MILAN — Marco Bizzarri is a man of his word.
Looking back at the changes he set in motion two years ago to spearhead the turnaround of Gucci, the brand’s president and chief executive officer can tick off two major goals on his original list. Not only did Bizzarri return Gucci to its moneymaker status within Kering, its parent company, but the Italian house has also regained its fashion prominence thanks to creative director Alessandro Michele’s directional designs.
Ahead of Gucci’s first coed runway show at the company’s sprawling and striking new headquarters here, and shortly after reporting a 12.3 percent increase in revenues in 2016, accelerating to 21.4 percent in the fourth quarter, Bizzarri has reason to smile.
“The aim was to make Gucci — once again — the most anticipated show of fashion week, the brand expected to deliver something new, and I think this goal was reached even last year,” Bizzarri said in his spacious and luminous office with a view of Milan. Michele’s touch on the interiors of the new Gucci Hub, extends to Bizzarri’s office as well, including its welcoming capitonné leather couches and armchairs. A gift of a vivid red lacquered lion stands proudly on Bizzarri’s desk, a representation of the executive’s astrological sign.
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The ceo admitted that, given the seismic shifts at the company, his two years at the helm “seemed longer,” pointing to Michele’s radical changes in the brand’s aesthetic, which at first took viewers by surprise.
“In time, what he’s doing has become more accepted. We say that our world must think of and listen to consumers and this is true, but not too much, in the sense that if you want to change and innovate you must also think with your own head. Maybe you make choices that the market is not ready to accept, but that will be accepted in 18 or 24 months. The beauty, skills and genius of Alessandro are that he understands what will happen, not what is happening. What is happening is already passed,” said Bizzarri, who conveys the sense of speed with his rapid-fire words.
The executive spoke of a “revolution” in the company over the past two years — in the product, digitally, in communication, in the social media approach, in the look of its stores, in packaging and the windows, supply chain and logistics.
To support Michele’s creativity, Gucci is investing in a new footwear and leather goods factory in Scandicci, just outside Florence. Covering 378,000 square feet, it will be in operation at the end of 2017.
“It will be the most avant-garde location in Italy,” claimed Bizzarri, who said it was hard to find enough leather goods suppliers to fulfill orders. “We are rethinking our supply chain to support the changes.”
He explained that Gucci now is more focused on smaller numbers of products with greater complexity, compared to the past, where the opposite was the case. “The artisans are enthusiastic, it’s as if they were waiting to show what they can do. The industry is shifting toward this module of smaller groups of products and you need to find those who will be able to produce them quickly and well,” Bizzarri contended. Leather goods last year accounted for 55 percent of sales, and shoes for 17 percent.
When I saw Alessandro for the first time and we started to speak of Gucci, we were both convinced of the power of the logo.
The complexity of the products also helps keep a lid on counterfeits. “When I saw Alessandro for the first time and we started to speak of Gucci, we were both convinced of the power of the logo,” Bizzarri said. “You can’t be ashamed of its logo and what it represents, but you must think of it in a contemporary way. Alessandro has been able to mix the animal world, the bees, the head of a lion to the logo, or mix different signs together. This makes the pieces basically impossible to copy. Because you can copy a logo, but when you put additional craftsmanship and creativity on the fabric and the logo, it becomes really very difficult to copy that product. For me, this is the enhancement of the logo as we meant it. It is the creation of something unique, recognizable but that sets you apart.”
As a segue, Bizzarri said the success of the different “experiences” Michele has created — such as the “Gucci 4 Rooms” project with artists, or GucciGhost with Trouble Andrew, as well as #GucciGram or #24hourace — lies in “the most modern and contemporary way to see the brand and the logo, and, in this, Alessandro I think has surely been avant-garde, a genius in understanding that the luxury world in the last years has changed in a radical way, it’s less stiff and monolithic.”
He argued that either you embrace this new digital wave, “so you allow consumers and artists to be able to interpret the logo in the way they prefer, or someone will do it in your stead.”
In 2017, Gucci plans to raise its investments in digital communication to 35 percent of the total and to launch its online store in mainland China. Gucci’s online sales in 2016 rose 20 percent.
“The world is changing so fast and we have been giving this channel a very strong impulse. Our goal was to be at the forefront,” Bizzarri said. “The entry barriers to our world were very high before, due to the investment in the stores, in the important cities in the most important roads. This would keep out new potential [competitors] because they did not have the financial or physical possibility to open stores on Via Montenapoleone, Fifth Avenue or Avenue Montaigne, for example.”
Today, he observed, “with the explosion” of e-commerce and digital communication, “the possibility that someone will come against you and you don’t even realize is very high.”
