1. “…an enviable reputation built
on 90 years of exclusivity,
quality, craftsmanship, and
fashion authority…”
gr oup 12 al an chen r ebecca l oo l i am coat es pet er w l l et t
i angel
t se
2. com pany over vi ew
st r at egy i dent i f i cat i on
obj ect i ves
m anagem ent
di ver si f i cat i on
sour ces of com i t i ve advant age
pet
i ndust r y anal ysi s
t ar get cust om s er
com i t or s
pet
porter’s f i ve f or ces
i ssues
gl obal r ecessi on
uni nspi r ed r unw ay
i nef f i ci ent cust om r el at i onshi p
er
agenda managem ent (cr m )
r ecom endat i ons
m
r ecessi on-pr oof cl assi c l ooks
concept ual i zed pi eces f or new
col l ect i ons
new i nf or m i on shar i ng cr m syst em
at
i m em at i on
pl ent
st r at egy i dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
3. 1920s
1980s
1990s
1950s
2008
st r at egy i dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
4. gucci gr oup: st r at egi c obj ect i ves
#1
to ensure revenue and
profitability growth of the
group
#2
to assign a specific role to
each brand of the group
so as to maintain
consistency
st r at egy i dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
5. Rober t
Pol et
A exi s B
l abeau K en Lom do
ar bar
Gucci G oup
r
CEO
CO
O VP H an
um
Resour ces
M m a Vi gl ezi o
i m
VP G obal
l
C m cat i ons
om uni
CEO CEO CEO
CEO CEO CEO CEO
st
St r at egy I dent i f i cat i on
i com
C pet i t i ve Advant ages
om advant i ndust r y
I i
I ssues r ecom endat i ons
R m
i pl ent
I m em at i on
6. f r eedom w t hi n t he
i
f r am or k
ew
“t ake a cr eat i ve per son: you need t o set
them free. but you also tell them, ‘do
whatever you want, as long as you respect
the brand’s dna, the clients, the market and
the budget.”
m m a vi gl ezi o, vp com uni cat i ons
i m m
st r at egy i dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
7. di ver si f i cat i on
moder at e l evel of gucci br and makes up l ess
di ver si f i cat i on t han 70% of gr oss r evenue
r el at ed l i nked l i m t ed l i nks bet w
i een
st r uct ur e i ndi vi dual br ands
val ue t hr ough oper at i onal r el at edness
econom es of scope
i cor por at e r el at edness
st r at egy i dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
8. sour ces of com i t i ve advant age
pet
st r ong br and equi t y
st r at egy I dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
9. sour ces of com i t i ve advant age
pet
i nf l uent i al desi gner s and i mpeccabl e
cr af t sm anshi p
st r at egy I dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
10. sour ces of com i t i ve advant age
pet
gucci group promotes
sharing of knowledge among
its various brands,
capitalizing on specific
expertise
cost synergies are generated
through centralized
administration, sourcing,
inventory delivery systems,
increased bargaining power
br oad di ver si f i ed br and por t f ol i o
st r at egy I dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
11. sour ces of com i t i ve advant age
pet
f ashi on goods and
accessor i es ar e m nl y
ai
sol d i n di r ect l y-
oper at ed st or es w ch
hi
ar e desi gned accor di ng
t o a speci f i c concept
f or each br and,
ensur i ng
consi st ency i n t er m s
of pr oduct di spl ay and
ser vi ce qual i t y ar ound
t he w l d.
or
cont r ol l ed di st r i but i on net w k
or
st r at egy I dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
12. t ar get cust om s w t hy, hi gh st at us,
er eal
f ashi on consci ous
cust om s such as
er
cel ebr i t i es, af f l uent
i ndi vi dual s, and busi ness
peopl e
st r at egy I dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
13. com i t or s
pet ar m ani
bul gar i
bur ber r y
f er r agamo
her mes
l uxot t i ca
l vmh
chanel
pr ada
r i chemont
l uxur y
tod’s
st r at egy I dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
14. subst i t ut
suppl i er
buyer s es
s
•i m t ant
por •m gi nal l y wealthy
ar
i nput s ar e customers could
i nt egr at ed “trade down” t o
•m e l oyal t o
or (desi gn, m d-hi gh f ashi on
i
t r ends t han m anuf act ur i ng) br ands such as
speci f i c •ot her i nput s coach, hugo boss,
br ands ar e et c.
