Gucci: "Quality Is remembered long after price is forgotten" Product Story & Business Model.

Who owns Gucci??Gucci is owned by the French holding company Kering, which purchased an $8.8 billion stake in the iconic Italian fashion brand in 2004. Artémis, the investment firm of the Pinault family led by Fran?ois Pinault, is Kering’s leading shareholder and holds a majority share in the company through its parent organization. As part of Kering Group, Gucci is one of their most profitable brands; it generated over €10.5 billion (approximately $12.7 billion) in revenue in 2022 compared to the Group’s total revenue of €20 billion (roughly $21.1 billion).

Founded in Florence by Guccio Gucci 97 years ago, this fashion house has come a long way since its early days manufacturing luxury travel accessories and equestrian gear for wealthy elites across Italy. Nowadays, they focus on creating lines of handbags, ready-to-wear garments, shoes, and accessories, as well as home décor items that are distributed all over the world and have solidified the reputation of being one of the most successful global luxury brands with worldwide recognition.

Gucci Origin Story

Gucci has become a timeless symbol of luxury and opulence over the decades, with its roots traceable back to 1921, when founder Guccio Gucci set up a small leather shop in Florence, Italy. A stickler for quality craftsmanship, Guccio initially specialized in producing handcrafted luggage and items for the elite. His son, Aldo, recognized its potential and expanded operations, then took over operations soon after and began to expand the company into new ventures, including opening the brand’s first store in New York City, located inside the Savoy Plaza Hotel — just 15 days before his father’s death.?

In 1953, America got its first taste of an iconic fashion house as Jackie Kennedy was seen carrying an instantly-famous Gucci bag at her husband John F.’s presidential inauguration ceremony — which lent itself to being renamed ‘Jackie’ ever since. This event only propelled their reputation further within the U.S. market and added worldwide recognition to complement their popularity all across Europe.?

The following decade would prove even more successful, as they?commissioned the custom-made print scarf ?when Princess Grace of Monaco visited the Gucci boutique in Milan; it was named ‘Flora’ after her favorite flower — creating another staple piece that helped solidify Gucci’s place in high society circles. They further enhanced their presence by launching their very first fragrance line in 1975, amid rapid expansion throughout Europe and Japan (adding even more stores). In 1982, Rodolfo Gucci assumed control of the company, with his son Maurizio overseeing operations until 1995. At that point, the Gucci family had?ceded 50% of their shares to Investcorp shareholders ?eight years earlier, in 1987, completing a 100% ownership transfer to Investcorp in 1993.?

Tom Ford’s appointment as creative director was instrumental in the rebirth of the ailing brand, which began during the mid-90s retail slump. This remarkable turnaround saw sales soar from $206 million in 1995 to an impressive $624 million in 2000. Since then, numerous changes of ownership have taken place, culminating in Kering Group (formerly known as Pinault-Printemps-Redoute), headed by CEO and chairman Fran?ois-Henri Pinault,?having purchased 42% of the business in 1999 . Kering would later acquire?67.6% of Gucci in 2003 and then 99.4% in 2004 .

Under Kering’s ownership, the company’s fortunes have flourished; its annual revenues are now estimated at?more than €10.5 billion (in 2022) , thanks mainly to its wide range of designer apparel lines for men and women, including everything from sweaters to sunglasses through to ready-to-wear collections showcased on catwalks around the world each season. The accessories division remains strong, too, producing everything from vintage travel cases to classic loafers, all proudly branded with that iconic interlocking “G.”

The Kering Group now encompasses multiple luxury brands, such as Bottega Veneta, Balenciaga, and Saint Laurent, along with Gucci, which had 528 stores across the globe as of December 2022.

Gucci Ownership Structure

The Gucci ownership structure began to shift following the death of company founder Guccio Gucci in 1953. At this time, three of his five sons assumed shares in the company — Aldo, Rodolfo, and Vasco. However, when Vasco passed away in 1974 and Rodolfo died in 1983, only their surviving brother Aldo and Rodolfo’s son Maurizio remained as shareholders.?

In the 1980s, a protracted battle for majority ownership ensued, which eventually resulted in Maurizio taking control of the company after Rodolfo was convicted of tax evasion. With Gucci experiencing financial difficulties at this point, he sold approximately 48% of his stake to Bahrain-based investment firm and Tiffany owner Investcorp in 1988, with a further sale to Investcorp occurring five years later for around $200 million.?

Following new leadership changes within the 1990s, Prada then took a 9.5% stake, while Bernard Arnault from luxury conglomerate LVMH took 34%. Prada would later sell their share to them, before French financier?Fran?ois Pinault?bought 42% of Gucci through his multinational corporation Pinault Printemps Redoute. After lengthy court battles between both companies over controlling interest, Kering emerged victorious and made an $8.8 billion deal to buy out all remaining shares in 2004, thus making them official majority owners of Gucci ever since.

