Luxury Good and Gucci Essay

1252 Words Nov 20th, 2008 6 Pages
Gucci‘s overall strategy was to vertically integrate to strengthen its overall brand image. After vertically integrating they acquired other luxury retailers to continue to grow horizontally and to increase economies of scope.
The economics of the luxury goods industry changed forcing Gucci to modify its strategy. Consumers demand shifted from classic style buyers to style conscious buyers. Gucci not only had to change due to the economics of the industry but they also had several problems with their existing structure. Hence Gucci made the following moves to reposition it to compete in the new economics of the luxury goods industry.
Gucci
The partnership between DeSole and Ford addresses the company’s inability to have streamlined
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Buyers
Due to changing consumer demands, Gucci started to focus on fashion in particular the “glamorous edge.” Since switching cost for consumers are low and consumers are now demanding new fashions every season focusing on seasonal trends competitively positioned Gucci against its rivals and impeded consumers from finding substitutes.
Gucci changed its target consumer from an older more conservative buyer to a modern, youthful, fashion conscious one. Since all of Gucci’s competitors had the same target (30-50 year affluent women) going after a modern, youthful spirited consumer allows Gucci to focus on a different segment of the luxury market, capturing a different slice of the pie.
To create loyalty, give consumers options, and to prevent consumers from switching and buying a substitute product Gucci decided to revolutionize their product assortments to correspond with the seasonal trends. In addition they increased the quality of their products comparable to Hermes and offered these products at a value to meet the consumer’s needs. Furthermore, Gucci tailored their product assortment in each DOS to local customers to attract more consumers in the local markets.
To better forecast product demand for seasonal goods and to keep inventory costs down Gucci added customer intelligence to the decision making process to better understanding consumers buying behavior.
In order to

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