SWOT Analysis of Gucci

Introduction 

Swot analysis of Gucci. Gucci is a worldwide renowned Italian luxury fashion brand. Guccio Gucci laid the foundation of the brand in 1921 in Florence, Tuscany. Pinault Printemps Redoute, a French conglomerate organization, acquired Gucci in 1999. The brand became the world’s leading iconic “Geek-Chic” brand in 2010. Nowadays, Gucci is the subsidiary brand of Kering, a French luxury fashion brand.

Home decoration items, handbags, perfumes, fragrances, ready-to-wear clothes, accessories, shoes, and makeup are some of the main products of Gucci. The company has got approximately 520 luxury stores across the world. Approximately more than 13059 people are working for Gucci to run various operations at its stores by the end of 2020.

According to an estimate conducted by statista.com, the annual revenue and net profit of Gucci in 2019 was 9.63 billion and 1.56 billion Euros respectively. According to spglobal.com, the net income of the company was reduced to 569.3 million Euros by the end of 2020. The net profitability of the brand has dropped roundabout 30% due to the covid-19 pandemic.

Today we’ll study swot analysis of the Gucci luxury fashion brand. We’ll discuss its internal strengths/weaknesses and external opportunities/threats. If you want to learn about external macro-environmental factors of the company, checkout pestle analysis of Gucci. Here’s the swot analysis of Gucci;

Strengths of Gucci 

Global brand

Gucci has been in the luxury fashion industry for almost a century. The brand has got approximately more than 500 retail stores across the world. The company is successfully operating its business in countries like the US, UK, Japan, and many other developed countries.

High-Quality Products

One of the best qualities of Gucci is that the company has never compromised on the quality of products. That’s why the company has a unique position among the luxury fashion brands. A very few brands have acquired the same status of quality and as Gucci’s.

High Brand Value

According to an estimate conducted by Forbes, the brand value of Gucci is 22.6 billion US dollars by the end of 2020. The company has a premium brand value in the fashion industry. According to the ranking of Forbes, Gucci has the 31st position as the world’s most valuable brand in 2020.

Corporate Social Responsibility (CSR)

Gucci is very well at corporate social responsibility. That’s why the company has been working alongside UNICEF as a partner on its various projects. It shows the brand’s commitment to society and people worldwide.

Strong Presence on Social Media

Gucci has millions of followers on its Instagram and Facebook accounts. The brand is active on its social media accounts. Millions of people visit Gucci’s website every month. If we talk about the marketing point of view, it’s a great strength of the brand.

Adopting Technology

Actively present on social media is of the best examples that the company is accepting the latest technology. Whether it’s the production assembly lines, fashion shows, or other events, Gucci always uses the latest tech trends to reach more audiences across the world.

Skilled Workforce

Gucci spends millions of dollars on the training and development of its workforce. It’s because the brand knows that investment in people would bring unique ideas. That’s why the company has the most skilled professionals working for the company.

Distribution System

The chain of command and the company’s network is remarkable. Whether it’s designing, production, or the distribution system, Gucci has complete control over all of its processes. It generates another source of revenue for the company.

Product Portfolio

The product portfolio of the company is very rich in line and category and has got a lot of variety in it. If we say that Gucci is a complete lifestyle brand, then it won’t be wrong. It’s because the brand offers clothes, shoes, handbags, accessories, and many other items in-depth product categories.

Trendsetter

Gucci has a reputation for being a market leader in the fashion industry and setting the trends. When the brand sets the trends, the whole world follows. It’s a unique quality of the brand.

Weaknesses of Gucci 

Liquidity Issues

When we compare the company’s assets with its liabilities, then the ratio is not equal. The liabilities of Gucci are much higher than its asset. That’s why the brand has liquidity issues and is facing difficulty to pay off its rents and other expenses.

The controversy of Objectifying Women

Many critics have claimed that Gucci exploits women’s sexuality and overly uses it in its advertisements. It’s also one of the reasons that the company’s ads attract the attention of people. Critics also say the marketing campaigns of Gucci prove one thing that sex sells.

Training & Development Cost

It’s a good thing that Gucci cares about its employees and their skill development. But the company spends millions on the training development of its employees. It’s much higher than many competitors are spending.

Research & Development

Research and development are one of the key success areas of Gucci. The company has the market leadership position is because of the R & D. The question is not about the brand’s investment in R & D, instead of how the company spends it that matters.

Opportunities available to Gucci

Skillful & Educated Professionals

Technology has increased the literacy rate and education level of people. Nowadays many people are spending a lot of resources on the education of people. It means that Gucci won’t have to spend a lot of resources on the training and development of employees.

New Asian Market

When we talk about the Asian market, then the Chinese and Indian market has great growth potential for fashion. If the company changes its focus in those marketing, Gucci would get a lot of customers that would increase the sales and profitability of the company.

E-commerce

The new customers are tech lovers. They love spending their time on their smartphones. Gucci has already got millions of followers and visitors to its online platforms. The company needs is strong online retail stores for conversion into sales.

Young Demographic

The good news for Gucci is that the young demographic is brand conscious. They’re willing to spend a lot more money on their favorite brands. Now Gucci should launch a marketing campaign on brand awareness.

Fashion Never Ends

The good thing about the fashion industry is that it never ends. It’s because people want to wear unique apparel and they want to look good. It means that there would always be a scope of growth in fashion.

Threats Gucci has to face

Government Policies

As we know that people across the world are getting aware of the environment and they want eco-friendly products. They see Gucci as a luxury brand wasting scarce resources and polluting the environment through mass-scale industrialization. If the government passes environmental regulations, it would be very bad for the company.

New Competitive Brand

Some of the new major brands like Burberry, Lauren, Ralph, Dior, Armani, Prada, and many others are attracting the attention of many customers. If they keep on increasing the market share, it would negatively impact the company’s growth.  

Trademark & Counterfeit

As we know that Gucci is a trendsetter and well-reputed iconic brand. New brands in other countries copy the ideas and style of Gucci and launch it under their trademark. The brand has been facing counterfeit issues for many decades.

Conclusion 

After an in-depth study of the swot analysis of Gucci, we have realized that Gucci is indeed a trendsetter and market leader in the fashion industry. Although the pandemic of covid-19 has impacted its growth, the brand has performed very well compared to other companies. The brand should also keep its finances in order; it would help the company to grow stronger.