Gucci customer’s focus – Vicious circle in a customer audience

Gucci customer’s focus? Last August, an article published a report about the first six months of 2019 of the luxury fashion group Kering, which holds brands including Bottega Veneta, Saint Laurent, Balenciaga, Brioni, Gucci and many other brands. The company reported revenue of 7.64 billion euros in the first half of 2019, an increase of 18.8% compared to the same period last year. But it was unexpected when Gucci’s growth report slowed down, reaching only 12.7% in the first six months of the year, which was below the level of strategic analysts’ expectations. Gucci’s development is always associated with investment from Kering; because Gucci is currently the brand that accounts for 40% of the parent company’s revenue.

Gucci customer’s focus – Gucci is in a vicious cycle about what kind of audience it has

And recently, the newspaper specializing in fashion business BoF has just announced the revenue of kering group in Q3. Specifically, in the third quarter, the total revenue of Kering also increased by 11.6% – meaning 4, 3 billion dollars in the quarter. And Gucci’s revenue increased by 10.7% on a comparable basis to $ 2.7 billion, mainly based on the Asia Pacific region. Many analysts are satisfied with the statistical results; because that is a positive expectation when the estimate is only between 8% and 10%.

However, this level of revenue is far different from the booming years 2017 and 2018, when sales soared nearly 30% per year. According to some documents published in 2017, Kering’s top growth in annual growth is Gucci brand, Italian luxury fashion and leather goods, Gucci has increased by 44.5% in nine. month, ending on September 30, 2017. After Gucci financial statements revenue increased between 48% and 39% in the first and second quarters of the same year, their parent company Kering also announced that revenue reached 49%, profit came to about $ 1.82 billion in the third quarter of fiscal 2017. Kering president and CEO Francois-Henri Pinault once told CNBC that about 50 Gucci’s% of revenue comes from the age group of 35 and under.

The political crisis in Hong Kong is a problem for Kering, as violent protests prevent consumers from spending on luxury services. Retail sales in Hong Kong were down 1.8% in the first five months of 2019 compared to the same period in 2018. July and August were the times to increase sales, but, with the gradually escalating instability, retailers and analysts have lowered the prospects of the Hong Kong market from here to the end of the year.

Overall, sales in Hong Kong were down 35%; although the Asia Pacific region still increased by 17%. Kering’s chief financial officer Jean-Marc Duplaix said that August was the lowest month of the quarter, but also added that September was accidentally restricted in mainland China.

Gucci customer’s focus – Gucci sales in North America fell for the second consecutive quarter to 2%. Duplaix cited in other US market challenges, but said some of the decline was offset by American purchasing power when traveling in Europe. Especially Western Europe increased by 12%. He said Gucci plans to increase its marketing in the region, which it holds out until September following the controversy from the Balaclava blackface shirt, and holds various events promoting its products.

In September, Gucci’s Creative Director – Alessandro Michele presented a cosmetic change to the brand on the runway in Milan, which could spur sales as many simple products were on display at the store.

Investment bank, securities firm headquartered in the United States, Morgan Stanley said in a report that Gucci businesses are increasingly dependent on one country: Chinese customers, and revolving around in an age group, Millennial and Gen Z. This can increase Kering’s risk profile since Gucci accounts for about 60% of youth sales.

We are seeing ahead for a popular brand owning the 5th largest retail chain in the United States, F21 is having a great difficulty recently. F21 has always been positioned as a young brand, focusing too much on teenagers. Knowing that today’s fashion market is dominated by Gen-Y and Gen-Z; but bonding with teens and young people has created hesitation among older customers to buy clothes. Accidentally losing potential customers with stable financial resources.

So, keep an eye on Gucci’s bubble growth in the future. Brands will know how to spread customers more diverse; or they will use a newer tactic but only vicious in a certain customer audience.

Phong

Photo: Internet