computer project:topic: GUCCI

HISTORY OF GUCCI:

1.The name Gucci conjures a vibe of exclusivity and prestige, an Italian brand of quality.

2.As one of the world s leading purveyors of personal luxury goods, Gucci stands for more than just fine quality shoes or suits.

3.The Gucci Group is now a multi-brand conglomerate, with a collection of high fashion brands like Balenciaga, Stella McCartney, Boucheron, YSL, YSL Beaut, Bottega Veneta, Bdat & Co., and Sergio Rossi under its finely crafted umbrella.

4.The beginnings of the Gucci empire can be traced back to Florence, Italy, in 1921, when a man mellifluously named Guccio Gucci opened an exclusive leather and luggage shop to cater to a highbrow clientele.

5.His products were a hit and quickly became status symbols synonymous with luxury.

6.After Gucci died in the early fifties, his sons Aldo and Rodolfo took the reins and lead the Gucci brand to iconic status.

7.The Guccis took note of this popularity and expanded aggressively, opening stores in glamorous locations such as London, Paris and Palm Beach.

8.For all the glamour Gucci represented externally, a great deal of internal dissonance grew within the family.

9. Aldo and Rodolfo each had two sons who began a tug of war over the company in the eighties, pulling the brand in different directions like customers at a factory sale.

10.Aldo's son Paolo wanted more control over product development and got into a feud with his uncle Rodolfo, who managed the Italian side of the business.

11.Paolo then decided to launch a brand under his full name, but the rest of the family stood in his way.

12. To get revenge, Paolo exposed his father's personal tax evasion to the US authorities.

13.Aldo, who had built the Gucci brand, was sent to jail.

14. At his trial, Aldo tearfully forgave his son for his betrayal, but Paolo was exiled from the business and spent the rest of his life broke on a farm in England.

15.If that wasn t enough drama, yet more scandal surrounded the Guccis in the mid-1990s.

16. Apparently Maurizio, the only son of Rodolfo, inherited the largest stake in the firm and used this to edge his cousins out of the business.

17.He joined forces with a London-based investment firm called Investcorp to buy the other family members out and share fifty-fifty control with the investment firm.

18. However mirroring history, his cousins informed the Italian police that Maurizio had shady tax issues -- he forged his father's signature to avoid inheritance tax.

19.Maurizio fled to Switzerland to avoid arrest.

20.Maurizio returned to take control of the company after solving his legal problems, but eventually Investcorp decided to buy him out, and the Guccis lost complete control while Investcorp made billions.

21.While the internal conflicts were bad enough, equally damaging were careless decisions made about product distribution, which negatively reflected on the brand s reputation.

22.But all this back and forth took its toll; the brand went from headlines to sidelines, perceived as an old standard in the fashion world.

23.However, smart leadership in recent years has driven the Gucci brand to more visibility and success than ever before.

24.The two men responsible for this resurrection are Creative Director Tom Ford and President/CEO Domenico De Sole.

25. In 1990, Ford joined Gucci as the company's Women s Wear Designer, rising to Design Director in 1992. He gradually absorbed the position of Creative Director of Yves Saint Laurent, Rive Gauche and YSL Beaut, before finally becoming Creative Director of the entire Gucci Group.

26.Responsible for the design of all product lines from clothing to perfumes and for the group's corporate image, advertising campaigns and store design.

27.Italian born attorney Domenico De Sole is the other half of this dynamic duo.

28.De Sole brought much needed attention back to the quality of the brand while streamlining the back-end of the business and expanding the network of directly operated stores.

29.Strong leadership and an image revamp literally breathed life back into the Gucci brand.

30.Despite the numbers, analysts still cite Gucci as one of the stocks with greatest upside potential, giving it plenty of space on the runway.

THE INTRODUCTION OF THE GUCCI BRAND:

1.Gucci is characterized by a long tradition in fashion Clothing, shoes and accessories.

2. It is an Italian fashion and leather good label, the biggest-selling Italian brand in the world.

3.Gucci operates in about 278 stores worldwide and it wholesales its products through franchisees and upscale department stores.

