Robert Polet, Gucci Group

When frozen-foods honcho Robert Polet arrived at Gucci Group in 2004 and unveiled his three-year strategic plan, he faced skepticism galore - about his lack...

LONDON — When frozen-foods honcho Robert Polet arrived at Gucci Group in 2004 and unveiled his three-year strategic plan, he faced skepticism galore — about his lack of experience in luxury goods, about the flow of red ink at several brands and about his ambitious targets for sales and earnings growth.

This story first appeared in the December 13, 2007 issue of WWD. Subscribe Today.

But the proof, as they say, is in the pudding.

Nearly three years to the day when he mapped out his vision here with earnest, fist-pumping intensity, Gucci Group’s president and chief executive officer has met or exceeded virtually all of the goals he set, becoming one of the most admired managers in the industry along the way.

“All brands are on track to achieve the targets that we set for them,” he said in an exclusive interview last week at the group’s Grafton Street headquarters here. “What differentiates the really successful companies from the average successful companies is that you actually implement — with discipline and consistency — what you set out to do.”

Among the key goals Polet met or exceeded:

-Achieving compound revenue growth for the group of 14.7 percent, ahead of his 10 percent target, with operating profits rising even faster (up 44 percent in 2006 and 55 percent in the first half of 2007).

-Steering the group’s “other brands,” including Balenciaga, Stella McCartney and Alexander McQueen, to profitability by the end of the period, with Balenciaga meeting its goal two years ahead of schedule.

-“Fixing” Sergio Rossi and Boucheron, which have tripled in size since 2004 and entered the black one year ahead of schedule. Polet noted that, as a group, the “other brands” swung into the black in 2006.

-Growing Bottega Veneta beyond 200 million euros in sales with “solid” profitability. (The brand entered the black in 2005 and sales last year reached 267 million euros, or $338.4 million at average exchange rates.)

“I’ve never looked back,” a beaming Polet said in his office here, the walls decorated with a mix of fashion campaigns and family vacation photos. “The last three years went in an instant.”

A no-nonsense, dynamic executive with an infectious positive streak, Polet credits decentralized management, free-flowing information sharing and “clarity of purpose” for helping the world’s third largest luxury conglomerate meet its targets and putting it in a strong position as Europe’s luxury sector faces a darkening economic outlook and formidable currency headwinds.

“If you don’t know where you’re going, you don’t know how to get there,” he said. “Having that clarity, and having the teams focused in a very committed way, having them feel real ownership for that strategy by brand, and their own future …is one of the key things we did. Then we let the brands go because we trust the people that are leading them.”

In fact, Polet said Gucci Group would not alter its course one iota, focusing on organic growth — not acquisitions — and increasing its market share via new product categories, regions and niches. He noted three-year plans for each brand are rolled over and renewed annually: “When you talk about your budget for next year, it’s the first year of a three-year plan.”

Trumpeting the virtues of the multibrand model, he noted Gucci brand revenues grew 4 percent in Japan in 2006, while group sales advanced 12 percent, with Bottega Veneta, Boucheron and Sergio Rossi responsible for the lion’s share of the Japan gains. The performance is proof that having brands targeting different market segments and “at different stages of development” is a strong competitive asset.

“You’re able to get more growth than if you were only there with one big brand,” Polet explained. “As the market continues to evolve, the different segments will become more distinctive and larger. Hence, if you really want to profit from this expanding market, it’s important that you have a portfolio of brands that actually are targeting the different segments.”

Polet credits previous Gucci Group management, the duo of ceo Domenico De Sole and group creative director Tom Ford, for assembling a portfolio of brands with “virtually no overlap. That was a huge foresight of the people that put the portfolio together.”

But upon his arrival, Polet marked a decisive break with the Tom-and-Dom era, decentralizing management and empowering brand ceo’s and creative directors. He also has extolled the benefits of market research and implemented scores of behind-the-scenes initiatives to improve information sharing and foster synergies. The former Unilever executive is credited with spearheading an “uptrading” trend that saw Gucci introduce more expensive leather goods like La Pelle Guccissima to great success.

Now he spies what he dubs the “specially-made-for-me” phenomenon.

“More and more, you need to create the perception with your customer that certain products, services or concepts are made especially for them,” he said, seated at a conference table in white shirtsleeves and a sky blue tie.

That means ensuring a “constant stream” of product and service innovations along with limited quantities of certain products, he explained. One sign of the trend is a “real upswing” in demand for made-to-order products and swift sales of limited edition items.

“This is a true desire that people have — to be distinctive,” he said. “I think it’s always been there, but now it’s on a bigger scale.”

