ISLAMABAD: Gucci has begun selling new luxury sneaker models labeled “Made in China,” breaking with the Italian manufacturing tradition long central to the brand’s identity as it seeks to win back price-conscious luxury shoppers, according to Bloomberg.
The move comes as Gucci’s new designer, Demna, works to develop new products while controlling costs. The designer is set to present his latest collection on Friday in Milan, with Gucci's performance closely watched by parent company Kering as it seeks to revive the struggling brand.
Gucci sales have fallen by about half over the past three years, putting pressure on margins and prompting Kering to close dozens of stores.
Among Demna’s first products for Gucci is the Drip sneaker, a futuristic, laceless model that went on sale last month as part of the brand’s Primavera collection. The sneaker is labeled “Made in China” on Gucci’s website, and the same label was observed on Drip models displayed at a Gucci store in Paris.
The shoe sells for about 800 euros ($940) in Europe and $1,000 in the United States. It is less expensive than many other Gucci shoes but remains firmly positioned in the luxury market.
The Drip is made from nylon, canvas, or suede and has a sock-like shape that recalls some of Demna’s chunky sneaker designs from his time at Balenciaga. It differs from Gucci’s more traditional Ace sneaker, a white leather lace-up model manufactured in Italy.
A second leather slip-on sneaker from the same collection is also labeled “Made in China,” according to Gucci’s website.
China has 'technical expertise'
Gucci said the two models were produced in China because the manufacturer had technical expertise suited to the designs.
“Italy will always be at the heart of Gucci’s manufacturing model and identity,” the company said in a statement.
Gucci said it chose a Chinese manufacturer because it offered the “technological know-how and capabilities” needed to meet the brand’s performance and quality standards. A Gucci spokesperson said there were no broader plans to move production outside Italy.
All other Gucci shoes carrying a country-of-origin label on the company’s website are listed as made in Italy.
Label could face image issues
China is a major global center for sneaker production, and manufacturers there supply mass-market and premium brands. But analysts say the decision could raise questions about Gucci’s luxury positioning, particularly as the brand works to rebuild its appeal.
Luxury business consultant Simon Whitehouse said the “Made in China” label could prove difficult for Gucci’s image.
Reduced pricing
Gucci is also cutting prices on some products, including in China. The moves are part of efforts to regain market share as the luxury market faces weaker demand from aspirational shoppers, who make up a large share of luxury consumers and tend to be more price-sensitive.
Barclays analyst Carole Madjo said some investors were surprised by the price reductions and are watching for further moves that could affect Gucci’s brand image.
“Some people are wondering: should we keep buying Gucci if the price is coming down?” Madjo said. “Having Chinese-made products could fuel the debate around the brand’s price-value equation.”
The changes underscore the challenge facing Demna and Kering CEO Luca de Meo as they attempt to revive Gucci: creating products that appeal to a broader group of shoppers without weakening the exclusivity and heritage associated with the brand.