University of Makati

Higher School ng UMak

J. P. Rizal Ext. West Rembo, Makati City

Chapter 7

Business Plan
(Gucci)

Tuti, Era Margarette G.

Grade 12-01 STEM
February 2019

Prof. Arlene Jacinto

Entrepreneurship Teacher
Table of Contents

Title Page I

EXECUTIVE SUMMURY 1

INTRODUCTION 2

FOUNDER OF GUCCI 3

GUCCI

Company Background 3

Vision, Mission and Values 4

S.W.O.T 5

Ethnoraid 6

Products and Services 7

Gucci Department 8

Market Strategies 11

Analysis of the Competition 12

Operations and Management 13

Financial Data 14

New Products 15

The Future: Opportunities and Risk 16

Conclusion 17

References 18
EXECUTIVE SUMMURY

Gucci is the name of a “hottest” luxury fashion brand. Under the new vision of

creative director Alessandro Michele, the House has redefined as one of the

world’s most desirable fashion houses. This paper is about how Gucci

communicate their brands to the audience with high level fashion revolution.

This paper consists of analyses of the brand identity, signature style, fashion

statement, verity of product line, marketing policy, management and other

strategies. On this journey I noticed that Gucci performing for Global and social

welfare. In other side GUCCI is very much coveted. And it’s really controversial.

Their target customers are elite class and celebrities. Only particular people can

effort this level of products. This luxury fashion brand should resolve this and

create a new fashion statement which will be non-controversial. After all Gucci

is reflected back in themselves, the stereotypical consumer will feel influential,

innovative and progressive- much like the brand itself.

 1

INTRODUCTION
The House of Gucci, better known simply as Gucci. Gucci pronunciations is an
Italian luxury brand of fashion and leather goods, part of the Gucci Group, which
is owned by the French holding company kerning. Gucci was founded by Guccio
Gucci in Florence in 1921. Gucci generated about €4.2 billion in revenue
worldwide in 2008 according to BusinessWeek and climbed to 41st position in
the magazine's annual 2009 "Top Global 100 Brands" chart created by Interbred,
it retained that rank in Interbrain’s 2014 index. Gucci is also the biggest-selling
Italian brand

Gucci is one of the most sought-after(desirable) labels in the fashion industry.

From Los Angeles to Paris, the Gucci label is lighting up the runway and
becoming the single most respected label in the world. From their incredible
handbag designs to their super sexy floor length gowns, Gucci is offering an
elusive mix of casual styles and runway chic designs for men and women all over
the world.

Originally founded in 1921, Gucci has successfully provided consumers with

leading, high quality designer goods, unlike any other designer in the business.
Over the years, the label has obtained insurmountable levels of success with each
new collection released. By 2005, Gucci had established 207 stores around the
world.

Gucci operates about 278 directly operated stores worldwide as of September

2009, and it wholesales its products through franchisees and upscale department
stores. In the year 2013, the brand was valued at US$12.1 billion, with sales of
US$4.7 billion. In the Forbes World's Most Valuable Brands list, Gucci is ranked
the 38th most valuable brand, with a brand value of $12.4 billion as of May 2015.
Within the last decade, Gucci has expanded the label significantly. Gucci is just
one division of the Gucci Group, which is a parent company to world renowned
labels such as Yves Saint Laurent, Stella McCartney Balenciaga.
 2

FOUNDER OF GUCCI
Guccio Gucci was an Italian businessman and fashion designer, the
founder of The Fashion House of Gucci.

Born : 26 March 1881

Florence, Italy
Died : 2 January 1953 (aged 71)
Milan, Italy
Citizenship : Italian/British
Occupation : Professor, Doctor, Businessman
and Known for Founder of Gucci

Type : Subsidiary
Industry : Fashion
Founded : 1921; 96 years ago
Founder : Guccio Gucci
Headquarters : Florence, Italy
Key people : Marco Bizzarri (CEO)
Alessandro Michele
(Creative Director)
Revenue : US$ 4.3 billion (2016)
Website : www.gucci.com
 3

VISION, MISSION and VALUES

The company`s mission is to become the leader in luxury market at worldwide level.

