Gucci Ready to Accelerate Its Expansion in China

Gucci, the main luxury brand of PPR could open more than ten stores next year.

Nanning, capital of the Guangxi region on the border of Vietnam, is the thirty-second Chinese city in which Gucci is settled in a few weeks. After opening nine stores in mainland China last year, and as much this year, Gucci will have 48 stores in late December, seven times more than in 2005.

At the time, François-Henri Pinault, PPR’s CEO, decided to focus on China so that Gucci will catch up with Vuitton. “We still have room for significant expansion for store openings, says François-Henri Pinault. And to establish ourselves in cities where we are still not present. “If Beijing and Shanghai seem saturated with luxury boutiques, the potential is huge elsewhere in China.

New consumption

According to McKinsey, nearly 80% of the Chinese luxury market growth, which will reach 19.5 billion euros in 2015 (against 7.4 billion in 2008), comes from new consumers of luxury goods. And three-quarters of the 2.8 million new wealthy families (annual disposable income above 25 000 euros) will be living outside China’s major cities. Gucci could increase the number of openings next year, and opened more than ten stores, including several in new cities. A figure that PPR declined to comment, but said a plan to finish Hothot (Inner Mongolia) in 2013.

“In some mining towns, just 2,000 wealthy individuals to establish a customer,” provides Mimi Chang, the owner of the luxury division for Asia. “We offer a VIP service to everyone. ”

Gucci is present in cities (Guiyang, Hefei, Changzhou, Jinan, Shijiazhuang), where Louis Vuitton, the world’s leading brand of luxury, has not printed the monogram. The subsidiary of LVMH has instead decided to take a break from the pace of openings in China, preferring to expand some existing shops (38 in 28 cities in mainland China), to present all its collections, with, Also bags and luggage, ready-to-wear, shoes and watches, sometimes more than 1000 square meters. One way to avoid repeating the mistake made by some brands in the 1990s in Japan.”Gucci has not enough history to be strong in all categories of products and open many flagships, says François-Henri Pinault. But perhaps we will open in the future. “Gucci prefer open shops only 400 square meters, with only the supply of leather goods, as well as outlets that are only offering men and children. “We prefer not very large and welcoming shops to huge and cold stores,” said François-Henri Pinault.

The strategy is complicated to implement. Not only because it is difficult to find sites for boutiques in secondary cities. But also because consumer habits are different. If the Chinese fans prefer the luxury of more and more high-end pieces, leather and discreet, the new rich want to see success with products at affordable prices in fabric and adorned with logos.

Customers of Gucci China, who go five times a year in Florence, the birthplace of the brand, to make their selection, must therefore realize the large gap. The range varies from store to store. Gucci to retain a large offer to please all tastes of luxury, design special pieces for the Chinese market and seasonal products. Objective: To deter the Chinese to postpone their purchases while traveling in Europe, where prices are 15-20% lower due to the lack of import tax.