Product Strategy:

Gucci's product strategy revolves around creating distinctive and desirable luxury items that reflect the brand's heritage and contemporary style. The company places a strong emphasis on design, often incorporating unique elements such as iconic motifs, bold patterns, and innovative materials.

Gucci offers a diverse range of products that cater to various consumer preferences. Its product portfolio includes ready-to-wear apparel, handbags, shoes, watches, jewelry, eyewear, fragrances, and home decor items. The brand regularly introduces new collections and collaborates with influential designers and artists to bring fresh perspectives and creativity to its offerings.

Gucci maintains a strong brand identity by consistently incorporating signature elements into its products, such as the double-G logo, the green and red web stripe, and the interlocking G pattern. These distinctive design elements contribute to the brand's recognition and make Gucci products instantly identifiable.

Furthermore, Gucci places increasing importance on sustainability and ethical practices in its product strategy. The brand has made commitments to reduce its environmental impact, promote responsible sourcing, and support social initiatives. This aligns with the evolving consumer expectations for luxury brands to be environmentally conscious and socially responsible.

In summary, Gucci's slogan "Quality is remembered long after price is forgotten" encapsulates the brand's commitment to craftsmanship and excellence. With a business model centered around luxury and exclusivity, Gucci maintains control over its operations and distribution. The product strategy focuses on creating distinctive and desirable luxury items while incorporating signature elements and embracing sustainability and ethical practices.

Business Model:

Gucci operates under a business model that focuses on luxury and exclusivity. The brand positions itself in the high-end segment of the market, targeting affluent consumers who appreciate quality and sophistication. Gucci's business model combines creativity, innovation, and craftsmanship to deliver desirable luxury goods across various categories, including apparel, accessories, footwear, beauty, and home decor.

Gucci operates through a vertically integrated business structure. The company controls every aspect of its operations, from design and manufacturing to distribution and retail. This allows Gucci to maintain strict quality control and retain its reputation for excellence. The brand also utilizes a selective distribution strategy, partnering with prestigious department stores and operating its own flagship stores in prominent fashion capitals around the world.

Does Guccio Gucci’s family still own Gucci?

No, the Gucci family ceased to be involved in the company after Maurizio sold all of it to Investcorp in 1993; Kering (which owns 99% of the company) now owns and operates the?business.

Who runs Gucci now?

The current president and CEO of Gucci is Marco Bizzarri, who took his position in January 2015. Prior to joining Gucci, he was the CEO of Bottega Veneta and had served as head of Kering’s luxury couture and leather goods division for many years. He replaced Patrizio Di Marco, who stepped down as CEO after a slow year for the company, which saw sales decline while competitors were thriving.?

When he joined the company, Bizzarri made an important decision — to promote Alessandro Michele as the new creative director of Gucci. Under his leadership, Gucci became one of the most talked-about brands in luxury fashion. His bold designs and use of color helped cement Gucci’s place on the world stage once again.?

Since then, profits have been steadily increasing each year thanks to both organic growth and strong marketing campaigns, such as its recent tenure featuring Harry Styles as a campaign model. It’s safe to say that under Marco Bizzarri’s guidance over the past few years, Gucci has firmly established itself as one of today’s most influential fashion brands.

Alessandro Michele has since ceased his collaboration with the company,?as per WWD’s report ; this was due to conflicting ideas for the direction of the brand, which resulted in a rift between himself and Bizzarri.

How much is the Gucci brand worth?

In 2018, Gucci achieved a milestone of 8 billion euros in sales, a new record in the preceding years. This success was largely attributed to their strategic expansion into younger markets; 65% of their sales were directed toward shoppers aged 18-34.

It was worth approximately $11.36 billion (€10.78 billion) in July 2020.

As of 2022, the Gucci brand was estimated to be worth an impressive $18.1 billion, a significant increase from its October 2018 net worth of just over $11.55 billion (€10.96 billion). This remarkable growth has been attributed to several factors, most notably the label’s increased popularity amongst millennials and Gen Zers alike, their relevance in both luxury and streetwear culture, as well as their collaborations with big-name celebrities like 2 Chainz, Lady Gaga, etc.

Conclusion

The Gucci brand has come a long way since its inception in Florence in 1921. It has evolved from making exclusive travel accessories and equestrian gear to becoming one of the most successful global luxury brands with worldwide recognition. Their products are distributed all over the world, from ready-to-wear garments to handbags and home décor items. Owned by Kering, Gucci remains an iconic fashion house whose influence reaches far beyond Italy’s borders and will continue doing so for many years to come.

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