4.Patrizio di Marco was appointed Gucci s President and Chief Executive Officer in January 2009 having originally joined Gucci Group in 2001 as President and Chief Executive Officer of Bottega Veneta.

5. His support of the Made in Italy tradition is unwavering. Mr. di Marco s vision is now being applied to Gucci, where the storied Italian brand s exclusive heritage and long-lasting values are emphasized in conjunction with its high fashion and aspirational style.

6.Gucci Group is committed to expanding its share in the fast-growing markets of Asia, where it recorded a 16.1% growth in 2005.

A broad, diversi ed product portfolio:

1.Gucci Group designs, manufactures and markets high-end luxury goods items, including ready-towear, leather goods, shoes, watches,jewellery, ties and scarves, fragrances, cosmetics and skincare products.

2.The extensive product range is one of the Group s greatest strengths.

3.The Gucci brand, which has a long-standing reputation in fashion, leather goods and accessories, has shared its in-depth knowledge with the other brands of the Group to successfully build the Group market share in the luxury goods industry.

4.Gucci Group Watches manufactures its products in Switzerland and markets Gucci, BEDAT & CO and Boucheron timepieces worldwide.

5.Lastly, YSL Beaut creates, manufactures and distributes fragrances and cosmetics for Yves Saint Laurent, as well as fragrances for Boucheron, Alexander McQueen and Stella

McCartney.

A controlled distribution network:

1.Management of brands and brand image is tightly controlled through the distribution network.

2. Fashion goods and accessories are mainly sold in directly-operated stores which are designed according to a speci c concept for each brand, ensuring consistency in terms of product display and service quality around the world.

3.Gucci Group s products are also distributed through a selected number of exclusive franchise stores, duty-free boutiques, department and specialty stores.

4.A rigorous communication policy Creative design, product quality and brand image are closely linked in the luxury goods industry.

5.Through outstanding product quality and a carefully controlled distribution network, Gucci Group has succeeded in strengthening and reinforcing its brands leading status over the past few years.

6.The goal of the communication activities, which combine fashion shows, advertising campaigns, public relations, special events and store displays, is to maintain the brands exclusive image while ensuring high pro le and consistent visibility and reinforcing their market positioning at the international, national and local level.

Strategy:

1.Gucci Group s strategy is based on three main objectives: ensuring revenue growth and pro tability at Gucci Group, refocusing on the Gucci brand and assigning a specific task to each brand within the portfolio.

2.The latter point strengthens the coherence of the multi-brand strategy.

3.Regarding the supply chain, Gucci Group takes care to guarantee exceptional product quality.

4.To achieve this, it selects the very best materials and exercises very strict controls over production, whether in-house or by outside partners.

5.In addition, Gucci Group is making its supply chain more exible in order to rotate its collections and replenish stocks faster during the season.

6.The group also keeps a watchful eye on practices by the main competitors in luxury goods and other industries in order to stay on top in terms of supply chain.

7.Gucci s growth strategy emphasises three main areas of action: capitalising on its state-of-the-art positioning in fashion, innovation and product quality; maintaining the strong momentum in leather

goods and shoes; exploiting new opportunities in jewellery, ready-to-wear and watches, as these product categories have recorded improved results since the fourth quarter of 2005 and should continue to post strong growth in 2006.

8.Gucci operates in 55 countries, and thanks to strong global brand recognition the brand is successfully developing its presence in the emerging markets.

Business concept:

1. Founded in Florence in 1921, Gucci built its reputation by specialising in the creation of highquality leather goods.

2.As Gucci Group s agship brand, it is now one of the most prominent and pro table brands in the luxury goods sector.

3.Gucci manufactures and markets leather goods (handbags, small leather goods and luggage), shoes, ready-to-wear, silks and jewellery.

4.The products are sold exclusively

through directly-operated stores and through exclusive Gucci franchise stores, department stores and specialty stores around the world. In addition, Gucci manufactures and distributes watches through Group-owned Gucci Group Watches in Switzerland.

5.Licensed distributors manufacture and distribute Gucci brand eyewear and fragrances.

