Gucci have (remarkably) reduced their wholesale while heavily cutting, at the same time, Italian clients. In other words, multi brand stores in Italy, “licensed” by Gucci, are about to decrease, from 110 to 38. In so doing, the double-G fashion brand will augment its direct control over the manufacturing track once products go out of warehouses. Moreover, most of all, it will optimize the management of selling prices, therefore enjoying the opportunity to limit discounts and promotional sales.
From 110 to 38
Gucci’s choice evidences they do not fear the pandemic immediate effects on revenues: as formerly announced, the company is reorganizing wholesale accordingly. They have cut the number of clients drastically. As reported by fashionmagazine, the number of Gucci’s Italian wholesale customers is going to decrease considerably next season, from 110 down to 38. Apparently, they “spared” the ones that can provide innovation inside the selling store or considering their position in strategic places.
Gucci, whose direct retail channel drives 85% of overall sales, are implementing such strategy for several reasons. On the one hand, since they are going to reduce the number of clients, their turnover might possibly go down consequently; yet, on the other hand, the brand will be able to control prices more closely, therefore limiting discounts and promotional sales.
That will subsequently bring about some positive effects in terms of brand positioning and higher product exclusivity (which could possibly lead to the increase in prices in the future). Furthermore, they will also benefit from product higher traceability in order to pinpoint final buyers and the use of products themselves; besides that, they will also manage to control, much more strictly, the parallel market of luxury accessories.