Gucci’s “Flash Collapse”, Xiao Zhan Weeps?

After listening to the news of luxury goods giants raising prices one after another, I was still somewhat surprised by the sudden news that they couldn’t sell.


A few days ago, luxury goods industry giant and Gucci’s parent company, Kaiyun Group, suffered the “largest decline in history” of up to 15%.


It is widely believed in the industry that the “flash crash” that shocked the entire luxury goods market was caused by the sharp decline in sales of Gucci, which is regarded as the “pillar” of Kaiyun Group in the Asia Pacific region.


Although Gucci has been following the trend of rising luxury prices recently and adjusting prices, some popular bags have risen by over a thousand yuan. Why can’t they be sold overnight?

In the recent Q1 2024 performance warning released by Kaiyun Group, it is estimated that the group’s revenue for the first quarter of 2024 will decrease by about 10% year-on-year.


As a leading global luxury goods group, in addition to Gucci, Kaiyun Group also owns several well-known fashion, leather goods, and jewelry brands such as Saint Laurent and Bottega Veneta.


However, Kaiyun Group has always had a high dependence on a single brand, “Chengye Guchi, Defeat Guchi, other brands are not strong enough to influence the overall Kaiyun market.”.


Therefore, the unsatisfactory performance mainly reflects the sharp decline in Gucci’s sales, especially in the Asia Pacific region.


Data shows that in the first quarter of this year, Gucci’s sales decreased by nearly 20% year-on-year.

Recently, many luxury goods attempted to manipulate consumers’ mentality of buying up instead of falling, and have raised prices one after another. Gucci also followed the trend and surged.


For example, the Gucci “Mamon Bag” originally priced at 8700 yuan has risen in price to 9800 yuan, with some products experiencing an increase of over 12%.


According to staff, Gucci has been on an upward trend and adjusts its product prices every year.


However, consumers do not seem to be interested in the price increase of Gucci. Gucci’s poor sales have even dragged down the overall performance of Kaiyun Group.


On one hand, there has been a rise in product prices, while on the other hand, there has been a sharp drop in stock prices. How could Gucci, once the favorite of fashion enthusiasts, suddenly become unsold?


Industry insiders suggest that the collapse of brand image may be the main reason.


Currently, luxury brands are further stratified.


Herm è s is certainly unattainable, but LV and Chanel are also actively competing for the top luxury brand tier.


On the other hand, Gucci has gradually withdrawn from the top tier luxury brand camp.


In addition, insufficient product innovation is also the reason for the decline in Gucci sales.


Nowadays, consumers are pursuing diversification and personalization. Creativity and innovation have become the core competitiveness of luxury brands.


It has to be said that in recent years, Gucci’s product innovation has been lackluster.

Meanwhile, a series of failed market strategies are also affecting Gucci’s sales.


In order to promote sales, Gucci lacks selectivity in customer base and sales channel selection, and its brand positioning is unclear, resulting in a large number of customers fleeing and new customers unwilling to choose.


Although the competition for luxury goods is full of variables, Gucci cannot sit idly by. Recently, a new designer has been launched with great fanfare, attempting to turn the tide.

At the beginning of this year, Gucci launched a strong marketing campaign. We have successively released new men’s and women’s fashion shows created by the newly appointed creative director.


We see that this season’s Gucci has declared farewell to the “gorgeous style”. Showcasing a new brand tone that is classic, minimalist, and practical, with a greater emphasis on fabrics and cutting.


In the over 7 years since the previous designer’s tenure, Gucci has won many young consumers with its retro, mysterious, and romantic Italian Renaissance style.


For a long time, the God of Wine handbag, horse buckle loafers, and other representative popular items of Gucci were popular.


It is worth mentioning that during his previous tenure as Design Director, Gucci successfully transformed into a street fashion brand loved by Generation Z, with sales growth exceeding 35% for seven consecutive quarters.


The sales revenue increased from 3.898 billion euros in 2015 to 9.628 billion euros in 2019, just one step away from 10 billion euros.


However, fashion trends are constantly changing. When consumers are tired of the beauty of velvet and retro “flowers”, simplicity and comfort have become the mainstream fashion style today.


In addition, influenced by various factors such as the economic environment, Gucci’s income growth has significantly slowed down since 2020.


Gucci has always attached great importance to the Chinese market. After all, the Chengdu Taikoo Li store had previously won the annual “sales champion” of Gucci’s global single store.


After the new director takes office, the offline space of “Gucci Ankara Red”, which is mainly promoted, also launched simultaneously in six cities: Shanghai, Chengdu, Beijing, and Shenzhen.

In 2022, Gucci signed celebrity Xiao Zhan as the brand’s global spokesperson, attempting to help the brand attract more young consumers.


However, from the current perspective, the effect of spokespersons on brand sales is not significant.


In a sense, luxury brands like Gucci need to constantly create new products that can lead consumer trends while strengthening the original brand tone.


In addition to pursuing simplicity, comfort, and personalization, the quality and design of luxury goods themselves determine whether consumers are willing to pay. Or, in other words, it is brand loyalty that continues to pay.


Can the massive marketing of Ankara Red become the beginning of Gucci’s comeback? We will wait and see.

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