Strength, Weakness, Opportunity & Threat

SWOT of GUCCI GROUP

Strengths

  • Diversified businesses serving the needs of customers with ready to wear, high end, varying from urban to classic, range of jewelry, dresses, shoes, leather bags, hand bags, authentic skins, watches, fragrances, accessories, lingerie, and beauty products.
  • Markets: – Europe, USA, Japan, Asia pacific.
  • All the businesses are showing organic growth in revenues in the years 2004-2007 varying from 9% – 20%
  • Asia pacific is the developing market along with USA. Japan has shown growing trends in the last 2-years i.e. from 2005-2007
  • More and more Directly Operated Stores (DOS) are being opened and are delivering positive results
  • The trinity of creativity(designers), Merchandising and Product Development work hand in hand and let the designers envision a launch and re-launch
  • A loosely worded merchandising grid lets all the decisions be taken in a democratic centralized , lesser hierarchical structure of trusted lieutenants
  • A group that is open and understand marketing, market research and customer loyalties and is working towards developing skills to interpret the customer understanding and invest into customer experience management
  • Understanding of market by market, product category by product category movement of stocks in a systematic product movement study
  • Had acquired lot of businesses between 1999-2001 which have started fructifying
  • The group has moved from family held business to market run business
  • It has been cohesive at the back end to exploit the economies of scale wherein enjoys the different supply chain for all brands so that the face of the brand remains entirely distinct and keep on giving a unique experience to the customers
  • It has a lean central structure
  • It believes in sharing of internal learning within the group companies
  • It has understood giving equal share of voice to all the businesses in decision making
  • The creativity isn’t exposed to each other to keep the offering mutually exclusive and keep the trade separate.
  • Customer relationship management (CRM) modules work by inviting the key 5% buyers who end up buying 30-35% of the inventory has been tied up with Corporate Social Responsibility initiatives like that with UNICEF

Weaknesses

  • The group though has been focused on market trends, keeps an eye on material being used, customer wants, need gaps, and has been launching products for all unmet needs, being a fashion brand conglomerate the group hasn’t recently been seen more on the cat walks than in the stores
  • In the process driven environment, the creativity of the designers is left to their own set of learning as they aren’t really sharing a pool of creativity / learning and the chances of getting obsolete, unwanted stuff in the markets are always there.
  • With a presence across price points, across market trend, across market needs, the launches yet aren’t as frequent as competition. Competition at times changes the stuff in the stores every 3-4 weeks whereas GG does so 5-6 times in a year.
  • All capital decisions are centralized and thus left to the judgment of the common resources that are exposed to the market dynamics for all the brands and may at time, take decisions considering the impact of one brand Vis- a- Vis other, as in cannibalize own business against competition. This at times doesn’t work for brands and for the entire group as a few products basis trends/ basis the creativity may have the potential to change the entire market.
  • The market also has started responding to the calculated grid based range by matching like to like. Recently, the imitation has been seen on the increase among mutually competing brands of competitors.

Opportunities

  • The group hasn’t concentrated on mergers and acquisitions since 2001, ideally, to keep infusing fresh ideation, fresh range of products, creativity should always be evolving.
  • Also, it central lead Frida Giannini, who is continuously keeping the entire group alive and kicking with varying teams across brands, is not a good idea. With every 5 years, the generation changes and so does their attitudes, habits and outlook towards the fashion. Group could look at infusing fresh blood at the top and give the central lead a more macro role.
  • The great retail experience (E-retail) is opening newer markets and doesn’t need to have investment into directly operated stores rather will need investments into web stores.
  • Designer vision will be in vogue and ideally GG should invest into developing a pool of designers which the world will envy rather than investing into directly operated stores.

Threats

  • The great retail experience (E-retail) is taking away the visual identity that has been kept painstakingly distinct so far.
  • All the brands are selling products across the board and in a scenario wherein the market trends, tastes, consumer likes, there is always a chance of it becoming more homogeneous and loses competitor advantage / differentiation and thus may not command premium for the classic luxury position
  • When stores will be opening on websites, product lines will be more of procurement bases, the need will be to invest into creativity which brings out ever different, stunning new looks, that may not appeal to all and thus may move focus from multiple users to class users.

Recommendations

  • Initiation of designer academy, wherein the group will identify and groom talent for absorption into own businesses
  • Instituting an award for creative ideas among elite designers
  • Owning the design space and making it synonymous with GG
  • Commanding own catwalks across the globe and make the participation more coveted.
  • Getting into the route of acquisitions of small, yet noticeable designers across the world.

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