Gucci’s Journey in the Digital Age

Maha Mohsin
11 min readFeb 2, 2024

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1.1.Introduction of Company:

Gucci is a well-known luxury fashion company with an outstanding reputation for producing high-quality goods. Guccio Gucci established the company in Florence, Italy, in 1921, and it has since grown to become a fashion industry legend on a global scale (Zargani, 2021).

Earlier in its foundation years, the wealthiest families in Italy were its targeted customers. And they not only dealt with luggage but also with horse saddles. It was such an influence that even today, most of their modern designs are inspired by equestrian equipment. With time, as its fame grew, it was noticed by British upper-class families. Gucci added silk goods, leather shoes, and handbags to its portfolio.

History:

Guccio Gucci began selling leather items in his modest Florence business at the beginning of the 20th century. The equestrian way of life influenced his creations which the aristocracy of the time favored. As his fame rose, Gucci expanded his company and added other outlets in Italian cities, including Milan and Rome. The company established itself internationally in the 1950s and launched its first location in New York as shown in Figure 1. Since then, Gucci has developed into one of the most popular luxury brands worldwide, with a presence in more than 50 nations (Zargani, 2021).

Figure 1: The First Store of Gucci.

Gucci experienced a significant reorganization in the 1990s under the direction of Tom Ford, who was appointed the company’s creative director in 1994. Ford revived the brand’s reputation by introducing a new line of abundant goods, such as eyeglasses, watches, and jewelry, along with his audacious designs and controversial marketing campaigns. The luxury goods behemoth LVMH was interested in Gucci’s turnaround since it was so successful, and in 1999 it attempted a hostile takeover of the business (Zargani, 2021).

Organization Type:

Gucci is a privately owned company of the Kering Group, a multinational luxury goods conglomerate. The Kering Group owns several well-known luxury brands, such as Yves Saint Laurent, Balenciaga, and Alexander McQueen. Gucci operates as a subsidiary of the Kering Group and is responsible for producing and marketing its products (Marzovilla, 2022).

Organization Size:

Gucci is a sizable company with more than 35,000 workers in different countries. With more than 500 locations worldwide, the brand significantly influences the fashion sector. With approximately €7 billion in sales in 2020, the company was one of the most successful luxury brands in the world. Gucci’s successful global marketing strategy, inventive designs, and strong brand identification are all to thank.

Products:

Gucci is renowned for its unique styles, which frequently include the company’s distinctive “G.G.” logo and horse-bit gear as shown in Figure 2. The company offers various goods, from purses and shoes to clothing and accessories for men, women, and children. In addition to high-end clothing, accessories, and fragrances, Gucci also sells home furnishings and lifestyle items like candles and blankets (Marzovilla, 2022).

Figure 2: Gucci Bag with its GG logo.

1.2.Technological Challenges:

Counterfeit:

Gucci, a high-end fashion brand, deals with counterfeiting as a big concern. The term “counterfeit” refers to manufacturing and distributing phony or imitation goods offered to customers under the guise of the brand’s genuine goods. The development of e-commerce has facilitated the production and distribution of knockoff Gucci goods, which can harm the brand’s reputation and cause a loss of sales (Zidan, 2022).

The fact that fake Gucci products are frequently sold for a significant discount compared to the original products can draw customers to search for a deal. Unfortunately, compared to genuine Gucci products, these knockoffs are of poorer quality and do not offer the same level of attention to detail, durability, or craftsmanship. Consumers who have bought phony products may lose faith in the brand, which can hurt the company’s reputation and result in a decline in customer loyalty.

Shrinking Market:

In China, Gucci, one of the world’s most well-known high-end clothing brands, has grown particularly strongly in the past ten years. Nevertheless, the Chinese luxury sector has been slowing down lately due to shifting consumer habits and economic considerations, and fewer Chinese customers are now buying luxury products (Zidan, 2022).

The behavior of Chinese consumers has changed, and they are more willing to try domestic than expensive international brands. Chinese consumers are increasingly attracted to domestic luxury brands that provide a distinctive sense of identity and distinction as they grow more self-assured and proud of their culture and heritage (Zidan, 2022). Younger customers seeking an alternative to conventional Western luxury goods are drawn to these firms’ distinctive fusion of traditional Chinese aesthetics and contemporary design. As a result, the revenue of the company is decreasing and profit is reducing.

A large Number of Stores:

Gucci has been facing a problem recently due to the many stores it has opened worldwide. While expanding its retail presence was a successful strategy for Gucci in the past, the company has now realized that having too many stores can dilute the brand’s image and reduce the exclusivity of its products. Gucci has opened a large number of stores worldwide, but the down sales that came because of the Covid 19 or financial repression can cause a problem, and it won’t be a good solution to close all the extra stores (Zidan, 2022).

The basic purpose behind increasing the number of stores is to make sure the accessibility of the product and to make sure that demand for the product is being covered easily but this strategy bounced back.

