished the theme of each season distinctly.

Although this is contrary to the common sense that "brands should use different themes to provide consumers with freshness", Gucci has created a new mode of creativity, that is, to gain more profit margins on the basis of controlling risks. In the past, seasonal costumes based on different themes often constituted a high risk for the brand itself. Due to the instability of style, consumers who bought seasonal products did not necessarily buy the next season products, thus hindering the improvement of consumers' stickiness.

At this point, Gucci and Hermes actually have the same ideas. In the luxury industry of marketing addiction, Hermes has been extraordinarily heterogeneous in recent years, but it has also been growing by insisting on the attributes and stability of luxury goods.

In July 23rd, Hermes released its second quarter preliminary performance report, with sales surging 14.7% to 1 billion 674 million euros, an improvement over 3% in the same period last year. Sales in the first half of the year rose 15.1% to 3 billion 284 million euros, exceeding analysts' expectations. During the period, sales of leather goods and harness Department increased by 15.1% to 844 million euros, and sales in the first half of the year registered a strong increase of 16% to 1 billion 652 million euros. Hermes has a market capitalization of 67 billion 600 million euros, which has surpassed Kai Yun group and regained its leading position.

Now we want to put forward the view that it is precisely because of the stability and coherence of Alessandro Michele's aesthetic system that the peak period of Gucci has been stretched as long as possible, achieving a high-speed growth of three and a half years.

But as we all know, tidal currents are obviously cyclical. Gucci has become increasingly strenuous in breaking the curse of "three years of fire".

Gucci has indeed captured the bonus of retro fashion, but the challenge is how to get tickets to the next fashion cycle. Ahead of the inflection point that consumers are tired of returning to the past, the layout ahead is particularly important. If Kai Yun group can not find the next growth point that has explosive power, there is no doubt that the summit of Gucci is a masterpiece.

The choice of Gucci is to continue to add, but the consequences of "not doing business" may be the result of a hit in profit margins.

In order to get new growth, Gucci first set up the home furnishing area in April this year, and set up a home series D e cor Collection flash store in Milan. 1 months later, Gucci went all the way to the beauty market and sold the first lipstick product by Alessandro Michele on the official website. At the beginning of this month, the site of Gucci was officially opened at the first high-end jewellery boutique at 26, Wanda Square, Paris. Fran ois-Henri Pinault, chief executive of Kai Yun group, emphasized earlier that the launch of high-end jewelry series will further enhance the high-end positioning of Gucci.

It has to be mentioned that Gucci's competitors in the field of addition are very powerful and do not take much advantage. Since March, Hermes, whose core business is leather handbags, has decided to take a bold step and formally enter the beauty industry. It plans to launch a large-scale cosmetic product in 2020. Celine launched men's wear and Balmain launched the advanced custom series. The brand of the United States launched the second line brand is similar to the logic. Not only luxury brands continue to enrich the category, but also luxury magnates achieve scale effect through the acquisition of brands.

McKinsey has conducted a sample analysis of 412 enterprises. According to the rate of return, 67% of the business revenue from a business unit is professionally operated with the highest rate of return, reaching 22%. At least 67% of the business revenue from two business units is moderately diversified, with a return rate of 18%, while less than 67% of the business revenue from two business units is diversified with a return rate of only 16%. This means that addition does not necessarily bring about ideal results.

From the first half of Gucci's performance, it seems that the addition does not work. The biggest challenge is to arouse young consumers' novelty towards the core business of the brand.

Gucci has recently launched the #24HourAce digital creative activity with the theme of classic Ace series on Instagram. The digital creative activity has gathered artists from all over the world, such as Argentina animation designer Esteban Diacono, 3D animator Daniel Lam from Hongkong.

If we look back at a series of successful decisions in the early days of Gucci, it is easy to see that Gucci has relied on this strategy to win the minds of young consumers. In 2017, Gucci launched the Meme cooperation project #TFWGucci with the theme of the new wrist watch series, meaning "That Feel When......" When I wear Gucci watches, I encourage Meme creators and artists around the world to create around the watch series. Meme this cold and humorous way of expression spreads through the massive copying, imitation and transmission, spreading like viruses in the Internet, forming a network subculture that is popular among young people and is moving towards the mainstream.

The two wave #GucciGram project in October 2015 and March 2016 is also based on Instagram, calling on artists to create free creation of Gucci's iconic elements. The #24HourAce project launched in July 2016, based on Snapchat, allows artists to take over Gucci accounts in 1 hours in 24 hours and issue short videos based on Gucci Ace shoes. Snapchat, which is burning after reading, is the fastest growing social platform for Instagram after 18-24 years of age.

Gucci's success in building social connections with young people and transforming them into consumption is obvious. According to WeChat public LADYMAX statistics, in 2017, Gucci released new marketing projects on average every month, continuing to dominate consumer attention. However, in the past two years, Gucci seems to be relaxed in such digital marketing projects and artists' cooperation.

