I’ve always loved brands for their ability to tell stories and win business. In 2011, I decided to write my masters dissertation on the Nature of Luxury Brands. This was a time when luxury brands were razor-focused on showing the quality upfront and felt more traditional. The party line might have gone something like this — show perfection and justify high prices.

Much has changed…

In my view, no other industry relies on the power of “the brand” more than the luxury industry. Fast forward to the 2018 Interbrand study of the World’s Leading Brands — the luxury industry saw the most growth.

Kering — the luxury company, owns Gucci, Balenciaga and several other brands that compete with the market leaders; Louis Vuitton, Chanel, and Hermès. All are multi-billion Euro businesses. This year Kering’s flagship brand Gucci, experienced a reported 36% growth and essentially doubled brand value from 10-years ago. While it may seem unbelievable, last year, several reports, including Marketing Week pointed at the potential of “disruptive brands”.

Source: Interbrand 2018 — Gucci’s trajectory shows rapid and significant growth in just 12-months

It could be argued that Kering is “disruptive”, it would appear from the outside that they are turning the concept of luxury on its head. However, while watching a presentation with the CEO of Gucci, Marco Bizzarri for WWD, he explains that rather than being disruptive — challenging the status quo is necessary and they had a clear vision. Gucci could not be bound to the logo, the strategy was about emotion and creativity. Upon reading their September Investor Presentation, there appears to be a strategy of Audacious Luxury and Creativity to drive the group forward. I believe it is very transparent in the product and customer experience. This would reinforce the importance of having a clear and digestible strategy for any business.

Remember Gucci is almost 100- years old, but it feels as fresh as ever. Without reducing the price of their product, but radically changing and altering the heritage designs and patterns, Gucci has won so many new customers — younger customers, especially from Asia.

China is the honeypot every brand is dying to gain exposure to and I believe very few brands are resonating in China as successfully as luxury brands because they create desirability.

Brand heritage has new rules

Gucci is not the only star in Kering’s portfolio. In under 2-years, Balenciaga has boldly redefined luxury, through daring advertising campaigns, abrupt street fashion, and CHUNKY footwear, resulting in a roaring success and massive online conversation. In Q4 2017, Balenciaga had the highest quarterly growth across the group portfolio and also according to the Lyst Index, the brand had some of the best selling products of the year. Kering’s audacious strategy sings for me when looking at Balenciaga. Cristóbal Balenciaga was one of the most acclaimed couturiers and now the brand continues bearing his name but in a completely different direction, with a radically different aesthetic. The creative director, Demna Gvasalia is driving the street movement forward and bringing it to the highest echelons of luxury. Triple S runners and heavily mocked IKEA-looking bags are driving serious business growth and market penetration. Take note.

For me, Balenciaga feels like a war on the concept of fashion and Gucci is a celebration of the heart in fashion.

#KnowYourCustomer

My present view is that a great deal of the success of Kering brands boils down to a close understanding of the customer and the trends. Gucci and Balenciaga are brands that speak to the STREET — they are the friend you want to know. And now, for many including those without luxury budgets, some products, for example, flip-flops, runners and wallets are more attainable. It feels very non-exclusionary and a move away from the well-oiled principle of snob-value goods. Or perhaps it is a different iteration of the concept, time will tell. My belief is that these brands use DATA effectively. I recently noticed Gucci are recruiting analysts globally and would appear to have a very good handle on their customer. Last year, Gucci had the top 4 best-selling products in the Lyst Index, which analyses millions of data points where customers are interacting with brands.

There is no question, Gucci and Balenciaga are in high demand. Triple S runners are currently out of stock in a number of retailers and Gucci appears to be focused on supply chain management.

Are these brands anticipating what the customer wants next? Definitely.

Source: Pexels

The Kings and Queens of Content Marketing?

Arguably, content marketing is a core strength of Kering to enhance the customer experience. Recent advertising I have seen for both Gucci and Balenciaga show significant engagement online (especially on Instagram), which clearly is resulting in sales and footfall through the stores and driving online. There is a mix of dynamic photography (in the case of Balenciaga, the creative direction feels like a POV perspective of a friend taking a photo of the wearer), while Gucci has used illustration and emotional video/films. You can view all of the latest creations online.

When taking a look at the reports and the numbers — according to the Kering September Investor Presentation, the H1 revenue in Gucci was equivalent to the full year in 2015. Retail has accounted for a large portion of sales, online e-commerce is up 88% — there were no in-store markdowns. Gucci has bucked the polished and “stiff” luxury image by injecting heart, humour, and magicthrough collaborations with Spanish artist, Ignasi Monreal on a range of city murals and illustrations and a selection of directors, including Glen Luchford who has produced films more so than advertisements. The latest clip I saw for Gucci Cruise 2019 has a Noah’s Ark feel. You have to remember this is a heritage brand changing its direction and going almost against the rule book of polished and perfect. It certainly stands out.

My impression is that Kering’s creative expression appeals to young people, who feel the challenges of their world and are now more inclined to trust their brands and spend or save up for a piece of them.

The Future?

The vision from Gucci’s creative director, Alessandro Michele shows all the signs of a winning formula, and this is also thanks to their CEO, Marco Bizzarri who recognised change could benefit the brand and the group. There appears to be a great synergy here of business and creative professional minds. In every interview I have seen, the CEO thanks the creative vision of Alessandro. There are rumblings in the media about a slow down in Gucci Growth, but the reports are all very positive. And in terms of top of mind for the customer, surely there has been significant ground gained here.

Gucci recently opened ArtLab, a 37,000 sqm building near the original headquarters. After watching an interview with the CEO and Mimma Viglezio, it appears this new space combines the physical product with technology in an innovation hub. I believe this is another incredible step outside the traditional boundaries of heritage luxury brands that are so protective of their brand, but rather than being bound to the mores of Gucci, it would appear that the creative and leadership team have leveraged the power of a global brand in an industry that at its heart is about art and artisans.

It would appear that Gucci can and will now challenge the top players directly. They announced a goal to achieve €10bn in revenues according to BOF and are closing the gap -fast. Time will tell if a connection with the customer can drive Gucci to the top of the market.

Source: Pexels

Final thoughts

You might not be interested in the luxury category, but as a brand manager or an insight professional, there is an important point here on having a clear vision, recognising and challenging industry norms and the massive rewards on offer if you succeed.

Sources and knowledge obtained from the public domain.