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Gucci’s Lee Reveals Ambitious Strategy to Grow Brand

Mark Lee, Gucci's new ceo, has an aggressive agenda that includes boosting sales, redesigning stores and expanding in emerging markets.

MILAN — Mark Lee, Gucci’s new chief executive officer, has an aggressive agenda that includes boosting the brand’s sales as well as redesigning retail stores and expanding in emerging markets.

In his first interview since taking charge of Gucci in November, Lee mapped out his strategy to double sales in seven years to more than $4 billion, a goal set by Robert Polet, president and ceo of parent Gucci Group, after the tumultuous departure of creative director Tom Ford and ceo Domenico De Sole.

“Gucci’s transition is behind, the dust has settled,” Lee said in the minimalist gray, black and white offices of the brand’s headquarters here. “We’re moving very fast because we have so many things going on.”

Seeking to grow the business in what he described as “a luxurious way,” Lee said Gucci also would focus on jewelry, eyewear and fragrances, increasing the ready-to-wear assortment and launching advertising campaigns for each of the product lineups.

The plans have “thrown people off because it sounds like a staggering number,” Lee said. “In reality, it means a 10 percent annual growth. The first quarter of this year we grew 19 percent, which is double the pace we need and testifies to the brand’s strength.”

Lee, a 42-year-old native of San Francisco who started his career as an assistant buyer at Saks Fifth Avenue, became president and managing director of the brand in November. He moved from his spot as ceo of Gucci Group’s Yves Saint Laurent fashion house after the ouster of Giacomo Santucci. Lee was named ceo of the Gucci brand this month. He has overseen the promotion of Frida Giannini to creative director for women’s rtw and men’s and women’s accessories, which meant the departure of Alessandra Facchinetti two weeks after her second runway show in the post-Ford era.

Lee said that in terms of retail expansion, Gucci is late compared with its rivals in tackling markets such as China, India, South America and Eastern Europe.

At least 10 new stores are to open in China in three years to complement the existing seven, along with new units in New Delhi, Bombay and Ho Chi Minh City in Vietnam, by yearend. Mexico City is in the pipeline for February 2006 while a space in Macau, the Las Vegas-style gambling megacenter in eastern Asia, is to open in 2007.

This story first appeared in the July 29, 2005 issue of WWD.  Subscribe Today.

New Gucci stores also will crop up in the U.S, with openings slated this year for Westchester County, N.Y., and Chevy Chase, Md., in November and Naples, Fla., before Christmas.

“Next year, we’ll open in San Diego, where we don’t have a store, though I believe it’s the sixth-largest city in America,” Lee said, adding that his team also is checking out Prague and Warsaw. “The U.S has been our most established market since the Fifties, though I wouldn’t say a saturated one … Our competitors are already in Mexico and India and are ahead in China, but we still have potential and PPR is very supportive.”

Gucci will revamp existing stores in established markets to make sure store location and size are appropriate, and invest in replacement stores in West Berlin, Barcelona and Hamburg, Germany, by the end of 2006.

“One of Gucci’s great strengths is that it’s balanced geographically,” Lee said. “In terms of sales, we witnessed double-digit growth across the board: Japan, Asia, the Pacific, America and Europe.”

Parallel to the retail rollout is the new store concept that Lee is developing with Bill Sofield, a New York architect who spearheaded the first makeover in 1997 with Ford. The aim then was to give the stores the same sense of must-have opulence that pervaded the products.

“The existing store concept has been incredibly successful, but I would also say unbelievably copied, so it’s time for us to move on,” Lee said. “We want to show Gucci’s evolution with this state-of-the-art concept conceived for the next 10 years.”

Reluctant to disclose specifics or the company’s retail investment, he described the blueprint as sexy and modern, but warmer, brighter, richer and more natural in terms of materials.

“We’d like to incorporate natural light and to occasionally find a way to leave a window open, because it’s nice when in Paris or New York to look out the window and know where you are,” he said.

The makeover will be unveiled in fall 2006, when Gucci is to open a 10,000-square-foot flagship in Ginza, Tokyo, and a replacement store in central Hong Kong. In the eight-story Ginza building, four floors will be selling space and the rest will be events space, an art gallery and a rotating photo archive from Milan.

“Ginza won’t be the largest store, but the goal is to make it the most luxurious one,” Lee said.

Other major cities will be revamped in 2007 and 2008, a sensible move since 70 percent of Gucci’s revenue comes from its 200 directly operated stores, while the balance derives from exclusive doors such as Neiman Marcus, Bergdorf Goodman and Saks Fifth Avenue.

Counterbalancing the cost of the retail plan is the fact that Lee is convinced that Gucci has plenty of fertile turf on which to keep blooming.