The exhibition of the artist in this exhibition has further narrowed the distance between Gucci and art, but it is restrained by the traditional art exhibition. This kind of art exhibition with large scale investment is obviously lower than the digital marketing item, and the online topic has not been heated enough.

Gucci is also the main sponsor of this year's Met Gala. Under the leadership of Alessandro Michele, Gucci sponsored many stars to attend the dinner in brand gowns. This is considered to be a marketing strategy for the decline of freshness, especially in the North American market, which has hardly been recorded in the first half of the year. However, this costly traditional marketing behavior is once again proven to be less effective than the online marketing project that can motivate young people.

Surprisingly, the final statistics of the Launchmetrics statistics show that the winner of Met Gala in 2019 is still Versace. With the help of 8 stars such as Kylie Jenner, Kendall Jenner and Jennifer Lopez, its MIV has recorded $53 million 600 thousand, while that of the latter has been second, which is 39 million 100 thousand US dollars. This year, it has not bought any tickets and is 25 million 500 thousand dollars, and it ranks third.

At the same time, luxury brands have become a marketing standard in recent years by strengthening high-end positioning through art projects. Competitors Prada has formed a more distinctive art sign through a series of projects such as the Prada foundation and Prada house in Shanghai.

Despite the new cycle, Gucci still needs to solve young people's problems.

Gucci has a heart and hopes to catch up with Louis Vuitton at full speed. She also understands this problem. LVMH relies on capital advantage and brand matrix to occupy young consumers' attention. Jean-Jacques Guiony, chief financial officer of LVMH, stressed that the more intense the market competition, the greater the group's investment in its brand, so as to be more flexible in the cruel global environment. According to his disclosure, LVMH's expenditure on brand marketing and stores increased by 15% in the first half of this year.

Louis Vuitton, which has led the Off-White founder and social media opinion leader Virgil Abloh, is also betting on young people behind the Virgil Abloh. To take the lead in Gucci, LVMH boss Bernard Arnault seems to have sniffed the wind direction of the next fashion cycle.

Virgil Abloh, as the first African American Creative Director at the helm of Louis Vuitton men's clothing, has launched a large number of young ethnic faces in the show and advertising and even recently opened the "growth track" exhibition in Beijing. This will inevitably make some conservative loyal customers feel offended. However, Bernard Arnault has decided to take risks. He has bet on the deep-rooted white centralism in Europe and believes that diversity will be an irreversible trend.

The risk of frequent luxury goods market is proving again and again that image and diversification are the most important assets of luxury brands. However, Gucci just stepped on such a social and cultural environment. At the beginning of the year, because of the alleged racism in the black sweater incident, the brand that continued to gain a high reputation among young audiences in social media has been criticized rarely. (extended reading: deep |Gucci "lost" black consumers?)

Whether businessmen really believe in new ideas such as pluralism, successful businessmen always keep the most sensitive sense of market trends. In the first half of this year, sales of LVMH fashion and leather goods department rose by 21% to 10 billion 425 million euros under the promotion of luxury G brands such as Louis Vuitton and Dior, which reached a record high. For the first time in three years, it won Gucci, which means that the distance between two giants is widening again.

Although LVMH has never released the detailed performance of its brand, it has revealed in the earnings report that all Louis Vuitton businesses have grown significantly in all regions, and men's clothing and handbags have been continuously pursued by young consumers, especially the new products designed by men's creative director Virgil Abloh. RBC Capital Markets analyst Rogerio Fujimori said earlier that although men's clothing is only a small part of the performance of Louis Vuitton, it can not be underestimated. It has great stimulation to the sales of brand accessories and the high profit core accessories products such as handbags and shoes.

After the last window period, although Gucci has narrowed the distance from Louis Vuitton, the approximate rate in the next few years is going downhill. Consumers follow the inertia, but businessmen look at the future. Brands should have a clear understanding of themselves and have enough foresight to anticipate market changes.

Gucci is getting older. The biggest problem is that the design style tends to be stable, which makes the consumers feel fatigued, and the marketing form loses the "initial intention". The brand's digital marketing appeal has declined compared with the peak period, and underestimated the social trends such as racial diversity.

For today's Gucci, it is obvious that we need to rebrand the brand logic to cope with the next stage of development. What is more important is to focus attention on ourselves, not to let competition consciousness obscured the core development problems, and return to the marketing way that can really mobilize the participation of consumers.

It should be emphasized that the success of Gucci is the result of heaven, earth, and people. When we resume the growth track of Gucci, the environment for the luxury industry to pick up is a factor that can not be ignored. In the past two years, it is difficult for luxury brands to replicate the success of Gucci, which is closely related to the global economic environment falling into a turbulent period. The European depression, the French yellow vest, the US entity retail slump, and the consumer potential of Chinese consumers can last for a long time.

For the luxury industry, more important is the industry's general problems reflected in the Gucci case. After all, every brand has its ups and downs. Not everyone can keep up with the changing rhythm of young consumers at all times. Author: Drizzie