Gucci’s ‘Made in China’ Sneakers: A Shift in Luxury Manufacturing Tradition
The Impact of Gucci’s Manufacturing Shift on Brand Perception and Market Strategy
Gucci’s New Manufacturing Approach
PARIS, Sept 24 (Reuters) - Gucci has begun selling new luxury sneaker models labelled "Made in China", a break with its Italian manufacturing tradition that some industry watchers say could undermine the brand's high-end image as it races to win back middle-class shoppers.
The move highlights the challenge facing Gucci designer Demna, who must create innovative products while keeping costs under control to attract so-called aspirational shoppers, the bulk of luxury consumers who are more price-sensitive than the super-rich.
Demna will present his latest collection at a Milan runway show on Friday. His success is crucial for parent Kering and CEO Luca de Meo, who took over last year to lead a turnaround but has seen an early share price bounce fall flat this year.
Gucci, Kering's flagship brand, has seen sales halve over the past three years, squeezing margins and forcing the group to close dozens of stores.
The Drip Sneaker and Its Significance
Introduction of the Drip Model
In a move reminiscent of his tenure at Balenciaga, Demna has created a futuristic sneaker model called Drip. The shoe is labelled as "Made in China", according to Gucci's website. Reuters also observed Drip models displayed in a Gucci store in Paris carrying the same label.
Gucci’s Statement on Manufacturing
In a statement, Gucci said that Italy would "always be at the heart of Gucci's manufacturing model and identity" but that it had decided to work with the Chinese manufacturer just as it had worked with Swiss and Japanese suppliers for products like watches and eyewear in the past.
"The partner selected offered the technological know-how and capabilities most appropriate for achieving the performance and quality standards we were seeking," it added.
There were no broader plans to move Gucci production outside Italy, a Gucci spokesperson said.
Product Details and Market Positioning
Demna's First Sneaker for Gucci
DEMNA'S FIRST SNEAKER FOR GUCCI
The Drip sneaker, described on Gucci's website as "Demna's first sneaker for Gucci", went on sale last month as part of the designer's Primavera collection.
Pricing and Design
Retailing at around €800 in Europe and $1,000 in the United States, it is cheaper than many other Gucci shoes, though still firmly in the luxury category. The laceless design is made from nylon, canvas or suede.
The Drip is a break from Gucci's more traditional white leather laced Ace sneakers, and its sock-like shape is reminiscent of Demna's chunky sneaker designs at Balenciaga which were a streetwear hit in the late 2010s.
Expansion of Made in China Label
A second slip-on sneaker model, made of leather, from the same Primavera collection is also labelled as "Made in China", the Gucci website shows. The brand spokesperson said that model was produced in China for similar technical reasons linked to the shoe's design.
All other Gucci shoes carrying a country-of-origin label on the website are made in Italy.
Industry and Consumer Reactions
China’s Role in Sneaker Production
China is a global hub for sneaker production and its manufacturers have earned strong reputations among mass-market and premium brands. Some analysts say that in Gucci's case, however, breaking with "Made in Italy" could spark a backlash.
Analyst and Consultant Perspectives
"We think this creates a potential tension between provenance and the luxury positioning Gucci is seeking to reclaim," Berenberg analysts said in a note.
Simon Whitehouse, a Milan-based luxury business consultant, was more blunt. "Made in China is not a good look," he said.
Market Response and Future Outlook
Price Adjustments and Market Share
Two Kering sources told Reuters the brand has also begun cutting prices on a select number of products, including in China, as part of efforts to regain market share.
Investor and Consumer Sentiment
Barclays analyst Carole Madjo said the price cuts surprised some investors, who are now paying increased attention to any further moves that could affect Gucci's image with shoppers.
"Some people are wondering: should we keep buying Gucci if the price is coming down?" she said. "Having Chinese-made products could fuel the debate around the brand's price value equation."
Reporting Credits
(Reporting by Tassilo Hummel, additional reporting by Helen Reid in London and Elisa Anzolin in Milan; Editing by Ros Russell)
