Something old, something new: Gucci revives classics to regain edge

The luxury fashion house is looking back to the 1960s to ease the impact of the pandemic

A model gestures during the shooting of the first episode of the mini-series 'Ouverture of something that never ended' as part of the presentation of Gucci's last collection in Rome, Italy. Gucci/HandShow more

Gucci is revisiting 1960s handbags and other classics in its latest collection, mixing them with up-to-the-minute sneakers and logoed skateboards, as it seeks to reach a wider audience and reverse a fall in sales after years of stellar growth.

With traditional fashion shows cancelled because of the coronavirus pandemic, designer Alessandro Michele teamed up with US director Gus Van Sant to shoot a seven-part miniseries to show off his largely seasonless, gender-neutral creations.

Gucci is showing the videos as a virtual fashion film festival, with a new instalment released daily over the course of this week.

The films, which have a dream-like, retro quality with vintage cars and juke-boxes, follow a woman, played by Italian actress Silvia Calderoni, as she goes about her daily routine in Rome.

They feature cameo appearances by celebrities close to the fashion house such as singers Billie Eilish and Harry Styles - all wearing Gucci creations, including re-editions of Michele's designs from his first 2015 collection.

The former One Direction singer has also created a buzz in the fashion world by appearing on the cover of a December edition of Vogue, clad in a Gucci ball gown.

Gucci watershed

Behind the scenes, luxury industry watchers say this is a watershed moment for Gucci, the business that drives the bulk of revenue and profits at parent Kering, but which has been losing steam over the past year.

After a nearly fourfold increase in earnings since Michele took the creative helm, Gucci's revenues have slowed down, lagging rivals like LVMH's Louis Vuitton and Hermes . Gucci was the only fashion brand in Kering's stable to suffer a sales decline in the third quarter.

Much of the brand's success up until recently relied on well-heeled, young Chinese shoppers travelling to Europe's fashion capitals and snapping up Michele's quirky, flamboyant designs.

But with international tourism almost frozen due to the pandemic, Gucci can no longer rely on foreign visitors coming to Europe's shopping streets to boost sales.

Consultancy Bain, which produces closely-followed forecasts for the luxury industry, said on Wednesday the share of high-end goods purchases by local clients is expected to rise to 80-85 per cent of the total this year from 60 per cent in 2019. Local buyers are still set to account for 65-70 per cent of luxury shopping in 2025.

Gucci is rejigging its marketing and product line-up to refocus the label and boost its appeal among local and older shoppers in Europe and the United States. The fashion house has, for example, produced "re-edited" versions of its classic handbags such as the 1,800-euro Jackie 1961.

People born from 1981 onwards - Millennials and Generation Z buyers - now make up almost 60 per cent of luxury purchases, Bain said, but brands cannot afford to neglect the remaining 40 per cent.

That is why on top of tweaking ranges to include less trend-driven items, most luxury labels are directing their customer service to establish close contact with clients who are not able to go to the stores themselves.

Gucci is still doing well on many fronts, including an operating margin of 30 per cent in the first half of 2020, down from a record high of 40.6 per cent a year earlier but still far exceeding that of many competitors.

But analysts say there are some signs of fatigue.

Luca Solca of Bernstein said Gucci's social media traction, while still high, is diminishing. It also seems to have more trouble selling excess inventory at full price.

"There is no red flag at Gucci, but we see an opportunity to act now in order to avoid bigger issues down the road," said Solca.