PARIS — After the United States, Gucci appears to be losing brand heat in China, according to a report published on Friday.
A survey of Chinese luxury consumer preferences has found that Gucci has slipped from the top-five ranking for purchase intent in handbags and ready-to-wear for the first time in three years. RBC Capital Markets polled 750 affluent Chinese consumers between Sept. 3 and 6 for its biannual report.
It found that 30 percent of respondents would consider buying a Gucci bag in the next 12 months, placing the brand in sixth position behind Chanel, Hermès, Louis Vuitton, Prada and Dior, respectively. Gucci slipped from second position in the previous survey, published in April.
However, RBC noted that the gap between the third- and sixth-ranked brands was narrow, with 33 percent of those surveyed stating an interest in buying a Vuitton bag, 32 percent eyeing a Prada purchase and 31 percent favoring Dior.
In rtw, Chanel and Giorgio Armani maintained their position at the top of the ranking. “The main surprise was seeing Gucci also outside the top five in rtw for the first time in three years (vs. #3 previously), which matters given the importance of rtw as a traffic driver,” said analysts Rogerio Fujumori, Piral Dadhania and Richard Chamberlain.
After several years of stratospheric growth under creative director Alessandro Michele and chief executive officer Marco Bizzarri, Gucci is seeing a normalization in its growth rates.
Shares in parent company Kering have fallen by 9 percent since it reported second-quarter results in July. Organic revenues at Gucci rose 12.7 percent during the period, below consensus estimates. This was down from 20 percent in the first quarter, and from 40.1 percent during the same period a year ago.
Gucci’s retail sales in North America fell by 2 percent in the second quarter as the brand kept a low profile in the aftermath of the scandal over a balaclava-style sweater that critics said evoked blackface. At the same time, the Italian label soared to record profitability in the first half.
Jean-Marc Duplaix, chief financial officer of Kering, struck a reassuring note, saying the Gucci brand still holds strong appeal for consumers worldwide, especially in the Asia-Pacific region, where retail sales were up 23 percent in the second quarter. That compares with 35 percent in the first three months of the year.
Growth in Mainland China was particularly dynamic as Chinese shoppers spent more at home, encouraged by government measures including reduced import tariffs, shrugging off concerns about a slowdown in the Chinese economy and the impact of its trade war with the U.S.
“The Chinese clientele has been super positive,” Duplaix said.
The RBC survey found Chinese shoppers’ purchase intent for Gucci slipped to number three in shoes, from second position in April and number one a year ago. However, there was some positive news for Kering, as its Balenciaga and Bottega Veneta brands shot up in the rankings.
In handbags, Balenciaga jumped to eighth position from number 15, making it the brand with the biggest improvement versus the previous survey in April, while Bottega Veneta ranked 16th, compared to 27th six months earlier.
In jewelry, Cartier slipped to third in the purchase intent ranking from number one previously. Chinese luxury consumers said their top pick for the sector was Tiffany, followed by Bulgari. In watches, however, Cartier vaulted from fourth to first position, coming ahead of Longines, Omega and Bulgari, respectively.
“We therefore saw the opposite of what we would normally expect for Cartier,” RBC noted. In further negative news for parent firm Compagnie Financière Richemont, Van Cleef & Arpels now sits at number eight in the ranking, down four positions, as a result of gains by Boucheron, Chaumet and Piaget.”