Positioning:

1.Gucci s strong heritage is built on key critical foundations of uncompromising quality, superior craftsmanship and made in Italy.

2.The Creative Leadership strengthened the focus on iconic brand symbols (Horsebit, Bamboo, GG logo,Green/Red/Green web, Flora), re-inventing them in a modern and luxurious way.

3.Their understanding and appreciation for the brand s heritage, together with the extraordinary talent in providing a fresh and modern interpretation, drove Gucci to the excellent 2005 results.

4.Gucci has thus con rmed its outstanding growth potential in its main product categories and regions worldwide, through the creative and innovative appeal of its offering, underscored by the increased emphasis on communication policy and the development of exclusive goods.

THE REACH OF THE BRAND:

1. In 1998 Guinness book world records cited the Gucci "Genius Jeans" as the most expensive pair of jeans in existence. These jeans were distressed, ripped and covered with African beads and were offered for sale for US$3,134 in Milan.

2.The name Gucci conjures a vibe of exclusivity and prestige, an Italian brand of quality.

THE BRANDS UNDER GUCCI:

Bottega Vaneta:

Business concept:

1. Bottega Veneta meaning Venetian workshop of quality, craftsmanship, exclusivity and luxury.

creates luxury goods based on its core values

2.The brand began as a leather goods house made famous through its signature intrecciato, a unique leather weaving technique created by the Bottega Veneta artisans, and it has now a full product range of leather goods (handbags, small leather goods and full collection of luggage), men and women s ready-to-wear, shoes, and other accessories.

Positioning:

1. From its beginning, Bottega Veneta has stood for the highest craftsmanship, the choice of nest materials product, design innovation and softness of its products.

2. It was the rst brand to introduce the deconstructed bag as opposed to the usual rigid construction of handbags coming from the French school.

3. However, at the time the brand was bought by Gucci Group in February 2001, the company was in a dif cult position having gone through a number of failed re-positioning attempts following the

departure of its founder and his creative vision in the early 1980s.

4.Under the creative leadership of Tomas Maier and a new management team, Bottega Veneta has re-established its high-end luxury positioning with products able to satisfy the most demanding clients.

5.By combining traditional luxury goods values exclusivity, craftsmanship and the highest quality with innovation, its products are modern with timeless elegance.

6. Bottega Veneta is elegant in keeping with the brand s slogan, When your own initials are enough , the label is only present inside the products.

7. Bottega Veneta owes its exceptional product quality to the work of its craftsmen based in its workshop in Vicenza.

8. Bottega Veneta products are sold exclusively through a tightly-controlled distribution network of directly-operated stores, exclusive franchise stores and carefully selected department and specialty

stores around the world.

9.Bottega Veneta has a network of 83 directly-operated stores, which generated 87% of the brand s revenue.

Strategy:

1. Bottega Veneta continued to strengthen its position as a brand dedicated to life-style through its jewellery collections, furnishings (decorative accessories, tableware and of ce items, candles and interior fragrances) and gift items, whose launch was a great success.

2. Bottega Veneta is and will remain an exclusive and discreet niche market luxury brand.

Financial results:

1.revenue amounted to 160 million, a 60.2% increase year on year.

2. Thanks to the consistent strengths of the collections, revenue for the period was driven by strong performance in both existing and in the newly opened directly-operated stores as well as in the

wholesale distribution channel.

3. Bottega Veneta recorded a pro t and exceeded its initial target, with recurring operating income at 14 million.

Yves saint Laurent :

Business Concept:

1.Yves Saint Laurent core product lines are men s and women s ready-to-wear, leather goods and shoes.

2.The brand distributes its products and collections through directly-operated and franchise stores, as well as through department stores and specialty boutiques.

3.Yves Saint Laurent grants licenses for the production and distribution of some products, including selected men s ready-to-wear and eyewear.

Positioning:

1. Since its foundation in 1961 Yves Saint Laurent has been a global success and had lasting impact on fashion.

2.For nearly 40 years, founder Yves Saint Laurent built a reputation as one of the 20th century s most innovative and provocative designers.

