APPE NDIC ES H E EJ U NG K I M
DANA C AR I EL LO
C AT H ER I N E BAT R ES
T I A N YI WA N G
P ROFES S O R AL ES SANDRO C A N N ATA FAS M 4 3 0 PO P U P EX P ER I EN C E D U BA I
APPENDIX A G U C C I I N D EPT H H I STORY Influential, innovative and progressive, Gucci is reinventing a wholly modern approach to fashion. Under the new vision of creative director Alessandro Michele, the House has redefined luxury for the 21st century, further reinforcing its position as one of the world’s most desirable fashion houses. Eclectic, contemporary, romantic— Gucci products represent the pinnacle of Italian craftsmanship and are unsurpassed for their quality and attention to detail. 1921: Guccio Gucci opens his first stores in Florence on Via Vigna Nuova and then Via del Parione 1935 to 1936: As a result of a League of Nations embargo against Italy, Gucci finds alternatives to imported leather and other materials. It develops a s pecially woven canapa, or hemp, from Naples, printed with the first signature print — a series of small, interconnecting diamonds in dark brown on a tan background. Gucci’s first successful suitcases are made from it. 1947 to 1948: Production of leather goods resumes after World War II. Aldo Gucci introduces the pigskin, which becomes a signature house material. The first bamboo-handled bag, inspired by the shape of a saddle, is thought to be produced in this period 1951: Gucci opens the first Milan store, on Via Montenapoleone. Around this time, the green-red-green web becomes a hallmark of the company. 1953: Gucci becomes a pioneer of Italian design in the U.S. when Aldo opens the first American store in the Savoy Plaza Hotel on East 58th Street in New York. Guccio Gucci dies at age 72, 15 days after the New York store opens. The Gucci loafer with metal horsebit is created. 1955: The house’s crest becomes a registered trademark
1960: The New York store moves to a Fifth Avenue address next to the St. Regis Hotel at 55th Street. 1961: Stores open in London and Palm Beach. The bag that Jacqueline Kennedy is seen with is renamed the Jackie. Around this time, the GG logo is applied to canvas and used for bags, small leather goods, luggage and the first pieces of clothing. 1963: The first Paris store opens. 1966: The Flora scar f print is designed for Princess Grace of Monaco. 1968: Gucci opens in Beverly Hills 1972: A store opens in Tokyo. Around this time, the brand is hitting its fashion stride. A store dedicated to clothing opens at 699 Fifth Avenue in New York, while 689 Fifth Avenue focuses on shoes, bags, luggage and accessories. 1974: A flagship opens in Hong Kong. 1975: The first fragrance launches 1981: Ready-to-wear parades for the first time at the Florentine fashion shows at the Sala Bianca, playing heavily on the Flora print. 1982: Gucci gets the legal SpA designation; leadership eventually passes to Rodolfo Gucci. 1985: The iconic loafer is displayed at the Metropolitan Museum of Art in New York and becomes part of the permanent collection 1989: The Anglo-Arabian holding company Investcorp purchases 50 percent of Gucci shares. The fund lures Dawn Mello, then president of Bergdor f Goodman, to revitalize the brand. She brings Richard Lambertson, head of Bergdor f ’s accessories department, to be design director. 1990: American designer Tom Ford is hired to oversee women’s rtw. 1993: Maurizio Gucci transfers his shares to Investcorp, ending the family ’s involvement in the firm 1994: Tom Ford is appointed creative
director. His first collection, for fall 1995, focuses on jet-set glamour and is a critical and commercial success, putting the label back at the forefront of fashion. 1995: Domenico De Sole, previously chief executive officer of Gucci America Inc., is appointed Gucci Group’s ceo. He immediately begins reining in licenses, franchises and secondary lines to reverse a decade that saw overexposure of the brand and cheapening of its image Maurizio Gucci is gunned down by a hit man commissioned by his ex-wife, Patrizia Reggiani 1996 to 1997: Ford’s collection of white cutout j ersey dresses fastened with abstract horse-bit belts sets the sleek, sexy, modern style of the house’s look in the Nineties and establishes it as a brand dedicated to evening glamour — and con sequently attracts hordes of Hollywood actors and actress. 1999 to 2000: The Jackie bag relaunches in many colors and variations, t riggering a huge and sustained response. It opens the era of the Gucci “It” bag. The company weathers a hostile takeover bid by LVMH Moët Hennessy Louis Vuitton chief executive Bernard Arnault. It is ultimately saved when white knight François Pinault of strategic investment firm PPR (known as Pinault Printemps Redoute at the time) starts amassing a portfolio of luxury brands 2002: Frida Giannini, previously handbag designer for Fendi, joins the label’s accessories department, contributing bold reinventions of house sign atures as part of Ford’s design team. 2004: Ford and De Sole leave the company when they and parent PPR fail to come to terms over a new contract. John Ray takes over men’s design; Alessandra Facchinetti takes women’s, and Giannini becomes creative director of accessories