Gucci describe themselves as cool and responsible, and value themselves on

their craftmanship. These three concepts are linked; Taking up responsibility
can aswel be cool. For Gucci, Corporate Social Responsibility is an important
part of their global strategy. They work with a holistic, yet realistic approach.
They state that it is their duty to use their position as a luxury brand
to pioneer and promote sustainability.

The Gucci values are deeply embedded within ethics and in fact, the company
began to work on a sustainability strategy in 2004. Quality remains
a main priority, but they began to elaborate upon this. Sustainability for
people and the environment became part of the quality-concept. Gucci state
that their sustainability strategy is supported by their stakeholders.

June 2010, saw the introduction of Gucci`s 100% recyclable packaging.

Shortly after this, the company launched a collection of environmentally
friendly glasses which utilised biodegradable plastic and recycled metal;
with a new collection of these to be launched in 2013. Biodegradable plastic
is also to be used in a shoe collection which the company describe as a
combination of style quality and new material (Ravagli, 2012).

The Gucci target group is the affluent middle to upper classes. The consumer
is hip, aged thirty plus, and above all, is an individual who invests in fashion
as either a treat or a lifestyle (Ward, 2011)
 4

S.W.O.T

 Strengths
 Very strong brand identity
 High level of control over distribution channels
 Strong relationships with suppliers & retailers
 Directly operated stores

 Weaknesses
 Not seen as being sustainable
 Seen as being tacky

 Opportunities
 Emerging luxury market
 Innovative opportunities with textiles
 Be a pioneer of sustainability within the luxury market

 Threats
 Lacking innovation
 Competitors targeting the conscious consumer
 5

ETHNORAID

The ethnoraid was carried out in Copenhagen at the Gucci store in order
to gain an insight into Gucci employees and customers. The main purpose
of the interviews was to gather more information about the Gucci customer.
It was important to know if the consumer was interested in sustainability.

The average customer in Gucci is an upper class business person who

prioritises quality and design. It is important that the products are luxurious
and exclusive. The customer does not consider the environmental issues
but places emphasis on sustainability through the quality of merchandi
 6

PRODUCTS AND SERVICES

PRODUCT LINE/CARAGORIES
 MEN’S
 Clothing
 Shoes
 Ties
 Bags & Briefcase
 Wallets
 Underwear
 Swimwear
 Cufflinks
 Shirt
 Belt
 WOMEN’S
 Handbags
 Shoes
 Clothing
 Wallets
 Underwear
 Swimwear
 Accessories
 Beltway
 KID’S
 Kids wear
 Shoes & Accessories
 SUNGLASSES
 Men’s Sunglasses
 Women’s Sunglasses
  JEWELRY
 Men’s Jewelry
Women’s Jewelry
 WRIST WATCHES
 Men’s Watches
 Women’s Watches
 HOUSE
 Home Décor & Accessories

GUCCI DEPARTMENT
The Gucci brand has been the symbol of undisputed quality in the leather
field for almost 100 years. Past time and now, Gucci established itself
as a luxury fashion label in the clothing, accessories and jewelry field.
The quality of their fabrics, materials and the originality of their styles
made Gucci the symbol of Made in Italy, in the process to become one of
the most acclaimed brands worldwide.

 GUCCI SELECTIONS
Gucci is an example of how design can be highly innovative, yet solid
over generations. And testimonials prove it.

 GUCCI HANDBAGS
Gucci handbags are the epitome of Italian elegance and craftsmanship.
The unmatched quality and design of Gucci are highlighted through
intricate hardware, signature fabrics and the finest leathers. The iconic
Gucci logo comes stamped on handbags that can be brought to the office,
to the café or to a whirlwind weekend in the city.
  GUCCI WOMEN'S SHOES
Gucci women's shoes will help any woman put her best (and most stylish)
foot forward.
The finest materials take the stage in sexy stilettos, winsome wedges
and fantastic flats- to name a few. The color palette is as diverse as the styles,
allowing the Gucci woman to choose between neutrals, metallic, pastels or neon.
Every step will make a statement.

