NewsWire: 12/12/2020
- Gucci is pivoting away from marketing to young people and targeting Boomers instead. Prior to the pandemic, the brand’s youth-oriented designs made it a hit with Millennials—but with its core shopper base of wealthy tourists staying home, Gucci is now lagging behind other luxury labels. (The Wall Street Journal)
- NH: In 2015, Alessandro Michele took over as Gucci’s creative director. His strategy was to appeal to younger generations by designing more irreverent fashions featuring cartoons and sports logos. And for a time, this seemed to work. From 2015 to 2018, Gucci’s revenue climbed from €3.9b to €8.3b.
- But since 2018 Gucci’s growth expectations have decelerated.
- In 2020, clearly, the pandemic has been a significant blow to revenue. Gucci sales heavily rely on wealthy tourists, who have been kept home since March. Kering (KER), Gucci’s parent company, has seen its stock rise by only 2% YoY. (See "Retail in a Post-Pandemic World.")
- But there is evidence Gucci was already facing challenges before the pandemic began. Many Millennials boycotted the brand in 2019 over a sweater design that drew comparisons to blackface. And with a style focused on youth taste, many of Gucci's older and more reliable clientele had moved on to brands that remained classic.
- So Gucci is changing course once again: It is now moving back to targeting Boomers. Instead of focusing on “streetwear,” they are reissuing handbags originally sported by Boomer favorites like Princess Diana and Jackie Kennedy. They believe simpler designs will bring in an older and wealthier clientele.
- While this strategy may not be imaginative, it does make sense. Older adults have considerably more money to spend than today’s youth who have come of age in back-to-back recessions. (See “Millennials Hit By Back-to-Back Recessions.”) Boomers have also never had a problem showing off exclusivity or prestige--something young luxury consumers were sensitive to during the Great Recession. (See “Fashion, Fast and Slow.”)
- What's more, by focusing on Boomers, Gucci may not be losing all that many of their wealthy young-adult customers. We have often noted that Millennials widely admire Boomer pop culture, from their respect for actors like Tom Hanks and Meryl Streep to their music collections filled with Queen and Elton John. (See “The Return of the Guitar'' and “The Aging of Aquarius.”) While the simple elegance of Princess Diana’s handbag may appeal to Boomers’ pasts, it also appeals to Millennials’ fascination with bygone "authenticity." It’s not really dated. It's timeless.
Did You Know?
- Japan and AI: A Match Made in Heaven? Japan’s campaign to boost births continues—this time with some help from artificial intelligence. After amping up its “marriage bonus” program earlier this year (see “Japan Increases Marriage Bonus”), the government has now announced it will allocate ¥2 billion ($19 million) in the next fiscal year to local governments that run matchmaking programs for residents looking for love. This applies to about half of the country’s 47 prefectures. The money will be used to add AI to their matchmaking systems or to improve their existing AI capabilities. Typically, the people who sign up for these services submit forms detailing their backgrounds, and in many areas the systems are limited to considering criteria like age and income. AI would allow for the consideration of more personality-driven and values-driven criteria. After Saitama Prefecture introduced AI in 2018, 21 couples who met through the new and improved matchmaking system got married the following year.
