Gucci has long been known for its artistic flair and bold, eye-catching luxury products in a variety of colors. But in 2023, the brand underwent a dramatic shift in direction, after Gucci’s parent company, Kering, replaced its creative team. The new collections, under the direction of the company’s chosen designer Sabato de Sarno, have been noticeably muted. They also have debuted to notably mixed reviews.

Some buyers praise the recent changes to Gucci’s leather goods offerings, especially the wide range of new items introduced in 2024. These products alone accounted for one-third of reported sales in a recent fiscal quarter. But the new introductions and their performance arguably might not have been enough to compensate for the struggling performance associated with older products. An estimated two-thirds of current merchandising predates Sarno’s arrival with the company.

Even as the new product account for more sales, consumers appear to remain skeptical of the new design direction too. In both U.S. and European markets, overall sales are down. Brand redirections always take some time to attract customers, suggesting the persistence of financial pressure on Gucci. Meanwhile, the Asia-Pacific market has entered a turbulent period, marked by destabilization in housing prices and slowing economic growth, especially in China. Whereas luxury markets had been depending increasingly on Chinese consumers, sales among these buyers have fallen by around 35 percent, while in Japan, sales have dropped by 30 percent.

All of these data suggest bad news for Kering, the parent company that relies heavily on Gucci as its main source of income. Although the brand also can boast ownership of Saint Laurent, Valentino, Balenciaga, and Bottega Veneta in its portfolio, none of these trademarks generates as consistent a stream of revenue as Gucci has done. Some years, the brand made up two-thirds of Kering’s profit. 

Discussion Questions 

1. Can a new creative approach will lead to more mainstream appeal for a luxury brand? Or are flashier designs part of the Gucci brand and integral to its success?
2. Is a new creative direction an effective marketing strategy? What other fashion brands might benefit from a directional shift, and in what way? Be specific.

Sources: Carol Ryan, “Gucci Has Problems. The Biggest May Be a Safe New Look,” The Wall Street Journal, October 24, 2024; Karen Gilchrist, “Gucci Owner Kering Tanks 14% After Asia Profit Warning, Dragging Down Europe Luxury Brands,” NBC, March 20, 2024; Mimosa Spencer, “France’s Kering Warns on 2024 Operating Profit as Gucci Sales Fall,” Reuters, October 23, 2024