 MEN'S SHOES
Gucci men's shoes are for the man who can make everyday elegance look effortless.
Italian craftsmanship, iconic logos and the finest materials will make the Gucci man
stand out in a crowd. Whether he's leading a boardroom or kicking back in a
bedroom, it is easy to stay in step with Gucci on his feet.

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 GUCCI DRESS SHIRTS
Dress shirts by Gucci ensure that when the clothing makes a man it does so in style.
The trademark Gucci elegance is attained through the perfect fit, quality fabrics and
classic lines that honor the masculine form. Whether paired with a three piece suit
or simple slacks, a Gucci shirt provides subtle sophistication.

 GUCCI WOMEN'S WALLETS

Gucci women's wallets provide a portable way to enjoy Italian elegance.
Whether she needs to tuck away her credit cards in a leather wallet,
touch up her makeup in a heart shaped compact or keep the keys close by-
Gucci has a product for the modern day superwoman that is always on the go.

 MEN'S WALLETS
Gucci men's wallets bring high style, fashion and quality to an everyday product.
The modern man can stash his cash between folds of leather or fabric
emblazoned with the iconic logo. Music men can even find a Gucci case to
make that iPod more elegant.
  GUCCI WOMEN'S CLOTHING
Grace Kelly and Audrey Hepburn helped make Gucci women's
clothing iconic. Contemporary women can strike a classic pose or head
for uncharted waters in a more adventurous Gucci piece. Quality fabrics,
ingenious designs and the elegance associated
with the brand make every item a wardrobe staple.

 GUCCI MEN'S CLOTHING

Designed for those who want to make an impression, Gucci men's clothing
last without saying a word. European sophistication at its finest, Gucci clothing
can follow a man from work to leisure to play without skipping a beat.
The stylish designs and quality fabrics make every Gucci piece a worthy investment.

 WOMEN'S BELTS
Gucci women's belts can provide subtle support or bold contrast to any ensemble.
Quality materials combine with fine hardware and the signature
Gucci logo to create a staple accessory for a woman's wardrobe. Prepare to
buckle in to the luxurious lifestyle associated with the Gucci brand.

 GUCCI MENS BELT

Gucci men's belts provide a subtle statement of sophistication to looks for the
office or leisure. Whether leather or fabric, a belt with the instantly recognizable
Gucci logo makes it obvious that the wearer appreciates the finer things and
knows how to use them.

 GUCCI WOMENS ACCESSORIES

Women's accessories by Gucci can make even an ordinary outfit extraordinary.
Top off a look with a Gucci hat, adorn with high fashion jewelry or check
the hour on a timeless timepiece. Quality, style and luxury combine to make
every Gucci accessory a small piece of art.

 BRIEFCASES
Gucci briefcases ensure that the modern professional can carry their occupational
weapons in sophisticated style. Italian craftsmanship, luxurious materials and the
logo make it clear that the owner means business. There is no better way to make
a strong case for style than through Gucci

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MARKETING STRATEGY OF GUCCI

The Italian fashion and accessories brand was established in 1921 and is known
for its offerings in the luxury segment. It is the part of Kering group which is a
world leader in apparel and accessories with its portfolio of luxury, sports and
lifestyle brands.

