Gucci Suffers From Brand Fatigue, Needs Innovation And Talent Introduction

Worries about economic growth and conflicts in the Middle East and Ukraine involve luxury demand in China, Russia and Europe. Luxury spending hit a five year low, causing all major luxury businesses to be hit.

　　 Consumer Increasingly popular brands are not very popular, especially in major markets like China, which also hurt big brands. Until 2012, China has been the main engine of promoting the growth of luxury goods industry.

"I think for some brands, there is a problem of saturation and brand fatigue in specific markets like Asia," said Scilla HuangSun, head of Julius Baer Luxury Brands Fund.

Gucci, Burberry (Burberry) and LVMH (LVMH.PA: quotes) brands such as LV have been trying to rebuild their brand personality in the past 35 years. 2000s Middle late stage These brands go to the mass market and overextract brand value, resulting in the loss of brand personality. This winning strategy has made shareholders rich, but diluted the brand image.

From the sales point of view, some big brands such as LV and Hermes have done better than Gucci in reshaping or supporting brand personality.

Gucci's sales in the past year gradually In the same period, LV's revenue continued to rise at a low single digit level, while the sales growth of Hermes and Burberry remained above 10%.

Prada (Prada) may become the next victim of brand fatigue. The company has issued an early warning that sales growth will not be achieved this year. Prada is one of the most popular brands last year, and analysts are worried about its overexposure.

Analysts and investors say Gucci has cut down many lower priced products, which have seen an average price increase and lack of creativity. Product lack of creativity affects brand reputation, which will ultimately hurt investors' interest and growth prospects.

A spokesman for Gucci's parent company Kering (PRTP.PA: quotes) said the company is "satisfied with the high-end strategy Gucci is pursuing". Referring to Gucci's three quarter sales performance presentation, she said.

Gucci said its response to the new product was satisfactory. The company's new products include a $4500 bamboo slub leather handbag.

"You can't just restore the past glory, but also have radical innovation," said Luca Solca, a luxury analyst at Exane BNP Paribas.

Some fashion critics say Gucci has been trying to regain the splendor and fashion authority of executive Domenico de Sole and designer Tom Ford (Tom Ford) at the helm.

"They (Gucci products) have lost some personality after Tom left," said Tamara Mellon, founder of Jimmy Choo, a high-heeled shoe brand.

Gucci's price increases may also keep consumers away from the luxury brands such as Michael Kors and Longchamp in France. Over the past four to five years, the price of Gucci products has risen by more than 40%.