Robert Polet, the head of Unilever ’s $7.8 billion frozen-food division, trades ice cream and fish sticks for handbags and stilettos as the new ceo of Gucci Group. Mark Lee, ceo of PPR-owned Yves Saint Laurent, is named Gucci brand chief. 2005: Giannini is appointed creative director of women’s rtw following her successful relaunch of the Flora print as a bag collection. A year later, she adds the role of creative director for men’s wea r 2006: The Ginza flagship opens in Tokyo, and the Landmark Hong Kong flagship opens. 2007: The first TV ad campaign runs. It is for the Gucci by Gucci fragrance and is directed by David Lynch. 2008: Gucci opens the New York global flagship in Trump Tower on Fifth Avenue. The company celebrates with an event co-hosted by Giannini and Madonna — “A Night to Benefit Raising Malawi and UNICEF.” The renovated Rome flagship is reopened. During the celebration for the 70th anniversary of its Roman store, the 2009 cruise collection show is livestreamed on the Web site. Gucci by Gucci Pour Homme, the first men’s scent created by Giannini, makes its debut with actor James Franco starring in the ad campaign. The house also renews its eyewear licensing deal with Safilo until 2018. 2011: The company prepares to celebrate its 90th anniversary Currently Gucci is in the rebranding process under creative director Alessandro Michele and CEO Marco Bizzari.
APPENDIX B KE Y S U C C ESS FACTORS (K S F) & C OMPANY PROFIL E ICONIC, TRUSTED BRAND INVESTMENT IN INFRASTRUCTURE LOCATION OF HIGHEST FOOT TRAFFIC QUALIT Y SERV ICE IN STORE EXPERIENCE QUALIT Y PRODUCTS SENSE OF STATUS COMPANY PROFILE Gucci is a worl d leading luxury fashion house owned by Kering Group, a French luxury goods holding company that also owns Alexander Mcqueen, Stella McCartney, Balenciaga, Bottega Veneta, Saint Laurent Paris, etc. among luxury brands, and Puma, Volcom, and Cobra among sportswear brands. Gucci designs, manufactures, and distributes most of their products, and their headquarters is in Florence, Italy, where the brand first began. Starting with leather goods that entail handbags, accessories, and luggage, the brand expanded their product category to shoes, ready-to-wear, silk scarves, timepieces, jewelry, cosmetic s, fragrances, and eyewear. 33. 6% of total revenues from Kering came from Gucci in 2015, earining $4,325.7 million. For Gucci, prices for products range from $28 to $41,500, their lowest price being their beauty products, and their highest price being their luxury leather goods. Listed on the right are the prices for each product category offered in Gucci stores all across the world.
WOMEN Handbags $780-$41,500 RTW $450-$37,000 Shoes $270-$2,480 Accessories $70-$9,980 MEN Bags $590-$41,500 RTW $540-$15,980 Shoes $175-$3,100 Accessories $115-$1,500 CHILDREN Baby $45-$1,490 Girls $65-$2,350 Boys $65-$2,350 JEWELRY/ TIMEPIECES Fine $390-$15,950 Fashion $160-$1,750 Silver $125-$1,950 Watches $495-$8,600 FRAGRANCE Mens Fragrance $68-$134 Womens Fragrance $72-$200 MAKEUP Eyes $28-$65 Lips $32-$42 Face $44-$79 Nails $29
APPENDIX C CO R POR AT E ST RUCT URE
S H AREH OL DE RS OF KE RING GROU P
K ERI NG BOA RD OF DIRE CTORS
CEO : MARC O BIZZA RI (EXEC U TIVE C OMMITTE E)
BOARD’S C OMMITTE E
G EN E RA L MANAGE ME NT (M ANAGING DIRE CTOR )
AS S I STANT MANAGING DIRE CTOR
CR E ATIVE DIRE CTOR (ALESSA NDRO MIC HE L E)
APPENDIX D P EST L E A N ALYS I S F OR OT H ER POTE NTIA L C OU NTRIES Based on research of tourist destination and luxury travel, Russia, Brazil, and the United Arab Emirates (UAE) were three countries that had the highest potential of the growing luxury travel market and selling of l uxury goods. After much research regarding the three countries, UAE had the highest potential of growing in the luxury market and setting new standards in luxury for the coming decade. Below is the PESTLE information regarding the analysis of the countries Brazil and Russia.
