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Polet’s Prescription for Changing Gucci

When Robert Polet became president and chief executive officer of the $3.4 billion Gucci Group in July 2004, he was charged with guiding several of the world's most prominent luxury brands through a period of wrenching transition.

When Robert Polet became president and chief executive officer of the $3.4 billion Gucci Group in July 2004, he was charged with guiding several of the world’s most prominent luxury brands through a period of wrenching transition.

He didn’t exactly ease himself into the job.

Within months, Polet announced he planned to double the size of the Gucci brand in seven years, and he is on track to do just that.

In his keynote address, Polet described his first year on the job and the important steps he took to become acquainted with Gucci Group’s people, brands and culture. Tying in with the conference’s theme “The challenge of change,” Polet said, “We’ve had our share of change.”

Since Polet came aboard from food giant Unilever, Gucci got a new owner; 38 of its senior management left within eight months; 12 people were hired and 21 people were promoted from within. Six of the nine ceo’s in charge of the individual brands are new.

“We completely changed our organizational structure. We went from a leadership of two to a leadership of 20,” said Polet, who added that, in January, François-Henri Pinault replaced Serge Weinberg as ceo of Gucci parent PPR.

Soon after taking the reins, Polet decided to take a seven-week trip around the world and visited 168 of the company’s directly operated stores. He met and spoke with 2,500 Gucci Group employees, visited distribution centers and made speeches.

“It provided me with good insight into competitors,” said Polet, noting he visited their stores, too. “It gave me needed insight to the rules of the game of the luxury industry.” He was also able to soak in the culture of the group. “I loved the culture of the Gucci Group exactly as it was, as it still is.”

If you come in as a leader of an organization and you don’t like the culture, he said, “It’s a phenomenal challenge to try and change it.”

People always ask him about the similarities and differences between his previous job as president of Unilever’s $7.8 billion ice cream and frozen foods division and what he does at Gucci.

“First of all, it’s about managing brands and leading people,” he said. But the key differences are twofold, he maintained. First of all is the role that creativity plays at Gucci and the way it’s enabled in the organization. Secondly, in the mass market, companies manage for availability and want their products to be everywhere all the time. “It’s the opposite in the Gucci Group. You manage for scarcity. It’s a very big difference.”

Polet said the key to selling luxury products is to sell dreams. “We don’t sell handbags and shoes. You can buy them for a lot cheaper than with us. We don’t do that. We sell the world of Gucci, the world of Bottega Veneta, Alexander McQueen, Boucheron, Sergio Rossi, Stella McCartney, Balenciaga and Bedat.” He said the brands need to be extremely well positioned and defined. “The DNA of Yves Saint Laurent is completely different than the DNA of the Gucci brands…These dreams are kept alive by our creative directors and our designers.” It’s the use of the designer’s intuition, “combined with his or her and our insight into the customer that’s the golden combination.”

As to whether he manages creativity or leads it, Polet said, “We don’t lead it. We don’t manage it. We provide an environment in which creativity can flourish.”

But, he warned, not all designers are a perfect fit for a particular brand. “Frida [Giannini] is a perfect fit for Gucci, Tomas Maier is a perfect fit for Bottega Veneta. And I’m not sure it would work in the reverse,” he admitted.

Polet has enormous ambitions for each of his brands. In addition to his goal of doubling the size of the Gucci brand in seven years, Polet wants to increase gross margins to 70 percent (“it’s the lifeblood of your company”) and boost the communications budget of the Gucci brands by on average 20 percent a year.

When he came to Gucci, he asked each of the divisions to develop a three-year plan. “If you don’t have the clarity of where you are going, you have no idea of how to get there. The clarity has to be crystal clear and simple,” said Polet.

So far, the plan seems to be working. “We’re growing at 17 percent and our profits grew at 76 percent for the first half of the year,” he said.

He said growth is occurring in the most important categories, accessories and shoes. Accessories are growing at almost 30 percent and have been on the upward trend for the past 15 months. He said opportunities for growth in the U.S. are as important as in the Asia-Pacific region.

While not all the group’s 411 directly owned stores are profitable, Polet said, a new Bottega Veneta or Gucci store is profitable within 12 months.

Polet believes strongly in having one’s own retail stores. “We prefer to have our own environment. This is where people enter your own brand. The people in the stores are at the front line. This is where the bonding between the consumer and brand takes place.”

After carefully studying the business, Polet concluded a multibranded portfolio made the most sense. “It’s a necessity to have a group and portfolio of brands. I personally believe very strongly in the brands, and I like the brands we have. Each brand needs to have a specific role and know exactly where it’s going.”

However, it’s clearly evident Gucci “is the most important brand” the company has and gets the most attention, said Polet. Setting a goal of doubling its size over the next seven years was a deliberate decision. Polet said it appeals to the people who work for the brand, “and it gives them a sense of pride that we are going to do this.” But while the goal sounds ambitious at first, Polet pointed out that it actually involves growing Gucci’s sales by only 10 percent a year.

Perhaps the most significant way in which the group hopes to get there is by trading up its products both in the Gucci brand and its other divisions. He cited customers’ desire for more exclusivity, personalization and tailor-made merchandise. Last July, Gucci introduced the Pelle Gucci line of embossed leather. “We also took our average price up by $150 to $200,” and the quality impact is evident when you walk into a Gucci store, he said.

Describing his management style, Polet pointed out that you can’t manage a $3.4 billion company like a smaller firm. He structured teams around each brand led by a ceo, with the designers reporting to the ceo of each brand. “The teams are empowered to have freedom within a framework. They’re in charge of their own destiny. They have ownership, but it is within a framework…These teams live, breath and dream, on a 24-hour basis, Gucci, Bottega Venta, Yves Saint Laurent…It’s impossible for designers to create for multiple brands,” said Polet.

He said he doesn’t make all the tough decisions, but encourages each of the brand’s ceo’s and the teams to make their own difficult decisions.

“People love it when they have the feeling that they’re actually managing their own companies,” said Polet. “We’ve got nine of these teams. They all think that the business is theirs. Is it unstoppable? I think it is. If I were a competitor, I’d be deeply worried.”