Impacted by China’s stringent zero-Covid policy and the unexpected departure of its artistic director last November, Gucci, the renowned Italian fashion house, is strategizing to strengthen its foothold among the world’s wealthiest consumers. In a recent report by Reuters, it was revealed that Gucci plans to open exclusive spaces within its stores that will exclusively showcase its most luxurious and opulent creations. These sections, known as VIP salons, will offer a range of high-end items, including clothing, accessories, and even furniture, with prices starting at a staggering $40,000. François-Henri Pinault, the CEO of Kering Group, Gucci’s parent company, disclosed that some pieces from the Haute Joaillerie collection, launched in 2019, could fetch prices as high as three million dollars.
The news about Gucci’s VIP salons comes on the heels of the brand’s latest financial results. Despite the prevailing challenges, Gucci managed to achieve a modest growth rate of 1% last year, reaching a remarkable revenue figure of 10.5 billion euros. However, the departure of Alessandro Michele, the brand’s artistic director who had been at the helm since 2015, led to a decline in sales during the fourth quarter. This decline, coupled with the unexpected vacancy of the artistic director’s position, significantly impacted the brand’s commercial performance. While Gucci has since announced the appointment of Sabato de Sarno as the new creative director, the launch of these exclusive VIP salons is anticipated to help sustain and build positive momentum as the brand prepares to reveal its first collection under this new creative era.
Moreover, the establishment of these highly targeted VIP spaces underscores the growing importance of Very Important Clients (VIC) in the luxury goods sector, particularly in China. China, being a vital market for the industry, witnessed a 10% decline in spending on premium goods in 2022, largely due to the strict implementation of its zero-Covid policy. However, a recent report suggests that the luxury market in China is poised for a rebound and is projected to return to growth this year. This anticipated recovery is expected to be fueled by innovative pricing strategies and the expansion of the affluent client base, which has demonstrated greater resilience in the face of economic downturns compared to entry-level luxury consumers.
As Gucci adopts strategic measures to cater to the demands of high-end clients and navigate the evolving luxury landscape, it is evident that the brand recognizes the significance of capturing the attention and loyalty of discerning consumers. By offering exclusive VIP salons that showcase exquisite and expensive creations, Gucci aims to solidify its position as a premier luxury brand in the global market.
Two relevant links to this article:
1. Gucci website: https://www.gucci.com
2. Luxury market trends in China: https://www.reuters.com/business/retail-consumer/luxury-market-trends-china-2022-05-01/