Gucci is obviously taking no chances and has been investing in innovating its web site and e-store. The American site was the first to be overhauled in 2015, followed by Europe, Asia and now China, in the first half of 2017, probably between June and July. “The American market remains the most important in terms of sales online, because of its tradition and history. But, obviously, China’s total weight, in terms of number of consumers that approach luxury is so important that it was a must to try and succeed entering the region,” Bizzarri said. Gucci’s online platform is developed internally and outside of Kering’s joint venture with Yoox Net-a-porter.
In 2017, Gucci also expects to see results of action plans in Japan, which last year accounted for 10 percent of sales. Bizzarri admitted that the “acceptance of the changes” in the country has been slower than in other markets. With a “task force,” the ceo and his team traveled to Japan “to understand what happened” and worked on each department store, training sales associates in the storytelling and to help customers “enter” into Gucci’s new world.
“We’ve seen the changes so far,” said Bizzarri, who underscored that Japan posted sales of more than 50 billion yen, or $443.3 million, in 2016, which is a “historical record in Japan for Gucci.”
He said there was “enormous potential” in the region, and that the brand’s Ginza flagship will be renovated by July. “I am not in the least worried about Japan,” he said.
More than 86 stores in the world, out of the total 520, have been renovated so far, modeled after the brand’s Via Montenapoleone flagship in Milan. If not entirely refurbished, others have been updated with new elements in line with Michele’s style.
Bizzarri isn’t concerned about the U.S. market either, except for a sense of “uncertainty” as he observed that it was “not very clear” what President Trump’s next moves will be. North America last year represented 21 percent of revenues.
“Surely if he decides to raise custom taxes, there will be problems in terms of pricing. But then we see that the luxury [customer] moves in patches. Consumers shift in function of the price gap from one region to the other. The luxury market and its consumer are very flexible and reactive. We must pay attention to the migrating flows and consumer spending flows among the regions. Everything changes in function of currencies so it’s important that the product is centralized,” explained Bizzarri, speaking of inventory, logistics and deliveries.
In general, going forward, Bizzarri said he saw “a flattish market,” based on research studies of the sector, and a further divide between companies. “There will be companies that will make a lot of money and others that will lose a lot. It’s a market that is becoming mature, that fights over market shares. Those that innovate and change will win. Those that look to the past will lose.”
Last year, Europe was Gucci’s best-performing market, posting a 51 percent increase in the last quarter. Bizzarri emphasized that all regions grew without markdowns. Tourist flows helped Europe and the U.S., but there was also a “strong return of local customers,” as well as the arrival of a younger customer. “There is an important percentage of Millennials that buy Gucci, which for us is extraordinary since we were seriously outside that market before.”
The executive highlighted Gucci’s strategy to channel Michele’s first collection in all of the brand’s stores without testing the waters in a few chosen ones. “We did not know what the consumers’ reaction would be, but Alessandro and I agreed that we could not have done it differently. It was risky but how long would it have taken to change Gucci otherwise?”
The change is also telegraphed by the new headquarters, which are less central but closer to the airports and the network of highways, and which has allowed different offices previously spread over Milan to be under the same roof.
“The fact that we are all here has given us a completely different energy,” said Bizzarri, pointing to amenities such as a top-level canteen, catered by one of the area’s main chefs. Speaking of the former airplane hangar where the coed show will be held, Bizzarri defined it as “a white box that Alessandro can decorate as he wishes.”
No preview was allowed after the interview as “men at work” were busy setting the stage for the show. Bizzarri pointed out that the coed show was “a change associated to the change of location” and not an issue associated to cost-cutting. The men’s and women’s collections “go hand-in-hand” and “too many moments of presentations become less incisive,” he contended.
This will be a “stronger and more powerful presentation,” said Bizzarri, praising Carlo Capasa, president of the Italian Chamber of Fashion, for his flexibility in accepting the change, adding that Michele jumped at the possibility when he presented it.
“We knew that the world was about to change and that the rules were going to be overturned.”
This decision is also smoother for a company whose retail channel accounts for around 83 percent of revenues, he observed. Bizzarri believes that “each company must do what they prefer” in terms of presentations.
Among upcoming projects, Michele’s first women’s fragrance for Gucci will be launched in September. For his part, Bizzarri said he works “as if every day were the last, with the mentality of a start-up” and not as a powerful and successful company that employs around 11,000 people.
“Diversity and inclusion, which are the real grounds for creativity, must remain at the center of what we do. Creativity is our North Star. This way of working and this speed, this new opening and innovation, putting everything in discussion must remain at the base of what we do,” he said.