Gucci company research and analysis

¶ … Gucci Company

Gucci

A Brief History of the Company

Gucci was founded in 1921 by Guccio Gucci. Gucci was an immigrant who worked in London and Paris. Because he worked in high-end hotels, he became enamored with the beautiful luggage he would always see. He returned to Florence, Italy, where he was born, and begin to sell fine leather goods from a shop in 1920 (Forden, 2000). The Gucci company was officially founded the next year. The workrooms were organized to handle industrial production, but the handcrafting remained. Soon there were additional shops throughout Florence, as well as Rome and Milan (Bianchino, et al., 1987). The leather goods sold well because they were finely-crafted, but the leather was exchanged for cotton during WWII because of leather shortages (Bianchino, et al., 1987). The bags were marked with a signature Gucci logo. In 1953, offices were established in New York City. Jet-setters and film stars took notice of Gucci and turned the company's offerings into an international symbol for status (Forden, 2000).

In 1947, bamboo was used for handles, and waterproof satin and canvas were used for evening bags (Forden, 2000). The 1960s brought purses with a shoulder strap and decoration, and the lush butterfly pattern that was so popular in the Gucci line was created in 1964. Gucci's loafers were also redesigned in the '60s, so that they stayed updated for the changing times. The company also provided a "Rolls-Royce" luggage set beginning in 1970. Eyewear, jewelry, ties, and watches became part of Gucci's line, as well (Forden, 2000). In the 1980s, there were many problems for the company. The original founder died and his son managed the company poorly. In 1988, the company was sold to Investcorp of Bahrain. Any remaining stock held by the family was disposed of in 1993 (Forden, 2000). In the early 2000s, Gucci became one of the most copied designs, and there were many companies making knockoffs of the Gucci products.

Question 9: Merger or Acquisition Activities Within the Last Years

Gucci went public in 1995. In 1997, Gucci acquired a watch licensee called Severin-Montres (Steele, 2003). It was renamed Gucci Timepieces. Still, the company struggled. In the mid-1990s it was taken over by Tom Ford, and he wanted to take the company in a new direction (Horyn, 2004). Early in 1999, LVMH - a conglomerate providing luxury goods - increased its share of Gucci and had plans for a takeover. Because Gucci did not want that to take place, the company issued more shares so that the LVMH's percentage of shares owned would be diluted. That stopped the takeover, but Gucci was not completely satisfied. The company also reached out to a French company called Pinault-Printemps-Redoute (PPR) with the idea of forming a strategic alliance between the two companies (Steele, 2003). PPR's founder ended up purchasing a stake equal to 40% of the Gucci company. That diluted LVMH's share to 20% and created a legal battle that Gucci and PPR ultimately won (Steele, 2003).

In September of 2001, there was a deal and a settlement reached between Gucci, PPR, and LVMH (Steele, 2003). Credit Lyonnais is also a shareholder of Gucci, with an 11% stake. Tom Ford eventually left the company, and Gucci Group acquired three designers to continue the company's success (Horyn, 2004). Gucci was not looking to acquire other companies, be acquired by them, or merge with them, but the company wanted to ensure that it was protected from future problems and that it was strong enough to handle issues that might come up in the future. In 2006, Gucci named a new creative director, and the CEO was replaced in 2009. Since that time, Gucci has been a stable company without any major turnover in management or creative control. It has also not been acquired, in whole or in part, by other companies, or moved to acquire any other companies in order to grow and develop. The company has entered a period of comfortable stability.

Question 10: Presence of Company's Stores or Store Groups in Local Trading Area

Gucci's main stores are in Florence, Milan, and Rome, but the company has expanded to have stores in many other areas of the world, including the United States (Steele, 2003). Every major city in the U.S. has at least one Gucci store, because those larger cities can support stores where the items are considered to be expensive when compared with other items in the same genre. Even some of the smaller cities have Gucci stores if there is enough demand there for the products, but companies like Gucci that sell high-end, designer products have to be careful as to where they place their stores. If they establish stores in areas of the country where the economy will not support them, they will end up losing money and they will have to close those stores. The economy can affect this, of course, but there is more to the purchasing of high-end items than what the economy is doing. Many of the people who purchase Gucci items do not need to worry about the economy and are quite wealthy.

Finding Gucci stores is easy, because an online locator can show stores that are within a specific radius of a person's home. It is also possible to shop online, which makes the entire world a store for anyone who has internet access. That has helped to make Gucci stronger in recent years after struggling so much in the 1980s and 1990s (Forden, 2000). The company may still see trouble in the future, but it is currently moving forward quite well and providing its customers with everything that they need. People who live in smaller, more rural areas will not be able to easily shop at a Gucci store near their home, but they will be able to drive to a store in a larger city close to them or shop online to see what kinds of offerings Gucci currently has available to them. Overall, the company is still moving forward and running strong with its new CEO at the helm and the new designers who have been brought into the company in recent years to ensure Gucci stays fashion-forward.

Question 11: What is the Image the Store is Trying to Convey?