2020 was not a year investors expected stellar growth from most luxury brands. In the epic times of a global pandemic, most hoped to see a rebound toward the fourth quarter, with 2021 the year of returning to pre-Covid sales levels and acceleration.
At Gucci, sales were down 22 percent year on year, a loss far higher than most of its peers in the luxury sector. A slowing of momentum was already reflected in its 2020 outlook, as the brand’s maximalist approach appears to have peaked with consumers. Gucci remains Kering’s powerhouse, however, and is responsible for two-thirds of the Group’s turnover. It cannot wholly cite the coronavirus crisis as the reason for its drop in sales.
The challenges facing Gucci in the current circumstances highlight its reliance on shopping tourists and visitors. It shines a further light on a potential disconnect with local customers. The aesthetics of its technicolour collections are no longer as fresh as they were in 2015 and a new consumer mindset post pandemic may lean towards more pared-down designs for which Gucci is no longer known. High octane prints like its flora and fauna motifs, sequins, logos and fussy detailing on everything from keychains to sneakers to floor length gowns are a trickier sell to a local European clientele.
Unrivalled early success
The Florentine fashion house will go down in history with an unrivalled sales trajectory, doubling in size since the appointment of Alessandro Michele and CEO Marco Bizzarri. The company was well underway to being a 10 billion euro brand, growing at twice the pace of the luxury market. Last year the overall luxury industry contracted over 20 percent in 2020, according to figures from Bain and Co., yet Kering rival LVMH’s fashion division and Hermès both returned to growth, surpassing Gucci by as much as 30 percentage points.
A new chapter needs to be written
Some analysts are saying a new chapter needs to be written and Gucci has already begun to pivot, introducing more classic handbag options and making subtle aesthetic changes to its collections and campaigns. But as Kering’s biggest earnings driver, its ambitious plans to be a 10 billion euro brand will be compounded with retaining brand desirability and a new era of consumers seeking post-pandemic luxury.
Photo credit: Gucci, Facebook