Gucci chased fast-fashion trends and lost its luxury appeal, now accounting for two-thirds of parent company Kering's profit. Kering is copying LVMH's strategy of timeless designs to fix it, while LVMH's market value sits at $400 billion versus Kering's $39 billion.
Gucci is the most recognizable fashion brand in the world, but they're stealing the style of their biggest rival. Well, here's why. You see, Gucci has been struggling the last few years. They've built a huge brand based on fast fashion and trends, but their lines are going out of style faster than they anticipated, and they're dropping the list of the world's most fashionable and desirable brands. This is a big problem for their parent company Kering, because even though Kering owns a ton of brands, Gucci makes up more than two-thirds of their profit. And good entrepreneurs think about the big risks in their business, and in this case, Kering has a significant amount of concentration around the Gucci brand, and they need to think about what happens if Gucci goes wrong and their bets don't pay off. So Kering is trying to reposition Gucci and get them back to the top of the fashion list. And their strategy? They're copying the leading fashion giant LVMH, who owns Louis Vuitton, Dior, Marc Jacobs, and more. That company is crushing it because their designs rely on timeless fashion and looks that never go out of style, which is why today LVMH is valued at $400 billion while Kering's valued at just $39 billion.
