Can Gucci Turn Attention Into Sales?

PARIS — Gucci’s reboot under designer Demna is going in the right direction, Kering CEO Luca de Meo told shareholders at the French group’s annual general meeting on Thursday, on the heels of the brand’s blockbuster Cruise show in New York’s Times Square earlier this month.

It’s been no more than six weeks since the executive laid out his plans to turn the French group around at a capital markets day in mid-April, but the clock is ticking for de Meo to show results after years of declining sales at Kering’s flagship brand.

Gucci’s revamp is one of the most closely scrutinised in a wave of creative overhauls across the industry. The Italian house is seeking to reassert its fashion authority and win back ground lost to rivals like Chanel and Dior, which are also refreshing designs under new creative leadership.

“Above all, we’ve returned to the essence of the house, to what makes it immediately recognisable and culturally pertinent,” said de Meo, referring to efforts Gucci has made since the former car executive took the reins at Kering in September with a mandate for a broad overhaul.

At Gucci, the priority has been to sharpen its image, while bolstering its value proposition. Behind the scenes, it’s also reviewing industrial processes to improve quality and speed to market.

Initial reaction to Demna’s Famiglia and Primavera collections has been “very encouraging, notably from the most influential clients, which builds desirability and sets the tone,” de Meo said. “What’s more, analysis we have from women’s fashion in recent weeks confirms this dynamic,” he added.

Demna’s debut runway show in Milan in February topped the charts for media impact value. “For the first time in years, Gucci’s fashion show was number one,” said de Meo. The brand’s Times Square takeover further demonstrated the brand’s ability to generate buzz and dominate online discussion, though it is too early for data to be conclusive, he added.

“It’s a statement and I think Gucci needed to show that level of ambition,” said de Meo, noting Demna’s proven ability to grab attention. “Now it’s going to be how can he build his vision for the brand, how can he bring innovation,” de Meo told journalists after the shareholder meeting.

Beyond the runway, retail space is a priority, as the brand continues to cull stores, from around 600 to 450, and plans to refurbish the ones it keeps. Demna will play a role in drawing up the brand’s new store concepts, which are under development. Flagships will have an “expressive Italian flavour” and offer experiences, as well as space carved out for high-end jewellery.

Kering executives have identified jewellery, a category that has outperformed the wider luxury goods market, as a key area for development, including for the group’s fashion labels. COO Jean-Marc Duplaix is overseeing a new jewellery unit with an eye to pooling resources in the group, which includes the high-end jewellers Boucheron and Pomellato as well as production capacity.

Retail expertise from Boucheron will be important for training staff for spaces dedicated to jewellery that could be set up in around 120 Gucci flagships, suggested de Meo. “We already have the locations, we already have the rental contract, we’ve already paid for it, we already have the traffic — what we’re missing is the collection,” said de Meo, who noted that Gucci does not have a creative director dedicated to jewellery at the moment.

Gucci’s recent deal to become title partner to Renault’s Alpine Formula One team from next year offers opportunities for events with top clients in key locations like Miami, Singapore and Milan, as well as visibility, de Meo said.

“I think we negotiated a pretty good contract, that’s going much further than putting a sticker on a car,” said the former Renault chief, noting the complexity of activating 24 Grand Prix events on five continents over a year. Proximity to the Renault Alpine teams will help. “When you have people who treat you as a guest, that doesn’t work,” he said. “With these people, we are not guests.”