From a product standpoint, Lee noted that Gucci’s core business — leather goods and shoes — can continue to grow because it propelled first-quarter business as the respective categories registered 31 and 26 percent gains. “It’s quite remarkable because those are our most established and mature areas,” he said.

One segment poised to expand is fine jewelry. “Jewelry has grown a lot in the past five years, especially in Japan, so there’s a big opportunity to balance out Europe and America,” Lee said.

Giannini, a jewelry fanatic herself, is developing styles to woo a more international clientele. White gold and diamond chokers, rings and earrings featuring butterflies, dragonflies and horse bits and floral motifs crafted with yellow gold and precious stones were presented with the cruise collection.

Giannini will likely put jewelry on the runway in September when she makes her rtw fashion show debut. Jewelry also is getting a dedicated print ad campaign, set to break in November and featuring lavish gems shot on a black backdrop. “We wanted to show abundance, richness and luxury,” Lee said.

And outsourcing or the massification of the brand isn’t in the cards.

“Some competitors and some press have stirred up rumors that we’re going to massify or cheapen the brand, change the distribution or do something stupid,” Lee said. “Well, we’re not. We’re not adding licenses or doing children’s wear because we’re looking to grow in a luxurious way.”

Gucci is dedicated to a Made In Italy strategy and everything is manufactured there with the exception of the Swiss watches. “That’s not going to change because it’s an intrinsic part of Gucci’s heritage to which we’re completely committed,” Lee said.

He cited the just-launched La Pelle Guccissima, the labor-intensive line of accessories with special relief and embossing techniques, as being emblematic of Gucci’s drive for quality. “We launched early in Japan, in mid-July, and the response has been great, totally on target with our first-week sales projections,” he said.

With a sophisticated eye for quality and a strong marketing sensibility, Lee seems to have taken the Gucci transition in his stride.

His career includes stints at Cidat USA, Giorgio Armani and Jil Sander America Inc. He joined Gucci in 1996 and witnessed the brand’s comeback under Ford and De Sole.

His relationship with PPR appears even-keeled.

“My main relationship is with Robert Polet,” Lee said. “I don’t have day-to-day [contact with PPR chairman] François-Henri Pinault, but I can say he is terribly supportive as a shareholder and understands what we’re doing.”

For Lee, the big change is having full freedom to run the company.

And, unlike De Sole, Giannini and men’s wear designer John Ray report to him.

“Frida and John have total autonomy and freedom to design what they desire,” Lee explained. “That said, we have meetings to discuss the brand, strategies and our goals because they are very involved in understanding Gucci and the rules of the company.”

Referring to the exodus of managers in the post Ford-De Sole period, Lee said: “There was a transition and a lot happened in these past 18 months. People who didn’t see themselves projected into the Gucci future left, but at the same time others got promoted internally, which always creates a great energy.”

Lee is unfazed by questions about the ability of Giannini and Ray to match Ford’s talent for generating media buzz. And asked about speculation that PPR is vying to make Gucci more commercial, Lee rolled his eyes.

“Whatever Frida puts on the runway, you can rest assured that it will be her vision, what she felt was right,” he said. “There is no arm-twisting to push a specific style or category on the runway. I don’t think a new chapter of the Gucci rtw can be or will be written in one show. We have faith in her because she is highly talented as is evidenced by the success of the accessories she designed over the last 18 months. She has a great understanding of the brand and I’m confident she will apply her understanding to rtw.”

He said Gucci’s best moments over the years were when the media hype and commercial clout coalesced.

“I don’t think it’s either/or, but about balance,” Lee said. “In accessories, we go from limited editions and precious skins to canvas because we need them all. On the other hand, if we do $2 billion in sales that means that there is a certain commerciality in running a business with 200 stores. I don’t think that is a bad thing.”

He added that Ford’s blockbuster collection a decade ago soared on iconic symbols such as the bamboo bags, the bit and the double G logo.

“I wouldn’t say that what Gucci stood for was a particularly intellectual exercise or avant-garde and complicated,” he said. “It was great fashion, appropriate for the brand.”

In terms of media plans, changes are in the works.

“We want to be more dynamic in terms of quantity of campaigns and imagery, which is a big change from the past when, going back a year, we really only had the main fall” collection, Lee said.

Aside from a dedicated campaign for La Pelle Guccissima and the jewelry, images with the fashion show, rtw and accessories will run in September and October, while November and December will be focused on cruise, rtw and accessories.

Shot in Los Angeles by Craig McDean, the fall campaigns have a reportage and lifestyle feel with models interacting as in paparazzi shots.

“The last 10 years for Gucci have been an exciting and incredible time,” Lee observed. “It’s legend what happened to this company, to this brand, which grew so fast and dynamically. We’re so big that people assume that to grow more we have to destroy the brand also because in the history of Gucci there were moments of ups and downs. But it’s just envy.”