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By
Reuters API
Published
Jun 11, 2018
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With sales boom in mind, Gucci tightens grip on suppliers

By
Reuters API
Published
Jun 11, 2018

Kering's fashion powerhouse Gucci is bringing more manufacturing in-house, as luxury firms step up efforts to meet rampant demand from Chinese shoppers with slicker operations.

Gucci Cruise 2019 - Spring-Summer2018 - Cruise Collection - Paris - © PixelFormula


Gucci, which said this week it could one day overtake LVMH's Louis Vuitton as the world's top luxury brand by sales, also outlined plans at its strategy update to almost halve its reliance on independent leather goods suppliers.

The step comes as labels including Britain's Burberry and France's Vuitton begin to levy greater control over their production or invest in speeding up internal processes to ride a rebound in luxury goods sales.

Gucci, one of the fastest-growing fashion brands in 2017 following a flamboyant design makeover, plans to cut its use of independent suppliers to 40 percent of its leather goods production over the long term, from 75 percent now.

The Italian brand aims to halve the turnaround time between a product's conception and delivery in store as a result, CEO Marco Bizzarri said, as well as secure the production capacity it needs to match its punchy sales ambitions.

"We want to reduce the lead time, and it's not possible if you're too scattered with small suppliers," Bizzarri told reporters, speaking at Gucci's new "ArtLab" site outside Florence, where it will do prototypes of bag and shoe designs.

"We also need to make sure other brands are not stealing supply. Because of the growth that we're having we need to protect our artisans," Bizzarri added.

Italian brands have traditionally worked with an external network of dozens of local artisans on items such as handbags, when French peers Hermes and Vuitton almost exclusively use their own workshops.

Gucci has bought out 10 local suppliers and said it was closing in on another 10, though the shift to what the brand considers internal production will for the most part involve creating joint ventures with external workshops or giving them exclusive contracts.

FAMILY WORKSHOPS

Even that can help to stabilise production, however, when some manufacturers in Italy are vulnerable.

Some are "tiny, almost family-like workshops which have know-how but where there are often questions over whether they are sustainable, or regarding succession," said Olivier Salomon, managing director at consultancy Alix Partners in Paris.

Other brands with a big focus on leather goods like Milan-based Prada are grappling with these issues too as they also consider taking more production in-house, partly to help nurture new generations of skilled workers.

"One of the problems with outsourcing is one of quality. You need artisans ... and the problem with craftsmanship is one of training, you can't find these kind of people everywhere," Prada Chairman Carlo Mazzi told Reuters, as the label inaugurated a new industrial site in eastern Tuscany on Friday.

While traditional skills are in demand, fashion brands are also seeking to build-up internal expertise at a time of radical innovations in the materials used in fashion.

Gucci's Bizzarri cited leather grown in laboratories as one potential industry game-changer, albeit a far-off one.

Part of Gucci's ArtLab remit is research and development, as the brand seeks to perfect production methods new and old.

At the site on Thursday, workers buffed python skins dyed orange and blue for use in samples; elsewhere, a robot stress-tested sneakers, rhythmically bending them back and forth.

"If you internalise production you are able to experiment much more in terms of innovation," Bizzarri said.

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