GUCCI’s success in China
Since 2004, over 60% of GUCCI Group’s investments have been concentrated on China, especially the development in the so called ”second tier” cities, with a population between 5 and 8 million inhabitants. Gucci is now present in 26 cities, while its competitor Louis Vuitton is present in 25 cities. The number of directly operated Gucci stores has grown from 4 in 1997 to 46 stores in 2010.
The company’s CEO Francois Pinault atrributes the success of the company in China to its strong local management, the attentive selection of locations and the high level of merchandising. The company’s 1.100 workforce is 100% Chinese, which is unique compared to the other major luxury brands. Mr Pinault also highlights the fact that the merchandising of each store is adapted to the local customer target. For instance, there are stores with more entry level priced goods, especially in the ”smaller cities”.
According to Mr Pinault, a store in such a ”second tier” city can become profitable in two years. Sales in China represented only 5,2% in 2005 of the total sales of the group. In 2010, sales in China represent 17,2% of the total sales of the company. As for the consumer target, Mimi Tang, CEO of Gucci Group Asia Pacific says the majority is made of men, especially young men wishing to show off their wealth.