3.He instigated the move toward ready-to-wear collections, which represented the rst step in making designer labels accessible to a wider public.

4.Since Gucci Group acquired Yves Saint Laurent in 1999, the management team has been focused on repositioning the brand at the top end of the luxury goods market.

5.Alongside the brand repositioning, signi cant investments have been made in the network of directly-operated stores and manufacturing facilities.

6.Today Yves Saint Laurent operates 62 directly-operated stores, including agship stores in Paris, New York, London and Hong Kong.

7.The directly-operated stores generated 67% of Yves Saint Laurent revenues.

8. The brand is also present in more than 400 of the most prestigious boutiques and multi-brand department stores in the world.

9.At the same time, Yves Saint Laurent has successfully expanded into accessories, complementing its core ready-to-wear business.

10.Thanks to Gucci s expertise in leather goods, Yves Saint Laurent has a thriving activity in leather goods and shoes, which now accounts for 45% of the brand s revenue.

Strategy:

1.Alongside the brand repositioning, Yves Saint Laurent current challenge is to improve nancial performance through increased revenue.

2.Yves Saint Laurent prime objective is therefore to create highly desirable products which re ect the very essence of the brand.

3.This will involve broadening the product range while respecting the brand s fundamental identity and its historical presence in ready-to-wear.

Financial results:

1. Yves Saint Laurent s annual revenue totalled 162 million, with a decline of 4.3% compared to 2004. The softness in the rst nine months of the year was partially offset by a better fourth quarter.

2.The operating loss stood at 66 million, down by 5 million over one year.

YSL beaut:

Business concept:

1. YSL Beaut creates, produces and distributes fragrances and cosmetics under the Yves Saint Laurent and Roger & Gallet brands, as well as fragrances for Gucci Group brands like Stella McCartney, Alexander McQueen and Boucheron.

2.YSL Beaut sells its products through leading department stores, specialty stores and duty-free boutiques and uses distribution agents, overseen by its regional of ces, to reach the markets not covered by its subsidiaries.

Strategy:

1.YSL Beaut is a major player in the luxury fragances and cosmetics market. As a multi-brand company, it develops and expands each brand in its portfolio on the basis of the brand s distinctive

features.

2.Its products represent the state of the art in terms of quality, creativity and technology.

3.YSL Beaut contributes to global awareness of the Yves Saint Laurent brand as well as of Alexander McQueen, Boucheron, and Stella McCartney, and provides Gucci Group with privileged access to the luxury fragrances and cosmetics sector.

Financial results:

1. During a challenging year for the sector, YSL Beaut s revenue totalled 613 million, a decrease of 1.3%.

2.Revenue was driven by make up and the new designers fragrances (such as Stella by Stella Mc Cartney, My Queen by Alexander Mc Queen and Z Zegna by Ermenegildo

Zegna). Recurring operating income stood at 15 million euros.

Balenciaga:

1. The House of Balenciaga is one of the most in uential forces in fashion. Founded in 1919 by Cristbal Balenciaga and established in Paris from 1936, the House s haute couture de ned many of the greatest moments and movements in fashion from the 1930 s to 1960 s.

2.The provocation of its design and vision, the mastery of techniques and cut, and the constant innovation in fabrics marked out a special place for Balenciaga in the hearts and minds of its privileged clients and followers.

3.In 1995, Nicolas Ghesquire joined Balenciaga and presented his rst collection two years later, at the age of 26.

4.The young Designer s work has since captured the attention of both the media and the customers.

5.Critical acclaim, including the VH1 Award for Avant-Garde Designer of the Year in 2000 and the 2001 International Designer Award from the Council of Fashion Designers of America also

recognized and contributed to the brand s business success.

6.While the brand s identity is rmly anchored and re ected in its iconic ready-to-wear collections, the bag and shoe ranges have also enjoyed phenomenal success worldwide.

5.The women s ready-to-wear collection covers a wide range of price positioning, from the iconic pieces, to the more continuative capsule products that provide broader customers access to Balenciaga s style.

6.In the early years of its modern renaissance, Balenciaga has deliberately prioritized the exclusivity of its distribution.

