Kering reports a 10 % drop in revenue for the first quarter, as flagship brand Gucci seems to have focused too much on young people and trend-sensitive products, but lost interest from wealthier Chinese consumers as a result.
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For years, luxury brands made every effort in the world to rejuvenate and appeal to a new generation of consumers. Through games, TikTok and virtual reality, the affluent youth were the new target group par excellence. However, now that things are getting tougher financially, these young audiences are the first to have to cut back and thus drop out.
By necessity, brands have to reconnect with their older, more classic consumer base. For Gucci, this is proving to be no easy task. In the past first quarter, sales of the luxury brand fell 20 % on a like-for-like basis. The entire Kering Group consequently saw comparable sales fall by 10 %.
Especially in the Asia-Pacific region, Kering struggled with a volatile Chinese yuan and an assortment that did not catch on. Gucci recently hired a new creative director, Sabato de Sarno, but his first products have only been in shops since mid-February. His collection did receive a very positive reception and will gradually be made more available in the coming months. Perhaps his rather understated and minimalist style fits the zeitgeist better.
