Gucci case history

1. G U C C I
Historically, fashion was viewed like movies. We made it a business.
Domenico De sole – CEO of Gucci Group

2. HISTORY
1923: Florence,
leather goods
1930s: Mussolini,
new material,
canvas,
producing small
leather goods,
wallets and belts
1953-1973:
more shops in
USA ,Europe,
Japan

3. HISTORY
1970s: an
internal crisis
wracked the
firm 1980s: block
venture and
lawsuits flew back
and forth

4. WHAT DID DE SOLE DO?
BEFORE DE SOLE AFTER DE SOLE
Fake Gucci bags
900 employees
600 points of sale
Too high prices
Disorganized production
and nightmare delivery
No clarity to the direction
of the company
No cost controls
No liquidity
Conservative women
About 15,000 products
He fired 150 employees and
hired new manager
194 points of sale
Lowering prices on average
by 30%
Reorganization of production
and distribution
Quick decisions with
discipline and focus
Cost control
High liquidity
Modern, urban woman

5. Quality
Price
COMPETITIVE
POSITIONING

6. Substitutes
Competition:
(high)
Luxury but not
necessary
Industry Rivalry:
(high)
Chanel,
Hermés,Louis
Vitton,Prada
Suppliers
(low)
They rely on different
suppliers
Threat of Entry:
(high)
Various of brand ,
different trend
every season
PORTER’S
FORCES
Buyers :
(high)
Customers are easily
switch their choices
It depends on the
relevance of
distributors
Complementarities
:
(low)
Entertainment

7. 2. WHICH CRITICAL MOVES ALLOWED DE SOLE TO
REPOSITION GUCCI?
OLD
TARGET
NEW
TARGET
Highly classic
conception of
women’s role
in the society
40-50 y.o
Upper class
Family lady
Multi-brands
loyal
Not price
conscious
Upper class
30-50 y.o
Singles
working
women
Readers of
fashion
magazine
Change every
season
IMAGE MAKEOVER
DE SOLE - FORD
PARTNERSHIP
The two men ran
Gucci together, De
Sole in managerial
terms and Ford in
creative ones. Trust
and mutual respect
were key factors in
the Gucci turnaround.

8. 2. WHICH CRITICAL MOVES ALLOWED DE SOLE
TO REPOSITION GUCCI?
Distribution
DOS (from 65 to 126)
DOS
renovations,“clean,
modern look”
Closure of Duty free
store
As opposed to
previous franchising
and license agreement
strategy
PRICING
Lowered priced by 30% to be on the same level
as Prada and Vuitton, to target fashionable
young women

9. MANUFACTURING
• Keep only best manufacturers
and cut off the rest
• Provide selected suppliers with
technical and financial support
• Outsource 95% of leather goods,
keep
• only exotic skins in-house
• System based on 3 pillars:
Skilled artisans, advanced
technology and efficient logistics
ADVERTISING
• Doubled from 1993 to 1994
• expected to spend 250 million in
2000
• “Create an arresting image of
the world you want to be a part
of”
• Tom Ford’s star status
IMPROVED COMMUNICATION
WITHIN THE COMPANY
Manage Gucci as a coherent whole.
The company used to operate on its
own and no information
was shared.

10. 3. WHAT DO YOU THINK ABOUT THE ACQUISITION
OF YSL AND SERGIO ROSSI?
“If you really are an exclusive brand, you can’t grow beyond a certain
point. Nobody knows where that point is, but there is a limit to the
number of handbags you can sell for $1000. That’s the bottom line.”
(De Sole)
OPERATING MARGIN
1999 2000 2001 2002
21% 22.5% 22.5% 24.3%

11. 4. HOW IS THE CURRENT COMPETITIVE
POSITION OF GUCCI GROUP?
2008 2009 2013
4,2 billion (Business
week)
41° “The Global 100
Brands” (interbrand)
278 directly operated
stores
$ 12,1 billion USD
with a sales of $ 4,7
billion USD
38° most valuable
brand ( Forbes)
The Biggest-Selling Italian Brand !
1999 2003 2008 2012
1.2 billion revenues 3.1 billion revenues 4.2 billion revenues 4.7 billion revenues

12. INCREASE OF REVENUES
5000000
4500000
4000000
3500000
3000000
2500000
2000000
1500000
1000000
500000
0
Revenues
1998 2003 2008 2012

13. LUXURY
TRADITIONAL INNOVATIVE
AFFORDABILITY
CURRENT
COMPETITIVE
POSITIONING

14. Thank you for your
attention!
Xueyang Chen Giuseppe
Origo
Stefania Stefanizzi
Marika Torcitto
Maria Paula Varela