7.A great and decades.

tting tribute for a House that enjoys again the provocative in uence it wielded for

Boucheron:

1. Established in 1858, Boucheron was the rst jeweller to establish a store on the famous Place Vendme in 1893.

2. It was also the rst to use new materials in its jewellery and to launch innovative products, such as interchangeable watch straps.

3.For nearly 150 years Boucheron has been a trend-setter in the exclusive jewellery segment, acquiring an international reputation.

4.A Gucci Group subsidiary since 2000, Boucheron manufactures and distributes jewellery, watches and luxury fragrances through directly-operated stores, including its agship store on Place Vendme in Paris, franchise stores, department stores and exclusive

multi-brand boutiques.

5.Since 2003, YSL Beaut has managed all aspects of Boucheron s fragrance activity, including marketing, distribution and coordination of the subsidiaries and international distributors.

6.The year 2005 marked the beginning of a new era for Boucheron in terms of image, communication, retail network and products.

7.A new store concept was created exclusively for the agship boutique on Place Vendme. A new advertising campaign with legendary characters was launch and a new web-site has been created.

8.The last high-jewellery collection, Trouble Dsir, was an excellent success as well as four new jewellery lines and three new watch models were successfully launched.

Sergio Rossi:

1.Sergio Rossi is a leading Italian luxury goods brand focusing on manufacturing and distributing glamorous shoes for women.

2.The company also produces and distributes handbags and men s shoes.

3.Its products are distributed through directly-operated stores, leading department stores and upscale specialty boutiques.

4.Sergio Rossi has built a notable reputation in Italian luxury goods through a combination of exceptional product quality and unique style, season after season. Gucci Group s acquisition of Sergio Rossi in 1999 marked a new stage in the development of this brand, whose origins date back to the 1950s.

5.The Company appointed Edmundo Castillo as new designer for the brand.

6.With his attitude and his Latin spirit, Edmundo will have an extremely important role in developing the image of the brand.

7.they plan to better balance the collections, by broadening the range of leather goods and its stylish desirable footwear models for women, developing a complete range of shoes for men, streamlining the store network and keeping costs under tight control.

BEDAT & CO:

1.Founded in 1996 by Simone and Christian Bdat, BEDAT & CO is a unique, contemporary and exclusive watch brand which combines

quality with timeless value.

2.Distributed primarily in the United States, Italy and Japan, BEDAT & CO offers a handful of exclusive models,

for which the quality and origin are guaranteed by the Swiss A.O.S.C

certi cate.

3.By working with Gucci Group Watches, BEDAT & CO plans to expand both its product offering and its distribution network into new markets in Europe and Asia.

Alexander McQueen:

1.Alexander McQueen has an outstanding reputation in the world of fashion.

2. Known for his audacity and creativity, the British designer won the U.K. Designer of the Year Award in 1996, 1997, 2001 and 2003.

3.He received the Best International Designer Award from the Council of Fashion Designers of America in June 2003 and was named Menswear Designer of the Year at the British Fashion Awards in November 2004.

2.A 51% subsidiary of Gucci Group since 2001, Alexander McQueen primarily markets women s accessories and ready-to-wear through

its own retail network and upscale department and specialty stores.

3.The brand has three directly-operated stores, in London, Milan and New York and in the last two years several shop-in shop concepts have been opened with leading wholesale clients in the UK (Harvey Nichols and Selfridges), France (Le Printemps) and Asia (Joyce in Hong Kong).

4.New categories of men s ready-to-wear, shoes and small leather goods have been added to the brand portfolio, enabling stronger and broader global representation.

STELLA McCARTENY:

1.The Stella McCartney brand was established in partnership with Gucci Group in mid-2001, with its rst collection of ready-to-wear unveiled to

the world s media.

2.the Stella McCartney activity has developed at a strong pace, and collections of non-leather shoes, bags and other accessories have been added to complement the core ready-to-wear business.

3.The brand directly-operates three retail stores, in New York, London and Los Angeles.

4.The brand is also available through a network of upscale wholesale clients around the world, many of which present the brand s collections within in-store environments that feature iconic elements of the full store concepts of the brand s own retail stores.

