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NEW YORK — The transformation of Gucci’s North America business is in full motion.
This story first appeared in the November 5, 2013 issue of WWD. Subscribe Today.
During an exclusive interview here last week, Patrizio di Marco, Gucci’s worldwide president and chief executive officer, outlined key changes the brand has been making here — a strategy aimed at strengthening its U.S. presence with the ultimate goal of surpassing $1 billion in sales in the region.
Mainly, Gucci started looking to “drastically change our presence in the country by taking over the wholesale partners that we had,” di Marco said. “Our intention wasn’t to cut the stores out of the process, because they have been our partners for many years and they’re still our partners. There’s simply a change in the relationship, from coming to us and buying our merchandise to, together with us, managing the business, although the business is run directly by the company here.”
The takeover of the Gucci business at Saks Fifth Avenue is now complete, having converted its wholesale presence into directly operated departments. Now the company is looking to study its presence in its Saks doors to maximize opportunities.
RELATED STORY: WWD CEO Summit — Patrizio di Marco Talks Candidly About Gucci >>
“The first step was to take over our presence there, and the second step is to consolidate our presence [at Saks], because sometimes we don’t need to have, say, three different points of sale in the same department,” di Marco said. “We can actually consolidate categories under one roof, because that’s much more efficient saleswise and, most importantly, because it gives the right and proper presentation of the brand. That’s the process we started and will be continuing in the next months and years.”
Asked how he envisioned such in-store consolidation, di Marco elaborated, “It depends on stores and space. At the end of the day, you have handbags and small leather goods, and you have belts in another spot on the floor, and then silks and jewelry. If you combine these categories, you walk into a store and there’s a proposition which says who you are as a brand. Saleswise, it’s also much more efficient to have cross-selling opportunities.”
A similar change in approach has taken place at Holt Renfrew in Canada.
“The most important thing is that at Saks and at Holt Renfrew, what we’re seeing is just the beginning of the story, and we are seeing double-digit growth,” di Marco noted.
Gucci is currently in negotiations with Neiman Marcus for the same kind of takeover and consolidation to ultimately strengthen the Gucci business at the specialty store chain.
“The end result will be a net number of stores which is lower than the number we have now in terms of presence within Neiman’s, but a much higher consolidation so that, at the end, the presence will be more significant and the business will still be quite healthy,” di Marco noted.
In January, the company moved Christophe de Pous, previously president and ceo of Gucci Japan, to the same role at Gucci America Inc.
De Pous said of Neiman’s, “We will keep some wholesale and convert some to leased operations. We will create the world of Gucci where the consumer finds the Gucci environment, not only one category.” But, he added, “the shoes remain mostly a wholesale business because of the business model in America.
“The business in the U.S. has been very good,” de Pous said. “If you look at the U.S. business as a whole, the signs have been positive. The only reason why the sign is not as positive as it could be is because in the States you also have Hawaii, which has obviously been affected by the decrease in Japanese traffic and the depreciation of the yen. But if you look at mainland U.S., it’s been positive. What is interesting to note is that our growth with the local clientele is over 14 percent in North America.”
De Pous said that in the product mix in the U.S., “Ready-to-wear is actually one of the strongest categories in growth for both men and women’s. We still have potential for double-digit growth.”
Gucci is planning to add several new stores in the near future. Next year, it is set to open a second unit in Seattle, at The Shops at The Bravern in the upscale Bellevue area of the city. Gucci has plans for four additional freestanding stores in 2015, and six more in 2016.
Next year, the company will also renovate its Beverly Hills store on Rodeo Drive, which still features an interior concept from 1999, when Tom Ford was at the brand’s creative helm. There are also plans to reconfigure the Chicago location by designating its second floor for retail, which is how the store was when it first opened during the Aldo Gucci era of the brand.
“We’re planning to reach and possibly exceed the $1 billion mark in the country, which I think is achievable,” di Marco said.
To better serve customers, Gucci is fine-tuning the shopping experience. “Inevitably, you have certain customers who want to have a certain shopping experience,” di Marco said. “We all talk about traffic, and traffic is definitely important…sometimes you walk into a store and want to have a shopping experience. This goes beyond VIP rooms.
“We have great sales associates, we have great artisans,” he added. “The best thing would be to have our own people meet our customers, and offer them whatever we could.”
That could include opening stores during special hours just for specific customers. Improving the company’s communication — from its humanitarian efforts to corporate social responsibility — provides another channel to connect with consumers. The Chime for Change campaign, which kicked off in London earlier this year, is planning to mark its first anniversary next year in the U.S., though the company didn’t disclose further details.
Another way the brand has been reaching consumers is Gucci Kids, which is largely a wholesale business but, stressed di Marco, one that didn’t exist two years ago and now rakes in more than $100 million. Asked whether his baby daughter Greta, who was born in early March, has a closet full of Gucci, di Marco hesitated. “Well, actually no,” he said. “Her mom [Gucci creative director Frida Giannini] is quite democratic. She is choosing a number of different brands, but yes, we placed an order with the company just recently and should be receiving some Gucci soon.”