Kering’s flagship brand, Gucci, is focusing on rebuilding its market position in China following years of stagnation. The luxury company’s complacency resulted in an underwhelming retail experience and poorly situated stores, according to Kering CEO Luca de Meo.
China has been a significant growth driver for the global luxury sector, worth approximately US$400 billion, for over a decade. Gucci, like many of its competitors, capitalized on this expanding market. However, the brand failed to take advantage of a brief shopping surge following the pandemic and couldn’t recover when Chinese consumer spending slowed.
De Meo, speaking at Kering’s first investor day since he assumed his role in September, expressed that Gucci needs to reevaluate its strategy in China. He emphasized the necessity to cater to the discerning clientele with high-quality retail experiences and to move away from relying on off-price outlets offering goods at discounted rates.
“Gucci needs a comeback,” de Meo asserted, criticizing the brand’s previous approach to China as an easy revenue source.
The retail landscape in China has transformed significantly over the years. De Meo noted that Chinese consumers are now motivated by quality, design, and experience rather than logo-driven purchases, a trend seen in markets like Japan, South Korea, and Europe.
The CEO stressed the importance of a consistent brand message and an enhanced in-store experience to revive growth in China. Kering also revealed plans to acquire a minority stake in the Shanghai-based Icicle Fashion Group.
De Meo, who previously served as CEO of Renault, drew parallels between the luxury sector and the auto industry. He warned luxury brands not to underestimate domestic competition and acknowledged China’s innovative capabilities.
Other brands in Kering’s luxury portfolio, such as Bottega Veneta and Saint Laurent, have already begun reaping the benefits of a more finely-tuned China strategy. However, he indicated that Gucci’s recovery would be a more prolonged process.
“For Gucci, the verdict is still out. This transformation won’t be instantaneous, but we anticipate seeing measurable progress within the next few months to a year,” he stated.
What is Kering’s plan for Gucci in China?
Kering plans to reinvent Gucci in China by focusing on higher quality retail experiences and catering to discerning clientele. The company is moving away from off-price outlets and is focusing on a consistent brand message and enhanced in-store experience.
How has consumer behavior changed in China’s luxury market?
Chinese consumers are now motivated by quality, design, and experience rather than logo-driven purchases. This shift mirrors trends seen in other markets such as Japan, South Korea, and Europe.
How long will Gucci’s recovery take according to Kering’s CEO?
Kering’s CEO, Luca de Meo, anticipates that Gucci’s recovery in China will be a prolonged process, with measurable progress expected within the next few months to a year.
