Ready to buy that $700 Gucci Purse?
My original emotional response when I heard that Gucci was opening its largest store in the US was that they were being insensitive to the crisis so many American's are facing right now as worries of the economy weigh heavily on everyone's minds.
Whether you are a stock trader on wall street wearing Gucci shoes or a Gucci Purse toting soccer mom worried about making your mortgage payment, the economess is making you think a little more about where you are spending your money (and how others are spending theirs). You don't want to be bragging about your $10,000 shopping spree at Gucci when your neighbor just lost six figures in the stock market that day.
It appears that Gucci recognizes the backlash from the public of promoting the frivolous of their luxury goods at a time when America is deeply pensive about the problems it faces from electing a new President, the war, and the economy. As a result they are promoting their big 46,000 megastore launch in conjunction with a celebrity party featuring Madonna, Sting, Alicia Keys and dozens of Celebrities to raise money for Madonna's charity Raising Malawi and UNICEF.
Otherwise I think the attending celebrities, who are more in tune with America's national situation than a French Conglomerate touting an Italian Brand, would be more reluctant to celebrate the superficiality of this luxury super-brand knowing the distaste it might leave in their fan base's mouths because the timing is so off.
With Gucci's sales last year in China being up 130%, you have to wonder why they would choose New York as the destination for the largest store. With bonus cuts and job losses not just in New York, but across the country for what I might call the low to mid-wealthy, you have to wonder if they are really going to be in the mood for the Gucci warehouse of goods. The uber-wealthy are certainly recession proof when it comes to luxury goods but that only makes up a fraction of Gucci's overall sales. Even I have a Gucci purse and I certainly am not uber-wealthy.
Even Mark Lee, Gucci's CEO, when he talks about the launch of the Gucci department store is sure to focus the attention away from the glamour of the launch party onto the charitable reasons of solving some of the world's global problems. Mr. Lee points out that he understands Gucci is in a position to give back charitably and therefore they do the right thing.
But is he doing the right thing? Not just from a business perspective but from a public perception perspective. Just because they are selling a Limited Edition Gucci I love NY bag for $700 where 100% of the profits are going to Central Park Conservancy, doesn't mean they diffuse all the negative sentiment around the timing of their store launch.
Gucci's CEO says that he doesn't feel Gucci is reliant on American sales as they used to be because of emerging markets like China and India. I am not so sure. I think foreign companies underestimate the global market impact if we enter a recession. I believe everyone will suffer, including luxury brands whether they have strong international sales or not.
It is a wise choice for Gucci to focus on China and India where the population isn't as interested in being as socially responsible or "green" as we are in the US since Al Gore popped on the green scene. Well at least I like to think we are becoming more socially conscious. We are - aren't we? I know I am. What about you?
Developing countries are still seeking out ego fulfillment and are building their own identities as a people by associating with already identified world brands. The are probably thinking, if I wear Gucci, Prada, Boss, that I have "arrived" to the coveted place of International success.
With America's focus these days on solving the climate crisis and other social issues, it is becoming cool to shop responsibly. Which might mean instead of buying 4 Gucci purses customers might only buy 3 and make sure one of those purses has all the profits go to charity. That still leads to a 25% drop in sales (3 purses vs. 4). Or they might not buy any at all. And where would that leave the new Gucci warehouse? Probably looking for an even bigger space in Dubai or Delhi.