A fashion industry newbie and Dutch national, Polet was recruited from Unilever by PPR ceo François-Henri Pinault and his then predecessor Serge Weinberg. At the time, Polet already had a taste for fine suits, watches and shoes — but he has been dogged by speculation he would lead a “massification” drive at Gucci.

Polet waved off such charges anew, pointing out the group’s cash cow Gucci brand has no second lines, only two licenses (for fragrance and eyewear) and that around 70 percent of its turnover takes place in its own network of 229 directly operated stores.

“Pretty exclusive, I would say,” he declared. “There’s been no stretching, no dilution, and we’ve been very much focused on a constant uptrading….Our strategy is based on craftsmanship, the obsession with quality.”

Putting the management focus on the Gucci brand was also a central tenet of Polet’s plan, with a goal of doubling its size in seven years to over $4 billion. With sales growth of 18.4 percent in 2005, 16.8 percent in 2006 and 10.5 percent in the first half of this year, Gucci is well ahead of schedule to achieve his goal. Polet said the robust sales results, fueled by multiple product categories, are proof positive of creative director Frida Giannini’s “superb” ability to “translate the essence of the Gucci brand into desirable products.”

“The sentence ‘I must have this bag’ is the buildup of the strength of the brand on the one hand and the desirability of that particular product on the other hand,” Polet said.

He also asserted that Gucci, as a “true global brand,” has legitimacy in the 61 countries where it is present and has a “huge opportunity to continue to grow” and gain market share in many different product categories. Polet holds many cards close to his chest so as not to alert competitors to the group’s plans. But he asserted that Gucci Group has been a “leader” and risk taker.

“You can only lead if you actually go into new territory all the time and try out new things,” he said. “Going from a one-size-fits-all to a brand-by-brand strategy was a calculated business risk we took because we were convinced that this would provide the biggest source of energy for our people, and hence would have the biggest success.”

Another example of risk-taking was the recent launch of an online store for Boucheron. “We are not the biggest company, but probably one of the most innovative brands in the high jewelry segment,” he said.

A year and a half ago, Gucci Group initiated what Polet called “a tremendous focus on e-commerce,” which has also seen Yves Saint Laurent launch online sales in the U.S. “And many others will follow,” he noted.

While he keeps a lower media profile than his predecessor De Sole, Polet has raised some eyebrows by being upfront about his use of market research and focus groups. But “the fact that we actually listen to the needs and desires and wishes of our customers has always been part of Gucci Group,” he said, asserting he merely “formalized” its use. “Knowing the needs and desires of your customers in different regions of the world is very important to set strategies. Of course, it never tells you what to do or which products to design. “

Polet said he fosters a “culture of interchange” within the group and calls a free-flowing exchange of information between brands, regions, product categories and different levels of seniority a “key competitive advantage.”

The group’s management committee meets four times a year, and some 200 managers gather annually for a leadership conference, but there are various other meetings for human resources, communications and financial executives.

Three years ago, Polet declined to set a breakeven date for Yves Saint Laurent, saying only that would likely occur when revenues reach about 300 million euros. (They stood at 194 million euros in 2006, or $245.9 million at average exchange rates.)

In the interview, Polet expressed satisfaction with YSL’s progress under designer Stefano Pilati and ceo Valerie Hermann, noting accessories accounted for only 3 percent of the brand’s turnover in 2000 versus more than 40 percent in the first half of 2007.

“They know exactly what they are doing and they know exactly where they want to go and have been taking extremely successful steps in getting there,” he said, adding double-digit sales growth this year is “proof that the team is actually successful in growing the turnover.”

Polet is trenchant and uncompromising when it comes to his business principles. He scoffs at the term “managing people.” His approach? “Leading and coaching,” he declared.

He’s adamant that managing brands is a “professional activity” and one that is done “for a long life. You never manage a brand for tomorrow morning or for next year….So you must keep that dream alive of that brand. A dream needs to be constantly fed in a relevant and contemporary way…with a constant stream of really truly desirable products.”

The “lifeblood” of Gucci Group is providing “an environment where our creativity flourishes,” he continued. “The essence of what a designer does is create products that you and I were not aware that we desired.”

Polet stands by the long-term view on luxury he shared three years ago: that it will continue to grow at a rate of 5 to 7 percent. And looking back on his three-year plan, would he have made any changes?

“With the knowledge that we have today, we would have made the strategy we made exactly the same. I wouldn’t have changed a thing,” he said. “It has been a true adventure and it continues to be a huge adventure.”