1.3.Objectives to Overcome Challenges

The use of technology to fundamentally change the way an organization operates and interacts with its customers is referred to as digital transformation. The goals of digital transformation differ depending on the organization. The objectives of digital transformation allow us to fight against the challenges and solve a lot of problems by changing the methodologies. The digital transformation objectives that help Gucci overcome the challenges are given as:

Improved Business Model:

The development of new business models enabled by digital transformation has enabled organizations to meet demand through online sales. A new online business model can help reduce the need for physical stores. With the growth of e-commerce and online marketplaces, many businesses are shifting their focus to online sales and reducing their reliance on brick-and-mortar stores. Gucci can adopt a new business model that allows them to sell their products direct to the customers through digital tools by keeping consumer satisfaction in mind (Bunce, 2022).

Increased revenue:

Digital transformation allows you to increase the revenue of the company by allowing you to make new strategies that can assist you in approaching the market through a different approach. The different marketing and business approaches that are possible because of digital transformation help you fight against your competitors and catch the attention of the consumers. Gucci can use this objective of digital transformation to fight against the decreased revenue because of the shrinking market for Gucci (Bunce, 2022).

Organizations can use digital transformation to reach a larger audience by leveraging online channels such as social media, search engines, and e-commerce platforms. This can help organizations increase revenue by increasing the number of potential customers. Hence, digital transformation is the perfect solution for Gucci when the market is shrinking.

Improving agility:

Digital transformation allows you to improve the agility of the process and it helps you remain one step ahead of your competitors. Gucci is facing losses because of the local competitors and they need to adopt a system that can help them improve their condition in the market (Bunce, 2022).

2.Digital Business Agility:

The Digital Business Agility Model can be defined as the framework that helps organizations respond to constantly and rapidly changing situations. This model comprises three key elements: Hyperawareness, Making Informed Decisions, and Executing Fast. Gucci can implement this framework to implement new technological trends and adjust its business model to meet the ever-changing need of the market.

2.1.Hyperawareness

The state of Hyperwareness is necessary for any company to understand consumer demands, market trends, flaws in their design, and the progressive side of the competitors. Hyperawareness can be achieved by collecting data from consumers, social media, and third-party information. The data will help you extract the important information which can be used to information whoch can be used to develop business strategies and marketing plans.

It has been observed that Gucci is not much focused on consumer insights. The competitors of Gucci are using consumer insights and grabbing the market gap created by Gucci and using it to gain the attention of the customers. Gucci should work on consumer insights and must understand the expectations of the customers from the brand. There are a lot of AI tools that can be used to gain hyperawareness and consumer insights out of which a few are discussed below:

Text Analysis:

Consumers usually leave complaints, feedback, and, comment on the website of the company and they are willing to share their opinion. Gucci has to use this opportunity, to provide a platform on their website and use these comments to gather information and consumer insights. The text analysis allows you to extract specific keywords, the most asked question, and the demands of the consumers (Singh, 2019). The tools like SmartReader allow you to list all the phrases and important keywords. They can use these tools to gather data from social media and fashion platforms.

The text analysis allows you to understand the emotions of the consumers and hence you can understand whether they are happy and excited while receiving your products or not. Gucci can use it to understand the changing consumer behavior. It can help Gucci to fight against local brands and gain the trust of the customers.

Speech Analysis:

Speech Analysis uses AI to understand the sentiment of the customers when they are giving their opinion about anything. The complaint department of any brand has call centers to listen to the issues of the consumers. These calls are being recorded and can be used for analysis. Gucci can use the same idea to analyze the feedback and complaints of the customers and then use it to gain awareness about the flaws of the competitors (Singh, 2019).

2.2.Making Informed Decisions:

Informed decision-making is very necessary at this time to maximize profit with a small investment. Moreover, digital transformation has made the business grow fastly and decisions should be taken by estimating the return on investment. Informed decision-making is necessary at this time and it can assist Gucci in smartly managing its marketing strategies. Gucci can use the digital tools that allow them to make informed decision making as discussed below:

Predictive analytics software:

The Predictive analysis software allows you to use consumer data, study market trends and predict the future demands of the customers. Gucci can use such software and predictive analysis to understand the upcoming demands of the customers in different regions and then design their upcoming products accordingly. It will help them to fulfil the customer needs and then give them a customized consumer experience (Hajj, 2023).

Data Analytics

Data analytics allows you to arrange the data, and highlight the trends and the most frequent demands of the customers. Gucci can use these data analytics to understand which trends are famous among the customers. These data analytic can also help you predict future economic conditions and can help you invest the money accordingly. These data analytics are the perfect choice for Gucci to adapt and compete in the market (Hajj, 2023).

2.3.Executing Fast:

In the fast-paced world of fashion, brands must be able to respond quickly to changing trends, market conditions, and consumer preferences. Gucci may need to be able to quickly implement new ideas, whether that means designing and manufacturing new products, launching marketing campaigns, or making strategic business decisions. Gucci has to understand that they are luxary brand, still they have to speed up the process to meet the demands of the customers.

Furthermore, with social media and other forms of instant communication, today’s consumers expect brands to respond quickly to their needs and concerns. Gucci may need to respond to customer inquiries, complaints, and feedback in a timely manner, as well as make changes to its products and services in response to this feedback.