Gucci main values: “exclusivity, quality, made in Italy, Italian craftsmanship, design
leadership in the world of fashion”.
Strategic positioning: perfect balance of modernity and tradition, innovation and
craftsmanship, trendsetting and sophistication.
Craftsmanship and Made in Italy: strong linkages with the territory; 100% Made in
Italy; 45.000 workers in all Italy; the project “artisan corner” in the shops; the project
“made to measure”
Support in the creation of 3 “Network contracts”: Gucci has sponsored the birth of 3
networks contracts to improve innovation, efficiency in the value chain, economy of
scale, facilitate credit access: 1) P.re.Gi. Network (7 firms, leather goods artisan;
11 mil. Euro turnover); 2) Almax Network (8 firms, bags producer, 20 mil. Euro
turnover, 300 employees); 3) F.a.i.r. network (9 firms, accessories and leather; 45 mil.
Euro turnover, 200 employees)
Eco-friendly initiative for the environmental impact reduction of the firm activities
Innovation: Launch of the new collection in the kids market all made in Italy.
Opening of the Gucci Museum (Icon Store, Library and Gift Shop, Coffee and
Restaurant) Selective Retail strategy: 317 shops worldwide (they realized the 73%
of the Gucci turnover, the other 27% distributed in selected retail stores)
Economic Performance: In 2011 Gucci turnover was 3.140 million Euro (+17,7%)
with a profit growth at group level (+26,4%). In 2012 Gucci turnover was 3.639
million Euro.
The network of subcontractors: 750 direct supplier, 1500 subcontractor, 45.000
employees The Luxury Group: change of the name of PPR Group in Kering.

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ANALYSIS OF COMPETITION
In the premium and luxury segment, creating a buzz in the market,
high visibility and garnering reputation is necessary in order to build
a distinctive image in the mind of the consumers. Gucci has been
closely associated with the various campaign and its partnerships
have helped it in positioning itself superior to its competitors. Hermes,
Louis Vuitton, Chanel, Prada etc. are some of the brands which compete
with Gucci.
 1. Brand equity – A fashion brand which is selling at premium
prices requires a very strong brand equity. Gucci’s brand ranks
38th in the whole world in 2015 as per Forbes. The brand is
valued at a whopping 12.4 billion dollars.
2. Highest quality products – Naturally, with the quality and the
trademark that it represents, Gucci products are of the highest
quality and the most luxurious items in the market. There are very
few companies which can match Gucci’s standards in fashion
3. Strong presence in international market – Gucci has about 500
stores across many countries. Its major presence is in UK, US
and Japan as well as in other emerging countries.
4. Product line and depth – A major advantage of Gucci is its product portfolio
which comprises of premium handbags, apparels
for men and women, clothing and whatnot in fashion. It is a
complete ultra premium lifestyle brand.
5. Keeps Diversifying – It is not easy in the fashion business and
one of the advantages of Gucci is that it does not wait for events
to launch something new but it keeps changing things so that the
store layout always looks fresh and hip.
6. Various CSR activities – Gucci as a brand is involved in various
CSR activities. One of them is with Unicef since a long time and
the other is “Chime for change”.
7. Strong tie ups – Being a premium fashion brand, it was inevitable
that the brand venture into Automobiles as well. Many cars over
the years have been designed by Gucci giving the car a unique
blend of efficiency and fashion.

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OPERATIONS AND MANAGEMENT

Economic Performance
In 2013 Gucci turnover was 3.561 million Euro (-2,1%)
with a profit growth (Ebitda 35,8%). The composition of turnover for business
area is: 58% leather goods, 14% shoes, 11% clothing, 5% watches, 2% jewellery,
10% other products.
Investment in correlated business
In 2013 Gucci group acquire Richard Ginori an historical porcelain firm based in
Florence Changes in Management Team: In 2014 Gucci turnover was 3,5 million Euro
(-1,8%). At the end of 2014 the Ceo P. De Marco and the Creative Director Frida
Giannini where both substitute: the new CEO is Marco Bizzarri (ex CEO Bottega
Veneta), the new creative director is Alessandro Michele (Leather goods director)
Strategic positioning
Reduction of wholesale point of sales (indirect channels) and increase of direct retail
store. Pushing to the top of the luxury market the Gucci positioning (upgrading); in
Spring 2009 the turnover of the bags collection was: 32% entry price, 48% medium
segment; 18% high market; 2% top; in Winter collection 2013-14 the figure are
respectively 2%, 47%, 48%, 3%.