5.The one-off women s ready-to-wear collection launched in November 2005 proved a tremendous success, further fueling awareness of the brand worldwide.

SWOT Analysis of Gucci:

Strengths

1.The strength of Gucci is in its established, very strong brand image and international presence.

2.Gucci has also the ability to control its distribution channels. This is part of Gucci s defensive strategy in the chain value to capture the value added instead of giving it to the middlemen such as suppliers and retailers.

3.The company has also increased the number of their Directly Operated Stores (DOS) as part of the defensive stratergy of taking more control of the distribution process.

4.Its aggressive strategy accomplished through diversification and communication is also another of Gucci s strengths. Gucci changed its strategy of carrying a single brand to branching out to a multi brand group.

5.This strategy is also adopted by other conglomerates such as Louis Vuitton and Prada.

6.Some luxury companies use the strategy of focusing only on one brand and add other business segments such as what Armani, Polo Ralph Lauren, and Versace did.

7.This strategy is done in order to allow the positioning of the brand in the industry to differ depending on the number of brands and the number of business segments the company wants to compete in.

8. This is the idea behind focus (mono brand) versus diversification (multi-brand). Gucci Group has more than 10 brands, including Gucci, Yves Saint Laurent, YSL Beaut and Sergio Rossi.

Weaknesses:

1.The weaknesses of Gucci include instability in management and financial base. The instability of its management can affect the group s corporate strategy and vision.

2.The financial base is weak and alarming, with a long term debt increase from $17 million in 1998 to $143 million in 1999 and to $1.3 billion in 2003.

3. Some brands in the Gucci group s portfolio are still not profitable, and there is a need to promote and market them aggressively.

Opportunities:

1.Opportunities for Gucci abound especially in the emerging luxury markets in growing economies from Asia such as India and China.

2. People who come from these places who recently amassed huge wealth due to the excellent performance of the economy would definitely want to try luxurious brands such as Gucci.

3.There is opportunity in the consolidation of other brands too.

4.The opportunity exists in creating competitive advantage in different business segments. There are various business segments Gucci can venture into should the need to expand and create more luxurious products arise.

Threats:

1.The luxury goods carry premium products designed for very wealthy individuals.

2.This demanding market spares on expense to get the best product in terms of quality, style and design. Price, therefore, is not a basis of competition in this kind of industry.

3.Competition largely exists on how potent and valuable the brand image has become. This is the focus of Gucci s thrusts.

4.Its competitor Louis Vuitton may have made its mark in size with more than 50 luxury brands in its belt and sales of 12.6 billion euros in 2004 alone but it is not exactly the single dominant player in the market.

5.This is because in the luxury products market, companies can carry several brands and business segments which could change their positions depending on the segments such as leather & shoes, cosmetics, jewelry & watches, wine and spirits and others.

6.Competition is also effectively minimized by the intense rivalry of established luxury goods.

7.New firms would definitely find it next to impossible to penetrate such an exclusive market. The cost of maintaining and promoting this image are also prohibitive.

8.Companies are forced to invest huge money in brand promotions in order to maintain their image.

9. Expenses such as advertising and marketing expenses, acquisition of competitors, control of the distribution channel and other strategies take the bulk of company s operating budget.

10.The barriers to exit in this industry are low which means that survival is for the fittest. If the company cannot compete with other players in the industry then it has to fold or sell to other bigger firms which make exit quite easy and quick.

11.In this industry, the barriers to entry are really high and the barriers to exit are low, therefore only the select few can maintain their position in the market, while others could give up altogether or are bought by bigger firms.

12.Also, luxury goods do not have direct substitutes like other ordinary goods but the threat could come from imitation. Counterfeits often penetrate the market. This could take away a portion of the sales that should go to luxury goods companies.

13.There is also the threat of substitutes to contend with.

14.These are products that are considered ordinary or the medium brands but can eventually expand their product lines to premium brands in the future such as Zara and Gap.

15.Internal threat could also come from French holding company Pinault-Printemps-Redoute (PPR) who currently owns 68% of Gucci s stocks.