Despite Gucci's strong presence in the fashion industry, it needs to avoid serious financial implications, as examined by our Gucci SWOT analysis.
While everyone may have heard the phrase “That’s so Gucci”, used to signify the good quality of something, many may even be able to connect it to the famous fashion brand, but very few are aware of the history of the brand, which will come in handy in the following Gucci SWOT analysis.
The brand’s founder, Guccio Gucci, actually came from humble beginnings as the son of an Italian man who made products from leather. Initially, Guccio worked in the Savoy Hotel (London) this, in fact, was where his fascination with fancy bags began which eventually led to the formation of the renowned brand.
Eventually, Guccio made his way back to Florence, where he worked for a brand that made and sold luggage. As years passed, Guccio decided to turn his passion into reality and so he opened his very own shop in Florence in 1921.
Gucci’s range of products expanded over the years to include not only leather travel accessories but also equestrian equipment, which is still popular to this day.
The mid-1930swere not kind to Italy especially for businesses that relied on the availability of leather to manufacture their products. However, like any visionary, Guccio did not come at a standstill.
The brand explored other materials that could be used which led to the development of Gucci’s signature print. With the entry of Guccio’s sons into the business, the brand branched out into Rome and Milan.
The troubles did not end, however, as trade restrictions placed on Italy during the second world war, led to a scarcity of materials, which resulted in the invention of the Bamboo bag.
Gucci’s current efforts to connect with younger consumers under the leadership of Creative Director, Alessandro Michele, and CEO, Marco Bizzarri, show that the brand was made to persevere and evolve without a compromise on quality.
Let's start now with the first part of our Gucci SWOT analysis.
What are Gucci’s major strengths?
In terms of its brand awareness, Gucci certainly is at an advantage, pertaining to the fact that at some base level people have either heard of the brand’s name or a phrase being used in it. It doesn’t hurt that Gucci has close to five hundred stores around the world.
In addition to that Gucci is known for its superb quality, which warrants the high prices, and appreciated for the fact that despite all odds, the brand has never compromised on the quality of its products.
Gucci strives to be a trendsetter rather than a trend follower who is pushed around by market changes and so it keeps diversifying what it sells and how it sells. In addition to that Gucci has an extensive amount of products to offer including bags, clothes, etc.
Furthermore, Gucci has full control over the outlets from which it sells its products which serves as yet another advantage by giving the brand control over the distribution of its products.
The brand also has a highly skilled workforce, as a result of extensive investment in training programs.
Keeping up with the tradition of constant evolution, with the emergence of new technologies, Gucci has made use of digital capabilities to connect with a larger audience by communicating with them online.
In fact, Gucci’s social media presence spans over several platforms including Instagram, Facebook, etc. and the brand garners the following of millions of people around the globe. Its aesthetically pleasing website attracts quite a few people which contributes to sales.
Not one to be left behind, Gucci does not skip out on its corporate social responsibility, and for that very purpose, it has partnered with UNICEF.
All of these factors have contributed to the company’s exceptional brand equity which sums up to a value of around 17.63 billion dollars, as of 2020.
What are Gucci’s Major Weaknesses?
While Gucci is by no means slacking off in terms of its research and development efforts, it is still lagging in terms of how much it spends in comparison to some key competitors who are winning in this particular area.
While training and development are important for any company, Gucci’s extensive investments in the area incur costs that are far greater than those of competitors.
In addition to that, Gucci has been under fire on various occasions for its controversial and explicit advertisements that objectify women and hurt the sentiments of the brand’s audience.
In terms of its financial position, Gucci has liquidity issues due to the fact that its current liabilities outnumber current assets and in addition to that, the company has to pay significant amounts of money as rent.
What are Gucci’s Major Opportunities?
A great opportunity for Gucci exists in the form of younger consumers who are more brand conscious and so are more prepared to spend large sums of money to purchase branded goods and services.
In addition to that, these consumers are more tech-savvy which means they are capable of learning about products, comparing them, and making online purchases. A stronger online presence can allow for Gucci to connect to these customers and increase sales.
By tapping newer markets that present a demand for luxury goods, such as those of India and China, Gucci can cater to a far greater customer base hence increasing the chances of profitability.
As countries are becoming more developed, they are bringing educational reforms that result in a more educated and skilled workforce, this might help Gucci significantly decrease their training and development costs.
What are Gucci’s Major Threats?
Perhaps one of the greatest challenges that Gucci has to face and in the form of counterfeit products. With advancements in technology, it has become infinitely easier to imitate products and sell them at a cheaper rate which harms the origins brand.
Furthermore, as time passes, newer brands are emerging that are at par with Gucci if not better, (especially in terms of technological developments) such as Prada, Armani, Christian Dior, etc. which makes the market more competitive than ever.
While the brand’s global presence is a major advantage, it can just as soon become a problem if the government makes changes to its laws and policies that are not in favor of the brand. A change in environmental regulations can result in a need to stop the production of certain existing products.
Gucci SWOT Analysis: Conclusion
Gucci’s story is one that inspires people to take initiative and strive to turn their passions into reality. Its continuous success and perseverance despite all odds further cement the consumer-beliefs about the excellence of the brand, especially in terms of its quality.
However, Gucci needs to come to terms with the fact that its liquidity issues are very real and its global operations may have some serious implications with respect to the brand’s future.
Gucci needs to stay true to its tradition of being a trendsetter and to that end, it must make use of digital technologies to connect with young consumers as well as find new avenues to stay at the top of their game.
