Why Are Fewer People Wearing Gucci on the Streets?

Gucci is going through a tough time.

According to Kering Group’s financial report, in the third quarter ending September 30, Gucci’s revenue plummeted by 7%, and by 14% at constant exchange rates. In terms of regions, direct retail sales in the Asia-Pacific region, including China, fell by 3%, while Europe and North America saw drops of 5% and 22%, respectively.

The decline in Gucci’s popularity is also evident among consumers. Some social media users have remarked, “There are fewer people carrying Gucci on the streets.” Others have even joked that “Gucci is about to be kicked out of the top luxury circle.”

These comments are not without merit. As one of the top three luxury goods groups in the world, Gucci’s parent company, Kering, is often compared to Hermès and LVMH.

Looking at the third-quarter performance this year, the luxury market as a whole has been sluggish. Hermès reported a 15.6% increase in revenue at constant exchange rates, significantly slower than the 27.5% growth in the second quarter and 32.5% in the same period last year. LVMH, meanwhile, saw a 1% increase in sales, with organic revenue growth of 9%, also falling short of the 17% growth in the second quarter.

However, while Hermès and LVMH are still growing, Kering’s decline is more pronounced, with third-quarter sales dropping by 9% at constant exchange rates and 13% at current rates.

As Kering’s cash cow, Gucci accounts for half of the group’s revenue. So, where did Gucci go wrong?

Gucci has changed, but is it still Gucci?

Although Gucci held four fashion shows this year, none of them garnered the attention on social media that brands like Miu Miu did. It’s difficult to judge the brand’s new direction.

Take, for instance, Gucci’s Spring/Summer 2024 collection. Gucci shifted away from the luxurious, peacock-like styles of recent years to a “quiet luxury” aesthetic, featuring muted tones like gray, beige, and navy.

In terms of design, romantic elements like bows, florals, and ruffles were replaced by oversized, minimalist silhouettes. The individual pieces, such as tailored blazers, V-neck sweaters, and slit skirts, led some to comment that Gucci now feels more like Celine, Bottega Veneta, or Miu Miu—anything but Gucci. “It’s like a romantic young lady turned into a boring corporate executive,” one user noted.

Earlier shows, like the Fall/Winter 2023 and Resort 2024 collections, were even more confusing. On social media, they were described as a “chaotic mess.”

Perhaps the most direct reason for Gucci’s style change is the shift in leadership. In late 2022, Gucci’s creative director Alessandro Michele left, followed by CEO Marco Bizzarri eight months later. Michele and Bizzarri had worked together since 2015, ushering in an era of maximalism for Gucci. Their departures signaled the end of this bold, eclectic style.

Did Gucci rise and fall because of its youth appeal?

Gucci’s bold styles of recent years were so distinct that they became polarizing. Whether it was the Dionysus bag, bow-adorned dresses, or pearl loafers, Gucci was a social media sensation. But for many young consumers on platforms like Taobao, it’s hard to remember that Gucci looked very different before 2015.

Ten years ago, Gucci was seen as outdated and associated with nouveau riche stereotypes. Due to its aging brand image and conservative designs, Gucci’s performance languished from 2012 to 2014, prompting a leadership change in 2014.

Alessandro Michele, who had been at Gucci for 13 years, was appointed as creative director. He quickly overturned previous minimalist designs and introduced a bold new aesthetic inspired by Victorian, Gothic, and Elizabethan eras. His eccentric, maximalist designs shocked the fashion world and immediately resonated with Millennials, who were just starting to wield significant purchasing power.

From 2015 to 2018, Gucci’s revenue soared, driven by iconic products like the Dionysus bag and Marmont. However, by 2019, Gucci’s growth had slowed considerably. Some argue that during its boom, Gucci focused too much on producing trendy items without building a lasting, refined brand identity.

Many of Gucci’s past hits, like the Dionysus bag and pearl loafers, are now considered outdated and are being sold off in secondhand markets. According to experts, Gucci’s decline is partly due to its inability to maintain innovation and distinguish itself from competitors. Many of its designs were quickly copied by other brands, and collaborations with lower-tier brands damaged its luxury image. Moreover, Gucci’s core young customer base lacks loyalty, leading to an exodus when other, more diverse options became available.

Can staying “fresh” save Gucci?

In recent years, Kering has tried to find new growth points for Gucci. In 2019, for example, Gucci launched a lipstick line that became popular on social media but was hit hard by the pandemic, which reduced consumer demand for cosmetics.

Although Gucci continues to strive for innovation, these efforts have been less effective post-pandemic. While the brand saw a 30.8% revenue increase in 2021, growth stalled in 2022 and began declining again this year.

Experts argue that it will be difficult for Gucci to regain its former glory. Trends shift, and consumers often tire of one style and seek something different. After years of trendy, youthful designs, today’s luxury consumers are now gravitating toward understated “old money” aesthetics.

As the global economy slows and consumer behavior becomes more rational, Gucci’s challenges may be even greater than they were in 2015.