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With sales boom in mind, Gucci tightens grip on suppliers

Reuters  |  FLORENCE, Italy 

By Sarah White

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

Gucci, which said this week it could one day overtake LVMH's 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 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, 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 of dozens of local artisans on items such as handbags, when French peers and Vuitton almost exclusively use their own workshops.

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 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, at consultancy in

Other brands with a big focus on leather goods like Milan-based 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," told Reuters, as the label inaugurated a new in eastern 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.

(Additional reporting by Pascale Denis; Editing by Helen Popper)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Sat, June 09 2018. 23:33 IST
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