Craftsmanship and direct investment in the “Made in Tuscany”

Continue the strong linkages with the territory; 7.000 workers in the regional network.
Key words for manufacturing investments: efficiency, flexibility, specialization. In
2014 Gucci invested 21 million for a new manufacturing plant near Florence
Improving the “Network contracts”
From 3 networks contracts to 12 networks; 97 small and medium size firms are
involved; 1.500 employees in the networks; social responsibility and ethical code are
compulsory

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FINANCIAL DATA
Global Revenue Share of Gucci from 2012 to 2018 by region.
This statistic depicts the global revenue share of Gucci from 2012 to 2018, by region.
In 2018, the North American region generated 21 percent of Gucci's global revenue.
The global revenue of Gucci was approximately 8.3bbillion euros in 2018.
The global luxury goods industry, which includes drinks, fashion, cosmetics,
fragrances, watches, jewelry, luggage and handbags has been on an upward climb
for many years. The value of the global personal luxury goods market was 212 billion
euros in 2013 and is estimated to be worth about 262 billion euros in 2017.

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NEW PRODUCTS
• Gucci has completed its transition to the geek-chic aesthetic
introduced by Michele following his appointment in 2015
• introduction of the new styles in all categories (no-gender)
New comunicaton strategies
• https://www.gucci.com/it/it/st/stories
• E-commerce + 86%
Gucci sales 2017
• Gucci Sales growth 2017 (first semester): +43%
• Recurring operating income 2017 (first semester): +70% (€ 907 Million)
• Revenues 2017: € 2,83 million (First semester)

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THE FUTURE:
OPPORTUNITIES AND RISK
The Gucci case history is a good
example of leading firm that was able
to overcome family succession
problems and to develop “a glocal
strategy”. Its local network shows high
capability to support the crisis.
• The opportunities of globalization
(new rich people in Asia) with new
personalized products and services:
– made to order handbags;
– accessories personalized;
– made to measure
• Future challenges are approaching (in
2009 De Marco said: “at 1 billion Euro
it’s easy to remain Made in Italy, at
more than 2 billion it’s much more
difficult!” (the opportunities of
manufacturing “reshoring” with the
devaluation of Euro currency)

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CONCLUSION
SME companies continue to play an important role in the international
business, but the new competitive scenario obliged them to change their
strategies and firm structures
• Network organizations are only a small piece of the Italian puzzle, but they
are important to understand the process of entrepreneurial development in
certain area of the country
• The Made in Italy continue to represents a source of value (some American
distributors recognize the 17% of premium price to Italian products), but
the new competitive scenario obliged the firm to change their strategies
• At the moment the Italian fashion cluster are facing new competitive
challenges that will probably change some of their original characters (it
becomes strategic the role played by leading firms; increasing role played
by advanced services)
• More researches are needed to understand better the nature and the
evolution of network organizations (key variables, stages of evolution,
competition, etc.). Only the future will tell us if network organizations will
continue to be important or will move into some new consolidated forms
(medium or large firms, small transnational groups)
• The Gucci case history is a good example of leading firm that was able to
overcome family succession problems and to develop “a glocal strategy”.
Its local network shows high capability to support the crisis, but future
challenges are approaching

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REFERENCE
Bacci L., a cura di, (2004), Distretti e imprese leader nei
sistemi moda della Toscana, F. Angeli, Milan.
• Fondazione Edison & Symbola (2009), Italia. Geografie del
nuovo Made in Italy, may.
• Istat (2012), Le esportazioni dei prodotti dei sistemi locali del
lavoro, April, Rome.
• Onida F., (2004), Se il piccolo non cresce. Piccole e medie
imprese italiane in affanno, il Mulino, Bologna.
• Porter M. (1990) The Competitive Advantage of Nation, New
York, Free Press.
• Porter M. (1998), On Competition, Boston, Harvard Business
School Press.
• http://www.gucci.com/uk

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