•hi gh l evel of com odi t i es
m •m or i t y of
aj
pow er (r aw cust om s st i l l
er
m er i al s)
at w t hy enough
eal
•l ow l evel of •f ai r l y l ow power
pow er
porters five forces
st r at egy I dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
15. pot ent i al com i t i ve r i val r y
pet
ent r ant s
• very di f f i cul t t o
becom a hi gh
e
f ashi on br and
•t akes m any year s •qui t e com i t i ve
pet
t o devel op am ong l uxur y
cr edi bi l i t y and br ands
val ue •consum s l oyal t o
er
•ver y m ni m
i al t r ends, not br ands
t hr eat •si gni f i cant t hr eat
porters five forces
st r at egy I dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
16. pr obl em one
gucci’s pr oj ect ed
gr ow h r at e
t
f al l i ng f or t he
f i r st t i m af t er
e
4 year s of
const ant gr ow h t
cr edi t cr i si s
st r at egy I dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
17. pr obl em t wo
“many of the suits in the
show…could easily hit the
shelves of zara and h&m
months before they get to
gucci's boutiques. at first
glance, there was nothing
much about…that would
make them stand out from
fast-fashion imitators.”
[wall street journal]
uni nspi r ed r unway
st r at egy I dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
18. pr obl em t hr ee
• “the shopping experience has
reached saturation in luxury.
There are too many new
stores and brands. If people
don't like the experience they
can go somewhere else or
buy online." -cheryl mead
• current system is limited
• there is limited sharing of
customer information
between stores within the
brand
i nef f i ci ent cust om r el at i onshi p
er
m anagem ent
st r at egy I dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
19. recommendation one: back to basics
“w hen t i m get t ough, peopl e w
es ant t hi ngs t hat ar e r eal and
l ast i ng. bl ack i s cer t ai nl y r ef l ect i ve of t hat . I t 's what you
can bank on, and i t 's t he m ost el egant col or .” nar ci so
r odr i guez
W ch t he Vi deo!
at
st r at egy I dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
20. creativity
devel opm ent
t r i angl e
merchandising product development
st r at egy I dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
21. Conceptual Runway Pieces
recommendation two:
conceptual runway pieces
st r at egy I dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
22. for the less fashion-conscious out there….
st r at egy I dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
23. recommendation three:
• only ask for basic information at
first purchase
• sales associates will then be
able to add additional
information to the customer
profile through interaction with
customer
• adding to profile will be part of
sales associate’s job and their
name will be assigned to each
update they write
customer relationship management database
st r at egy I dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
24. sharing across brands
• front-end sharing
– not recommended
• it may ruin the
individuality of the
different brands and the
customer perception that
the brands are not owned
by the same company
st r at egy I dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
25. Implementation
polet meets
giannini to develop crm system
discuss tailored crm implementation
recession- system
hire it consultants •training
proof
to find suitable •modification of
collections
supplier for crm employee incentives
system
new
marketing collections
team begins introduce more
released
revamping conceptualized
campaign runway designs
next three months three months to one year one year and beyond
st r at egy I dent i f i cat i on com i t i ve advant ages
pet i ndust r y i ssues r ecom endat i ons
m
i m em at i on
pl ent
[Consider splitting each point onto separate slide and have full-slide backdrop image to tell story of Gucci’s history]*Transition* Polet brought to Gucci a new management mentality with a focus on business and profitability.