RU S S I A
PO LITICAL Russia ranked in the 18.96 percentile on voice and accountability in 2013. Voice and accountability measures the extent to which a country ’s citizens are able to participate in selecting their government, as well as freedom of expression, freedom of association, and the availability of free media. Russia ranked very low due to its closed and controlled attitude toward the press. In comparison, China ranked in the 5.21 percentile in 2013. Stronger trade and investment relations with China may soften the impact of western sanctions. Current Strengths International Integration, Open budget Current Challenges Strained relations with the west Future Prospects Strong Russia-China relations Future Risks Terrorism, Pressure from bureaucracy ECONOMIC The depreciation of the rouble due to capital outflows; supplemented by counter sanctions imposed by Russia on western food imports (August 2014) has raised inflation, especially food inflation. The rouble lost its value by a quarter in the three months to November 2014, which raised import
prices. In October 2014, Standard & Poor ’s affirmed the BBB- rating while retaining the negative outlook on the economy. The present rating is one notch above the junk status and on par with Brazil and South Africa. S&P cited strong foreign exchange reserves (around $400 billion as of November 2014) for retaining the rating, which it has given it in April 2014. Many critics thought that S&P would cut the rating to junk status in the latest revision. Current Strengths Oil and gas reserves Current Challenges Rising inflation, Containing capital outflows Future Prospects WTO Accession Future Risks Declining oil and gas revenues in the long term SOCIAL The government has been reducing education and healthcare spending due to redistribution of budget expenses towards defense and security. The Global Gender Gap Report by the World Economic Forum quantifies the magnitude of disparities on the basis of gender and tracks the progress over time. According to the 2014 report, Russia has been ranked 75th out of 142 countries. Although, the country is ahead of China (87th) and India (114th ), it is behind countries like Nicaragua (6th), Germany (12th), and the US (20th). Current Strengths Declining poverty rate, Controls on alcohol abuse Current Challenges Gender gap, Plight of the migrants Future Prospects Measures to control tobacco consumption Future Risks Democratic challenges, Crackdown on civil society, War possibility
TECHNOLOGICAL Russia, known for its excellence in space technolog y, has one of the most successful national space programs. For many years, Russia has per formed badly in terms of registering patents for the technolog y it develops. In 2013, just 417 patents were registered; this is particularly low when compared to the US, which registered 1,33,593 patents during the same year. Current Strengths Strategi c partnership in nanotechnolog y Current Challenges Poor per formance on patents, Weak science and technolog y systems Future Prospects Partnership with China in the development of military technolog y Future Risks Piracy and poor infrastructure LEGAL Among the BRICS countries, Russia has one of the least regulated product market. Product market indicators are a set of metrics that measure the extent to which policies framed by the government promote or inhibit competition in areas where competition is possible. In October 2014, Russia passed a bill, which would seek to limit foreign ownership of Russian media to 20%. The new law will come into force from January 1, 2016 and will impact several print and online media outlets, apart from television and radio stations. The passage of the law will seriously undermine right to freedom of speech. Current Strengths Improvement in business ranking Current Challenges Weak judicial system Future Prospects Improving product market segmentation Future Risks Personal liberties at threat, Media freedom threatened
ENVIRONMENT Prime Minister Medvedev signe d a law in May 2013 that mandated the co nversion of almost 50% of all city buses to run on natural gas by 2020. The main objective of the government is to use natural gas as a motor fuel and initiate measures to promote its use. Russia’s carbon dioxide emissions growth contracted 0.20% in 2012 after registering a growth 8.88% in 2011,according to MarketLine. Current Strengths New environmental policy, International co-operation Current Challenges Illegal logging, Spillages causing environmental hazards Future Prospects Promotion of clean energ y Future Risks High energ y intensity
BRA ZIL
POLITICAL The country is challenged by widespread corruption scandal involving both the president and her key ministers. Moreover, the legislature has reached a political impasse over the passing of important bills. In May 2016, President Dilma Rousseff was suspended from office. She is accused of manipulating the government budget. Current Strengths Strong federal republic, Efforts toward economic integration, Increasing ties with the US and Mexico Current Challenges Freedom of speech under threat, Weak rule of law, Impeachment of the president Future Prospects Efforts to clean up the electoral process Adoption of Marco Civil law Future Risks Prevalence of violent crime, Political uncertainty
P EST L E A N ALYS I S F OR OT H ER POTE NTIA L C OU NTRIES ECONOMIC According to the IMF, the current account stood at a deficit of 4.31% of GDP in 2014, and expected to be narrow down to 3.32% in 2015. The deficit was driven by a fall in commodity prices th at reduced the export earnings. Brazil has relatively little external debt. Total external debt stood at 23.73% of GDP in 2014, up marginally from 20.22% in 2013, according to the MarketLine. This was low compared to most emerging economies and hence is expected to bolster Brazil’s net liability position in the international market. Current Strengths Strong macroe conomic framework, Strong FDI inflow, Strong agricultural base Current Challenges Stubborn inflation, Low productivity, Infrastructure woes, High cost of Doin g Business Future Prospects Investments in infrastructure projects, Energ y self-sufficiency, Support to agriculture Future Risks Dependence on commodity exports Manufacturing downturn continues Low business confidence SOCIAL Approximately 22.8% of Brazil’s population is below 14 years of age and around 8% is above 65 years of age in 2016, according to MarketLine. Brazil is a relatively young country, with approximately 69.2% of the population between 15-64 years. According to the OECD, the proportion of people with secondary education and tertiary education has witnessed a sharp rise during 2003–12, which should benefit a large chunk of the population over the longer term as higher education is positively correlated with higher earning potential and exiting poverty.