3. Collaborative Tools

These technologies are important to build a cohesive and productive team. These tools can inspire innovation, streamline communication, and improve workflow efficiency if used properly. Some of these collaborative technologies are the following:

3.1.Project Management Software

Software like Trello is very useful for management-related tasks. Through it, Gucci can manage projects, assign tasks to individuals or teams, and track progress on ongoing processes. It can also improve communication and collaboration by creating a central hub for the team where respective members share their insights, discuss updates and work together towards the goal (Bika, 2017).

3.2.Communication Platforms

Platforms like Microsoft Team or Slack can streamline communications and foster collaboration across various departments or teams. They are also useful in reducing response time by eliminating the need for long email chains and replacing it with real-time collaboration and communication (Bika, 2017).

3.3.Video Conferencing Tools

Tools like Google Meet, Microsoft Teams, or Zoom are another way to improve global communication and collaboration between geographically dispersed teams or members. Gucci can use them to help teams connect in real-time with each other, share their insights, and collaborate regardless of where they belong (Bika, 2017).

3.4.Virtual Whiteboards

Google Jamboard is a great tool for teams to collaborate on visual content, brainstorm, share insights, and collaborate on solutions. This will help foster real-time collaboration between teams and improve overall performance (Bika, 2017).

4. Task 4: Digital Leadership:

The ability to lead an organization through the digital transformation process by leveraging technology, data, and innovation is referred to as digital leadership. Digital leaders understand how technology can drive business outcomes and can articulate a clear vision for the organization’s digital future. They also can build and inspire teams to carry out their vision. Digital leaders are adaptable, agile, and capable of navigating a rapidly changing digital landscape. They value data-driven decision-making and can use data analytics to uncover new opportunities and improve business processes. Gucci must develop and nourish important digital leadership skills for digital transformation among its leaders and managers. Some of these key skills are the following:

4.1.Digital Literacy:

Leaders and Managers must understand digital technologies and where they are used. They should be able to keep up with the latest trends and innovations in digital technology and identify opportunities that can be a source of business value (Zupanzic, Verbeke, Achten, & Herneoja, 2016).

4.2.Change Management

Digital transformation is linked with significant changes not only to processes but also to the ways work is done. They should be able to manage change quickly and communicate it clearly to the people involved and help them develop a new way (Zupanzic, Verbeke, Achten, & Herneoja, 2016).

4.3.Agile Methodologies

Agility is required, along with an adaptable approach for digital transformation to work. They should be able to respond quickly to ever-changing market conditions, customer needs, and technology trends independently. They should also be able to modify their strategies and initiatives if needed (Zupanzic, Verbeke, Achten, & Herneoja, 2016).

4.4.Risk Management

Taking risks is a critical part of digital transformation and making bold decisions. Digital Leaders must be able to access risk efficiency and balance risk-taking with sound decision-making, prioritizing long-term success (Zupanzic, Verbeke, Achten, & Herneoja, 2016).

References:

Bika, Nikoletta. “The 14 Best Collaboration Tools for Productive Teams.” Recruiting Resources: How to Recruit and Hire Better, 9 Oct. 2017, resources.workable.com/tutorial/collaboration-tools.

Bunce, Claire. “8 Digital Transformation Objectives You Should Be Striving For.” Www.bizagi.com, 2 Jan. 2022, www.bizagi.com/en/blog/8-digital-transformation-objectives-you-should-be-striving-for.

Hajj, Hassan El. “Decision-Making in the Digital Age: How Technology Is Transforming Our Choices.” Www.linkedin.com, 2023, www.linkedin.com/pulse/decision-making-digital-age-how-technology-our-choices-hassan-el-hajj/.

Marzovilla, Julia. “Gucci’s History Is Just as Wild as Some of Its Designs.” InStyle, 30 Nov. 2022, www.instyle.com/fashion/history-of-gucci.

Singh, Ankit Narayan. “8 Ways to Gain Consumer Insights Using AI.” Medium, 3 May 2019, ankitnsingh.medium.com/8-ways-to-gain-consumer-insights-using-ai-537853e194f4.

Zargani, Luisa. “The House of Gucci: A Complete History and Timeline.” WWD, 6 May 2021, wwd.com/fashion-news/designer-luxury/house-of-gucci-maurizio-gucci-tom-ford-patrizia-reggiani-history-timeline-1234813497/.

Zidan, Karim. “Gucci Market Shrinking and the Challenge.” Www.academia.edu, 2022, www.academia.edu/31711372/Gucci_market_shrinking_and_the_challenge.

Zupanzic, Tadeja, et al. “Digital Leadership.” Lirias.kuleuven.be, vol. 1, eCAADe and Oulu School of Architecture, University of Oulu, 1 Aug. 2016, pp. 63–68, lirias.kuleuven.be/1685390?limo=0.

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Maha Mohsin
Maha Mohsin

Written by Maha Mohsin

Passionate about creating impactful stories and sharing knowledge on diverse topics. Let's connect through the power of words.

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