In 1921, Guccio Gucci founded a leather goods and small luggage store in Florence, ItalyThe soul of Gucci is in the Made in Italy label. Florentine culture, Tuscan craftmanship,1950s, became a symbol of modern luxury by internationally expanding, opening its new stores in Milan and New York – under leadership of sons1980’s first runway show and became public limited companyUnder the leadership of Ford and De Sole, Gucci transformed into a not only a fashion sensation, but the European Company of the Year in 1998. It also went into a strategic alliance with retail glomeratePinault-Printemps-Redoute (PPR) and became a multibrand companyIn 2004, PPR took Gucci Group private and appointed Robert Polet as the new CEO – FridaGiannini Became the creative director of Gucci Gucci Group is committed to expanding its share in the fast-growing markets of Asia, where it recorded a 16.1% growth in 2005. At the end of the year 2005, 217 of its 426 directly-operated stores were located in this area. Over the next two years, 50% of the new Gucci Group store openings will take place in Asia
Gucci Group’s strategy is based on three main objectives: ensuring revenue growth and profitability at Gucci Group, refocusing on the Gucci brand and assigning a specific task to each brand within the portfolio. The latter point strengthens the coherence of the multi-brand strategy.
In order to implement its strategy, Gucci Group has overhauled its organisational structure. The Group has granted substantial autonomy, within specifi c guidelines, to the CEOs of the various brands who are now in charge of design, merchandising and all aspects of the operating and fi nancial results of their respective brands.Regarding the supply chain, Gucci Group takes care to guarantee exceptional product quality. To achieve this, it selects the very best materials and exercises very strict controls over production, whether in-house or by outside partners. Prototype development and the entire manufacturing process are monitored constantly for quality control. In addition, Gucci Group is making its supply chain more fl exiblein order to rotate its collections and replenish stocks faster during the season. The group also keeps a watchful eye on practices by the main competitors in luxury goods and other industries in order to stay on top in terms of supply chainPolet left the organizational structure of Gucci Group unchangedEach brand had its own CEO and operated independently, and Polet headed a lean central structure at the top that performed the back-office functions such as strategy, HR, finance, and communicationsBrands under the Group included:Gucci, flagship brand – Florence Heritage, Tuscan CraftsmanshipBottegaVeneta: classic leather goodsYSL: French high-fashion houseBalenciaga: urban fashion – “master of of us all” -Boucheron: JewellerySergio Rossi: Shoes and leather goodsAlexandre McQueen: Modern fashion – avantegardeStella McCartney: Environmentally and PETA friendlyBedat&Co: Swiss watchesTo manage all these brands, Polet uses a strategy called “Freedom within the Framework”
The strategy of Freedom within the Framework involves encouraging each brand to act independently to take charge of its own profitability and creative direction, so long as they do not betray the brand’s DNAThis DNA refers to the individual brand’s identityIn the Gucci Group’s portfolio of brands, each one targets a fairly specific niche of the high-end fashion market so that as a whole, the Group can satisfy the entire fashion needs of their target customer baseHence, adhering to DNA serves 2 key purposes:1. Making sure that the brand stays true to its customer base2. Allows Group to carefully manage cannibilization between brands
- Gucci Group’s organizational structure and Freedom within the Framework strategy falls under a Moderate Level of diversification with a Related Linked structure
Gucci continues to focus on strengthening the values upon which its enviable reputation has been founded for its almost 90-year history: exclusivity, quality, made in Italy, Italian craftsmanship, and fashion authority. Setting it apart from its competitors, Gucci is able to claim a unique duality in its brand positioning pairing modernity and heritage, innovation and craftsmanship, trendsetting and sophistication. 3rd most valuable luxury brand-7.45 billion dollars after LVMH and Hermes (According to Millward Brown Optimor’s 2011 BrandZ study)Best selling Italian Brand Labelin the world (Gucci itself)Celebrities choose Gucci too – Brad Pitt, Christian Bale, Jessica Alba – A-list Made in Italy – exclusivity - and only sold through Gucci’s directly owned stores, lady gaga
