Skip to content

Beware of the Temptation of Emerging Markets

Shopping Tales from the Colonies

The Gucci brands financial struggles of the 80’s and 90’s have been well documented. Gucci family infighting and the bastardization of the brand through excessive licensing agreements had, over time, cheapened the image of the brand in the eyes of consumers. Domenico De Sole is famously attributed for turning around the fortunes of the Gucci brand and it would be kind of ironic if Gucci had to bring Domenico De Sole back from Tom Ford – to “Do the Gucci” another time.

Where does the Gucci brand sit on your brand radar?

When you read the financial reports of any international luxury brand at the moment they tend to make mention of the fact that sales growth has flattened in the mature markets of Europe and the USA and that brands are now focusing much of their expansion strategies on the emerging markets of China, India, Russia and Brazil. The Asian markets have become a significant source of revenue and as a result, Australia has recently seen a rapid expansion of doors by international luxury brands. These have included including a 700sq m Gucci store at Westfield Sydney and a three-storey, 1200sq m Louis Vuitton store in George Street, Sydney.

Obviously, Australia can’t be considered as an emerging market in the same context as China and opening a store in Sydney doesn’t bring with it the corruption issues of expanding into the Russian market or the bureaucratic problems of  being a retailer in the Indian market. 2OPINIONATED recently visited both these two new stores and believe they make an interesting case study as to how to “manage” the process of expanding in emerging markets.

Hannah: ‘I met Olya in Paris last year just around the time of the launch of Gucci’s CELEBRATING 90 YEARS OF TRADITION AND INNOVATION campaign. The execution of this particular campaign at the Printemps department store was, in my opinion, truly exceptional. A very handsome and very agreeable man took us though an installation that was effectively like being walked through a “handbag museum”. The display showed you how Gucci constructs its handbags and the experience really caused me to really re-think my perception of the brand. Obviously, I was excited to see how this Gucci history of tradition would be translated in Sydney’s new flagship store. It all started off well with the delivery of 34 page Gucci 90th Anniversary Special insert in my Australian Harper’s Bazaar’.

It was a great teaser and successfully told the story of history of the Gucci brand. The insert featured famous Gucci imagery, showcased global Gucci events, touched on celebrity endorsements, displayed styles from the current collection, as well as  providing bio’s of key Gucci personnel.

In this day and age when shoppers can be fickle…when brands we admire become too readily available in our home towns they have the potential to  change your relationship with the brand.  First impression count. We want to connect with our favorite brands, we want to be wowed by them, as consumers really want to associate with brands that stand for something…brands who know what they are about!’

So lets take a closer look and compare how these two brands have expanded their operations in Sydney…

New Gucci Store in Westfield in Sydney

Damien Woolnough, from The Australian believes the Gucci store “glistens on the right side of gaudy” but we beg to differ! The label’s creative director, Frida Giannini describes the design concept for the store as “a modern architectural statement that references the iconic Gucci materials and elements of stores from the past… Everything was carefully chosen to make the design stand out while highlighting the collections in the strongest possible way.”

Personally, I don’t think of Gucci as a gaudy brand…flashy sometimes…gaudy never! I loved the Gucci Cruise 2012 print campaign and the Gucci Fall 2011 campaign focused on the brands craftsmanship and heritage . For me, the Sydney store really borders on the side of tacky…I suppose I expected something more elegant. Sydney is a flashy town but this store would have been much more suitable for QLD’s Gold Coast in the 1980’s and its not at all reminiscent of a luxury brand that was born in Florence in 1921.– Powerless ★ ★Hannah Brooks

In the same article, Woolnough quotes Melinda O’Rourke, of the MO Luxury consultancy group saying “roughly 60 per cent of sales by major luxury labels were to the local market…People see the large queues of tourists, but they don’t notice the long, ongoing relationships these businesses have with local customers,”

When we look at the design of this limited edition range created for the Sydney store opening and we start to question whether Gucci see the Australian market this way

 ‘For those who are old enough to remember Ken Done and his products that were considered revolutionary at the time because he successfully merged art with consumer products in the 80’s, were sold internationally and had mass tourist appeal. Having the luxury of hindsight I cringe at little at the idea of groups of Japanese and Koreans still proudly sporting his designs. But at the time they relevant and represented the free Australian spirit. For me Gucci does not capture the Australian spirit in this new range. How does the Gucci range contribute to supporting the Gucci image. Is Gucci heading back into the direction of Pierre Cardin? Is the marketing  focused more on the exclusivity factor at the expense of style, design and substance.’ – Olya Bell

‘Apparently, Frida Giannini created this range in celebration of the opening of this new flagship store….this collection looks more like it has been approved by the merchandising manager at Downtown Duty Free. Limited edition or not, I can honestly say that no self-respecting Australian Gucci lover would  ever buy this bag. Clearly Gucci is focusing on the other 40% of the market…the tourists. The flow of the store didn’t work at all and the service was shocking . This suggests that the Gucci staff themselves don’t see locals are potential customers either’ Hannah Brooks

The New Louis Vuitton Store in Sydney

The building was formally a bank, it conveys both the heritage of the brand and the colonial history of Sydney and thankfully the extensive use of gold is limited to the Louis Vuitton jewelery range.

No stuffed Koalas or Heart-shaped Australian flags here

To celebrate the opening of the new store Louis Vuitton commissioned artist Billie Acheilloes to create  animals using LV leathers, and these included native animals such as a kangaroo, a koala and a crocodile.

‘The Louis Vuitton store is luxurious, elegant and reflects the brands heritage. The window displays were engaging (even a rainy day people were milling round taking photos), this approach by the brand demonstrated the Louis Vuitton history of craftsmanship and was far more culturally sensitive for the local Louis Vuitton customers than the Gucci stores stuffed Koalas. Furthermore, commissioning this work is completely compatible with the brands commitment to the arts . Best of all, the Louis Vuitton staff were friendly, attentive, efficient and knowledgeable – I”ll be back !’- Phenomenal ★★★★– –Hannah Brooks

Two different brands, two different approaches and strong opinions from the 2OPINIONATED girls as to which brand told their story more effectively in this emerging market.

We’re sure that there are short-term profits to be made with the Gucci approach. but do these returns come at the expense of the Gucci’s long-term brand equity? We would have thought that Gucci had already learned that lesson a long time ago!

If you’re interested in the perils of failing to “manage” a brands distribution channels correctly in new markets have a look at some of our older 2Opinionated posts: Selling Short the Chanel Experience, GUCCI – Call the SPCBH Again!, Handbag Abuse Continues – CALL the SPCBH, Crimes Against Marc Jacobs.

3 Comments Post a comment
  1. Magnificent post, very informative. I ponder why the opposite experts of this sector do not realize this. You must continue your writing. I am sure, you’ve a great readers’ base already!|What’s Going down i’m new to this, I stumbled upon this I have discovered It positively useful and it has helped me out loads. I’m hoping to give a contribution & assist other users like its helped me. Good job.

    February 6, 2012
    • Thanks for the feedback. We are actually doing a follow up on this post next week. Keep you posted so to speak!

      February 10, 2012
  2. Nice to read your blog

    February 17, 2012

Reply with your Opinion

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: