Meet millenials’ new favourite brand: Gucci
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Meet millenials’ new favourite brand: Gucci

Kering is one of the biggest luxury group’s in the world, owning a multitude of brands that includes Bottega, Saint Laurent, Stella McCartney, and more. And this year, its strength is on full display, as its share price has already risen by more than 100%, year to date. Amongst the company’s brands sits one of the most powerful in the luxury world: Gucci. Given its iconic status, it’s no surprise that it’s performing well. But what is surprising is just how well, and with whom.

Kering’s share price has appreciated by 103% year to date

kering2011

SOURCE: Yahoo Finance

Kering is growing fast – in the first nine months of the year, its revenue grew by 26.4% against the same period in 2016. But Gucci is outperforming its parent: the brand has seen revenue rise by 44.5% in the same timeframe. Given that Gucci alone makes up 39% of corporate revenues (57% of the company’s Luxury Activities segment) this incredible performance can’t be ignored. But what is driving it? Millennials.

This is surprising. Gucci is one of the world’s best known and most prestigious luxury brands – but it is associated with traditional luxury, not the new world of the millennial consumer. At least, that’s on the face of it. Quietly, the brand has been working to reinvent itself with this hugely important demographic.

Kering’s CEO, Francois-Henri Pinault, says that a full 50% of Gucci’s sales are coming from millennials: “It means that we have a core category of customers that are between 25 and 35…The attractiveness of couture, of ready-to-wear is much higher for that clientele than it used to be for older people.”

Strategic marketing consultant Britton thinks it knows why: “Gucci has woven e-commerce, social media, digital marketing and the integration of mobile apps into the tapestry of its legacy offline business. As a consequence, the modern consumer’s relationship with Gucci is holistic, which has resulted in huge returns from longtime customers and new converts alike.”

With the perfect combination of traditional luxury and modern communication, sales, and marketing platforms, Gucci is currently rewriting the book on how luxury works.

Disclosure

Dominion holds Kering in its Global Trends Luxury Fund.


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The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.