Essay on The Success Of Luxury Goods

1577 Words Apr 1st, 2016 7 Pages
Luxury goods have not always been as prevalent as they are now, in today’s growing consumer market. There are a few leaders in the luxury goods industry, including Gucci; who opened its first store in 1923 in Florence. The business was owned by Guccio Gucci who sold luggage imported from Germany and offered repair services for leather goods. Gucci began to flourish in a booming economy thanks to post war prosperity; Guccio Gucci began to create his own designs using leather. In 1953 Gucci opened its first store outside of Italy in New York City. As the US economy boomed Gucci began to open up stores in major cities throughout the US. There are many rivals in this industry that compete with one another, 35 firms in this industry comprise 60% of the market. The bargaining power of buyers in the market is moderate as none of the distributors are likely to integrate backwards. The bargaining power of suppliers is relatively low as they are mostly smaller artisans. The threat of substitutes are low as well as the only substitutes are knockoff imitation products.

GENERIC STRATEGIES/ COMPETITIVE POSITIONING
Gucci was one of the larger luxury goods companies through the ‘70’s and 80’s, however as the 1990’s came they began to lose market share. This was largely due to the war going on at the time which caused a recession. This impacted many markets not only in the US but around the world as well. Luxury good sales fell by almost 3% a year from 1990-1994. Gucci began cutting…

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