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Gucci’s E-Commerce Sales Jumped 86 Percent Last Year—Here’s Why

Gucci has been everywhere in the last year: front and center in luxury sector talk, on every influencer gracing the squares of Instagram, and referenced in a slew of non-Gucci products leaning very heavily on the brand’s signature style.

What Gucci is having is more than a moment. It’s a rebirth under CEO Marco Bizzarri and creative director Alessandro Michele, that’s garnered considerable success for both the top and bottom lines.

In 2017, Gucci’s e-commerce sales jumped 86 percent, and 50 percent of those buyers were millennials, Deloitte said in its Global Powers of Luxury Goods 2018 report. Total brand sales beyond just online, were up 42 percent to 6.2 billion euro ($7.2 billion). With Gucci’s sales leading the way, parent company Kering ranked fifth among the top 100 luxury goods companies and made it into the Fastest 20 list in terms of growth for the first time with a compound annual growth rate of 11.9% between fiscal 2014 and 2016.

“Growth reflected synergies from the brand’s reinvention for millennial customers (known as ‘geek-chic’) and its online experience,” Deloitte said.

Part of the brand’s overall experience involved integrating its online and in-store brand experience, by doing things like adding visual presentations and stories to the website it redesigned late in 2016, and turning its flagship stores into interactive art galleries. A new digital campaign around its spring ’18 collection also featured scannable ads, and augmented and virtual reality experiences. On social, Gucci doubled its Instagram following between 2016 and March this year. Today, the brand has 25.2 million followers on Instagram—bringing it neck and neck with Louis Vuitton.

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In a presentation on Gucci for its investor day earlier this month, Kering group managing director Jean-François Palus, said the brand’s relaunch has been bold and swift, but it also had a lot to do with Gucci stepping out if its comfort zone.

“Others would have gone for the safety of an established outside artistic director instead of Alessandro who lived and breathed the brand from within. Others would have gone for small steps instead of going for bold and radical. Others would have followed instead of becoming leaders,” Palus said.

Instead, the brand honed in on its strength and set about—with full managerial support, financial backing and key leaders—making its potential manifest. And its method for going about this rebirth strays from what many brands may be going after in pursuit of their own.

“We didn’t look at focus groups. We didn’t look at consumers. We just did exactly what we wanted to do. That was our passion,” CEO Bizzarri said.

Though the brand had slipped out of fashion’s favor and logo-heavy product was largely outmoded, the company knew new risks would be the only way forward—and it wasn’t going to let old ways get in its way.

“Legacy cannot hold you hostage of your history,” Bizzarri said.

At first, and even now depending on whom you ask, the brand’s transition was met with doubt since store shelves didn’t experience any impact from its new creative director’s entry for at least a year. Then its sudden and wild success was met with additional doubt that it wouldn’t last, though Bizzarri says today more are leaning toward longevity as the projected fate for the fashion brand.

“Gucci and Alessandro created a demand in new luxury that is very far away from a fashion moment and created a styling lexicon that is unique,” Bizzarri said, pointing to that as the reason the brand may prove to have more staying power than even some of its more established counterparts.

To get there, it took an acknowledgement that fashion is not about product.

“Fashion is about an idea that people cannot resist to buy into it. That to me is key,” Bizzarri said. “If we referred to Gucci just as a product, we miss completely the point. If you think to Gucci today, you don’t think about the product. You think about the worth. You think about something that you want to buy into it and you want to belong to it.”

And the appeal with millennials came because Gucci hit on two things that are key to the generational group: individuality and belonging.

“It’s about self-expression because you can really create your individuality through Gucci wardrobe. But also, there’s a huge pride in belonging. And a huge use of symbol and signs of Gucci used by Alessandro are the way in which millennial recognize themselves, and that is part of the fact that to me, creates a lot of sense of belonging.”

Turning from product to stores, Gucci wanted the experience of belonging to continue, and the notion of brand exclusivity to cease.

“We wanted to reduce the distance between product, people and customers. We wanted to create an inclusive ambience that was something very different from the so-called perceived exclusivity that everybody is now promoting,” Bizzarri said. “The mega trend today is not about exclusivity. The exclusivity could be about a product, but the exclusivity of a brand is something very different. Today, what is going to win is of inclusivity of the brand, in all the aspects, shops, advertising, communication and people, especially.”

Gucci decreased its wholesale, closed roughly 25 percent of its “old doors,” varied the stores from one city to the next, choosing colors, materials and people that could all create a culture of inclusivity.

“I want people to touch and to feel the product, to have people that are selling with a proper and genuine smile, because again, this creates innovation and creativity, even at shop level,” Bizzarri explained. The approach appears to be working because, as Bizzarri added, “traffic is crazy…retention is growing, and that is a very good thing. Means that the loyalty of any age bracket is growing. And average ticket as well, that is a potential.”

Online, Gucci has created a communication hub rather than an e-catalog, according to Bizzarri. Upon entering the site, consumers are met with colorful squares of artfully presented product and a link that says “discover more,” and clicking it leads to Gucci DIY, a place where shoppers can customize totes and sneakers. The site also hosts stories about red carpet moments, campaigns they believe in and artwork in their revamped stores.

Though its growth has been substantial online (reporting triple digit growth in the first quarter), Bizzarri admitted that the brand remains tied into too many systems interfacing with one another as it works to catch up with where it should be in terms of tech, and its present position is “slowing down the process.” But investments in that area are ongoing.

Whether new leadership, new stores or new communication tactics, Gucci’s rebrand was about emotions rather than simple rationality, Bizzarri explained, adding that it took risk to get there.

“Brands and industry need to take risks, otherwise it’s boring and we lose traction as a brand and as an industry,” Bizzarri said. “In many cases, new and newness are perceived as a risk. To me in today’s world is more risky to be boring and to do exactly the same thing in the past than not putting newness.”

So where does Gucci go from here? The brand’s sales climbed 49 percent year over year in the first quarter of 2018, to $2.25 billion, and things are only expected to go up going forward, as Bizzarri pegs the brand’s sales for this year at 9 billion euro ($10.4 billion).

“I really believe that the journey of Gucci is just at the beginning. We just scratched the surface. What we are creating is something unique,” Bizzarri said. “But of course, I don’t have a crystal ball. I cannot tell you we’re going to grow 40 percent, 50 percent, 10 percent, 15 percent. That is not the point. The point that if we are able to maintain these values, these activities going forward in a consistent way as we did in the last 2 years, there’s no doubt, the competition will be following.”