The Gucci catwalk needs two new suits

Ford and De Sole’s abrupt departure from the Gucci fashion house raises important issues for other high fashion brand names, says David Benady

Gucci is about to find out whether its brand is bigger than the man who built it. Last week’s surprise joint announcement that creative director Tom Ford and chief executive and president Domenico De Sole are to leave Gucci Group when their contracts expire next April leaves a big question mark over the company’s future (MW last week). According to Gucci, the duo are leaving after a year of wrangling over – and, ultimately, failing to agree – the terms of their new contracts.

Speculation is already rampant that Pinault-Printemps Redoute, the company that controls Gucci, will try to head-hunt Burberry chief executive Rose Marie Bravo to replace De Sole.

But many observers wonder what kind of future Gucci has without Ford, who rescued the dowdy Italian label in the early Nineties and worked with business brain De Sole to build it into the world’s sexiest fashion brand – and the third-largest fashion house after LVMH and Richemont.

Some suggest that Ford is leaving because he has done as much as he can with Gucci and sees the brash brand values he created as being increasingly out of step with the 21st century, but a Gucci spokesman responds: “Ford and De Sole said consistently they were happy to stay provided certain things happened.” He declines to detail the conditions they laid down.

“Ford thrives on challenges and, having taken the brand as far as he can, he wants a new challenge. He sees that luxury is moving in a different direction,” says Mark Rodgers, a researcher at luxury goods consultancy Pearlfisher. “Ford has built Gucci into a brand that is about flashiness, success and feeling sexy. But he is not a brash character – you could not equate the Gucci brand with Tom Ford. He understands the moment and has his finger on the pulse. That is why he is baling out of a grounded ship.”

Fashion observers believe luxury trends are moving away from the showy, urban sexiness and Eighties values exemplified by Gucci and are heading towards a more “inner-directed” approach of personalisation and self-realisation – less Sex & the City, more yoga in the countryside.

Others believe the “Guccification” of the world is getting out of hand and risks destroying the exclusive image essential to the brand’s luxury positioning. “The Gucci brand has been overstretched over the last couple of years, in terms of the people it has been associated with,” says Rita Clifton, chairman of brand consultancy Interbrand.

She believes the company needs to try to control who is photographed wearing Gucci clothes and in which settings, and thinks it is becoming associated too closely with footballers’ wives and the disposable celebrity society. She says Gucci needs to pursue a strategy like Armani’s. Armani has used sub-brands – Giorgio Armani, the Collezione and Emporio Armani – to create a “firewall” between high fashion and less upmarket customers. “Gucci has definitely reached a plateau, in many ways,” she says.

The Gucci spokesman denies this, saying: “Whoever says Gucci has peaked doesn’t understand our business. Since we put the full winter collection into stores, performance has been strong. We are the only major luxury brand with double-digit sales growth in Europe.”

What Ford did at Gucci during the Nineties gave new direction to the whole fashion industry. He and De Sole axed licensed accessories and took control of every aspect of the brand, using the halo effect of the catwalk to promote ready-to-wear goods, which make up 13 per cent of sales; shoes, which account for 12 per cent; and leather goods, at 40 per cent.

They brought on board designers such as Alexander McQueen – tipped as a successor to Ford – in joint ventures. The purchase of Yves Saint Laurent in 2000 involved axeing $60m (£36m) of licensing deals and building up $150m (£90m) of new product sales. Unfortunately, the purchase came as the economy hit a series of crises. But analyst Sagra Maceira of Morgan Stanley says: “These things take a long time to turn around. Ford and De Sole have done a fabulous job.”

In effect, Ford and De Sole have used brand marketing to rescue fashion houses from obscurity. Wolff Olins consultant Cecile Conare says: “They rationalised the business model and codified the brand by making it consistent across the world. Ford reinvented the modern luxury industry. Others, such as Louis Vuitton, copied him. He made Gucci successful in the US, so French names in fashion were left behind. Ford gave Gucci the image of relaxed urban luxury, a very good vision for the US.”

Ford and De Sole presided over a fivefold increase in turnover between 1995 and 2002 – including acquisitions – although the years 2001 and 2002 have been very tough for Gucci and the entire luxury industry. Turnover in 2002 was down on the previous year at E2.54bn (£1.75bn), with operating profit down to E179m (£123m) – from E354m (£243m) in 2000 – and operating margins shrinking to seven per cent, from 23 per cent in 1998, as acquisitions are paid for. But Ford and De Sole are leaving before it becomes clear whether the acquisitions will pay off.

Whoever takes on the Gucci challenge will have a hard act to follow. The brand’s future success, or otherwise, will be a testament to Ford and De Sole’s work. As Futurebrand head of strategy Jasmine Montgomery says: “This is an interesting test for luxury brands – can they outlive the people who create them? Gucci should be able to outlive its creator.” If it can, then perhaps that will show that the luxury labels really have learned the lessons of brand marketing.

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