FridaGiannini – in 2007, ranked as 53 most influential people in the world, Alexander McQueen, Stella McCartney, BalenciagaHiring talented designers Creative and unique ability to use materials –crocodile skin , python leatherTuscan craftsmanship , everything is made in italyand its incomparable craftsmanship capabilities,Regarding the supply chain, Gucci Group takes care to guarantee exceptional product quality. To achieve this, it selects the very best materials and exercises very strict controls over production, whether in-house or by outside partners. Prototype development and the entire manufacturing process are monitored constantly for quality contro
Gucci Group designs, manufactures and markets high-end luxury goods items, including ready-to-wear, leather goods, shoes, watches, jewellery, ties and scarves, fragrances, cosmetics and skincare products. The extensive product range is one of the Group’s greatest strengths. It is a source of organic growth and one of the main criteria for the acquisition policy conducted between 1999 and 2001.As a multi-brand group, Gucci Group has promoted the sharing of knowledge among its various brands, capitalizing on the specifi c expertise. The Gucci brand, which has a long-standing reputation in fashion, leather goods and accessories, has shared its in-depth knowledge with the other brands of the Group to successfully build the Group market share in the luxury goods industry. Gucci Group Watches manufactures its products in Switzerland and markets Gucci, BEDAT & CO and Boucheron timepieces worldwide. Lastly, YSL Beauté creates, manufacturesand distributes fragrances and cosmetics for Yves Saint Laurent, as well as fragrances for Boucheron, Alexander McQueen and Stella McCartneyAbility to target niche segments within luxury goods marketLow cannibalization across brands because of the unique image and product positioning of each one.Instead, cost synergies are generated through centralized administration, sourcing, inventory delivery systems, increased bargaining powerFreedom within the framework – empowers designers and managers of each brand to be accountable for not only innovation and creativity, but profitability as wellDiversification , freedom within framework, and decentralization all together makes it hard for other competitors to duplicate
Management of brands and brand image is tightly controlled through the distribution network. The carefully controlled development of an integrated distribution network with a sound geographical basis has been a key strategic focus for Gucci Group. Fashion goods and accessories are mainly sold in directly-operated stores which are designed according to a specifi c concept for each brand, ensuring consistency in terms of product display and service quality around the world. The 426 directly-operated stores generated 54% of Gucci Group revenue in 2005. - global network -exclusivityGucci Group’s products are also distributed through a selected number of exclusive franchise stores, duty-free boutiques, department and specialty stores. The Gucci Group Watches activity markets its products directly through jewellery stores on most major markets, or through third parties. YSL Beauté focuses on locations which correspond best to its product prestigious image, marketing its products through subsidiaries in upscale perfume shops, department stores and duty-free boutiques.Tight relationships
Target CustomerWealthy, high status, fashion conscious customers such as celebrities, affluent individuals, and business people
Liam’s Slides:Porter’s Five Forces· Buyerso More loyal to trends than specific brandso High level of power· Supplierso Important inputs are integrated (design, manufacturing)o Other inputs are commodities (raw materials)o Low level of power· Substituteso Marginally wealthy customers could “trade down” to mid-high fashion brands such as Coach, Hugo Boss, etc.o Majority of customers still wealthy enougho Fairly low power
Liam’s Slides: Potential Entrantso Very difficult to become a high fashion brando Takes many years to develop credibility and valueo Very minimal threat· Competitive Rivalryo Quite competitive among luxury brandso Consumers loyal to trends, not brandso Significant threat
-focus on classic pieces (little black dress) and wardrobe staples-try to convince customers a handbag isn’t just an accessory but an investment
Vera Wang’s f/w 12 presentation considered the potential for sheerness to transform garments from a purely functional nature to a far more conceptual one. When a sheer vest and skirt are worn over a vivid tangerine bandeau and cycling shorts, are the latter foundation garments or are the former distant cousins of the veil? What garments are meant to be revealed, and what garments are meant to be concealed? Wang’s translucent layers deliberately left these questions unanswered, stimulating a dynamic “conversation” among pieces. In addition Wang, introduced two new pant proportions (a flare and a narrow winter-short) that worked to supply just the correct amount of wearability to this assortment.