Current Strengths High percentage of working age population, Improving urban living, Improving Healthcare, Measures to eradicate hunger and poverty Current Challenges Regional disparity and urban poverty, Informal employment, Child labor, High crime rate and violence against women Future Prospects Measures to reduce the spread of AIDS, Progress in education Future Risks Aging Population TECHNOLOGICAL According to MarketLine, mobile penetration stood at 139.9 per 100 people in 2015, with total subscribers at 281.15 million. Mobile subscribers grew by an average of 17.47% during 2001–15. According to MarketLine, internet use rs as of 2014 stood at 114.4 million, with a penetration rate of 57.3%. Internet subscribers grew at an average rate of 13.21% during 2006–14. In March 2013, the government launched the BRL32.9 billion ($14.84 billion) Inova Empresa Plan to boost productivity in certain key sectors. The plan intends to boost competitiveness of firms in sectors such as information and communication technolog y, agriculture and agribusiness, energ y, oil and gas, defense, environmental sustainability, and health. As per the reports from 2013 to 2014, $14.8 billion were made available for the plan. Current Strengths Government encouragement to improve R&D, Large aerospace and defense industry Current Challenges Low R&D output, Lack of national and international collaboration on innovation Future Prospects Inova Empresa Plan
Future Risks Low availability of human resources in science and technolog y Legal Brazil has not per formed well in product market regulation. Product market indicators are a set of metrics that measure the extent to which policies framed by the government promote or inhibit competition in areas where competition is possible. Overall, Brazil is regulated to a greater extent than Colombia, Peru, South Africa and Russia. In January 2014, a new anti-corruption law came into effect in Brazil. It reinforced the country ’s pledge to check corruption under the OECD’s anti-bribery convention. The law is applied to any business operating in Brazil, including foreign companies. The new law imposes fines up to 20% of their turnover, or BRL60 million ($27.07 million) if it is hard to find the exact turnover. Current Strengths Comprehensive Legal Analysis Current Challenges Complicated tax system, Concerns over intellectual property protection, Trade and industrial policies not focused on competition and productivity growth Rising Corruption in the Country, Judicial delays Future Prospects Anti-Corruption Law Future Risks Inefficient regulatory environment, Product market regulation Environmental Over 75% of Brazil’s electricity comes from hydropower, making the nation one of the world’s largest producers of hydroelectricity. This has helped Brazil to reduce dependence on conventional power plants that pollute the environment. According to MarketLine, CO2 emissions rose to 537.6 million metric tons in 2013,
up from 500.2 million metric tons in 2012. Rising CO2 emission is likely to hamper the country ’s efforts to reduce its carbon footprint. Current Strengths Rich Biodiversity, Hydropower Current Challenges Changes to the forest code, CO 2 emissions and Air Pollution, Po or Waste Management Future Prospects Reduced deforestation, Propagation of ecotourism, Reforestation and renewable energ y plans with th e US Future Risks Projects fraught with environmental risk, Threatened and Endangered Species
APPENDIX E G U C C I C U STOM I Z AT I ON S ERV I C E As mentioned in the main body of the project, GucciArcade will have a room dedicated for customers to experience a customization feature for a limited edition bag only at this event. Customers will interact with the screens in front of them to decorate a Gucci Lilith Bag and have the option to purchase, or share their design on soc ial media. To experience the customization service please follow this link: goo.gl/UPwbIL
APPENDIX F IN S P I R AT I ONS AND M OOD BOAR DS The following i mages were used to ins pire and conjure the theme of the GucciArcade project.
© FAL L 2 01 6 C ONT E NT BY DA N A , T I A N YI , C AT H ER I N E, a n d H EEJU N G