Brief History Guccio Gucci opened a small shop selling leather goods on the via del Parione in Florence in 1923. He sold luggage imported from Germany and offered customers with repair services. As the luggage business prospered, he opened his own workshop to produce his own design. The business in the 1920’s created huge profit and success however in the 1930’s Gucci began to face some challenges when the sanctions imposed on Mussolini. He faced shortage of imported leather yet this challenge gave him innovated idea of using new materials such as canvas and produced small leather goods, wallets and belts that are still big part of the Gucci company.
Gucci became an internationally known luxury brand after World War II and over the next two decades the company flourished. In the1970s Gucci began to fall down due to internal conflict. Most of the conflict was between Aldo and Rodolfo Gucci, the founder’s surviving sons over strategy and control of the company. Rodolfo Gucci died in 1983 and left his 50% stake in the company to his son Maurizio. One year later, Maurizio seized control over Gucci and determined to transform Gucci into a modern retail organization. Maurizio failed. Years later, Tom Ford and Domenico De Sole are given the credit for turning Gucci around in 1994 and turned the company into a powerhouse luxury brand. This case study will discuss why Maurizio failed to transform Gucci and how Tom Ford and Domenico De Sole rebuilt Gucci again.
Luxury Industry Luxury market is around $60 billion global industry. The competition is high and its entry barrier is low. In this industry, consumer preferences are constantly shifting, causing the concept of luxury itself to change over time (Hanna). Therefore, brands are constantly refreshing their products lines. Also, this industry is a risky business because brands need to have the