With sales boom in mind, Gucci tightens grip on suppliers
FLORENCE, Italy: Kering’s fashion powerhouse Gucci is bringing more manufacturing in-house, as luxury firms step up efforts to meet rampant demand from Chinese shoppers with slicker operations.
Gucci, which said it could one day overtake LVMH’s Louis Vuitton as the world’s top luxury brand by sales, also outlined plans at its strategy update to almost halve its reliance on independent leather goods suppliers.
The step comes as labels including Britain’s Burberry and France’s Vuitton begin to levy greater control over their production or invest in speeding up internal processes to ride a rebound in luxury goods sales.
Gucci, one of the fastest-growing fashion brands in 2017 following a flamboyant design makeover, plans to cut its use of independent suppliers to 40 per cent of its leather goods production over the long term, from 75 per cent now.
The Italian brand aims to halve the turnaround time between a product’s conception and delivery in store as a result, CEO Marco Bizzarri said, as well as secure the production capacity it needs to match its punchy sales ambitions.
“We want to reduce the lead time, and it’s not possible if you’re too scattered with small suppliers,” Bizzarri told reporters, speaking at Gucci’s new ‘ArtLab’ site outside Florence, where it will do prototypes of bag and shoe designs.
“We also need to make sure other brands are not stealing supply. Because of the growth that we’re having we need to protect our artisans,” Bizzarri added.
Italian brands have traditionally worked with an external network of dozens of local artisans on items such as handbags, when French peers Hermes and Vuitton almost exclusively use their own workshops.
Gucci has bought out 10 local suppliers and said it was closing in on another 10, though the shift to what the brand considers internal production will for the most part involve creating joint ventures with external workshops or giving them exclusive contracts.
Even that can help to stabilise production, however, when some manufacturers in Italy are vulnerable.
Some are “tiny, almost familylike workshops which have knowhow but where there are often questions over whether they are sustainable, or regarding succession,” said Olivier Salomon, managing director at consultancy Alix Partners in Paris.
Other brands with a big focus on leather goods like Milan-based Prada are grappling with these issues too as they also consider taking more production in-house, partly to help nurture new generations of skilled workers. — Reuters