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Kering will outline this week its conquest plan to boost sales of its flagship brand Gucci in China.
Even if China is slowly recovering from its imposed confinements and the very big slowdown of the economy, luxury brands are not forgetting the importance of this market. Indeed, by 2025, China is expected to be the most important market for the luxury sector.
This is why Kering is adopting a plan of attack for the Chinese market via its iconic brand Gucci. The group has thus recruited former Tiffany executive Laurent Cathala to head Gucci’s Chinese operations (Gucci crystallizes more than half of the group’s total revenue.)
Analysts say Cathala is expected to strengthen local teams by giving them control of marketing and advertising activities, an unusual move in an industry where strategy is normally decided by European teams based in Paris or Milan.
But empowering local teams is a good strategy and is proving essential at a time when it is becoming increasingly important to know your customer and understand their culture, according to Leaf Greener, a Shanghai-based luxury brand consultant. “Brands haven’t paid enough attention to how to build that cultural bridge. The sooner they start, the better,” he explained. “It’s not just about using celebrities to sell a lot of products anymore.”
Business recovery
Gucci suffered more than rivals such as Louis Vuitton, owned by LVMH, or Hermès in the first quarter of the year due to restrictions in China, especially in Shanghai and Beijing.
Slowing Chinese consumption, Kering’s shares have fallen 26 percent since the beginning of the year, compared with a 16 percent drop for LVMH, which is considered more resilient to economic downturns because its business is more diversified.
CFO Jean-Marc Duplaix explained that Gucci’s underperformance was partly due to the fact that the brand has more exposure to mainland China than some of its competitors. Barclays estimates that Gucci generates about 35% of its annual sales in China, compared with 27% for LVMH’s fashion and leather goods division and 26% for Hermès.
Analysts at Jefferies, meanwhile, don’t expect a quick return to the growth rates China saw in the second half of last year, citing weak attendance in cities like Shenzhen and Shenyang earlier this year despite the lifting of containment measures. They expect luxury sales in the country to fall 15 percent in the first half of the year, then resume growth of about 11 percent in the second half.
Read also > GUCCI: 2023 CRUISE FASHION SHOW TAKES US ON A JOURNEY THROUGH THE STARS
Featured photo : © Gucci[/vc_column_text][/vc_column][/vc_row][vc_row njt-role=”not-logged-in”][vc_column][vc_column_text]
Kering will outline this week its conquest plan to boost sales of its flagship brand Gucci in China.
Even if China is slowly recovering from its imposed confinements and the very big slowdown of the economy, luxury brands are not forgetting the importance of this market. Indeed, by 2025, China is expected to be the most important market for the luxury sector.
This is why Kering is adopting a plan of attack for the Chinese market via its iconic brand Gucci. The group has thus recruited former Tiffany executive Laurent Cathala to head Gucci’s Chinese operations (Gucci crystallizes more than half of the group’s total revenue.)
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Kering will outline this week its conquest plan to boost sales of its flagship brand Gucci in China.
Even if China is slowly recovering from its imposed confinements and the very big slowdown of the economy, luxury brands are not forgetting the importance of this market. Indeed, by 2025, China is expected to be the most important market for the luxury sector.
This is why Kering is adopting a plan of attack for the Chinese market via its iconic brand Gucci. The group has thus recruited former Tiffany executive Laurent Cathala to head Gucci’s Chinese operations (Gucci crystallizes more than half of the group’s total revenue.)
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