How Gucci Killed Versace
How one Italian dynasty killed another (and how an American hopes to resuscitate it)
September was a turbulent month in the luxury business. The legendary Jean-Claude Biver announced that he was stepping down from his operational responsibilities at LVMH’s watch unit. Jérôme Lambert was named the new chief executive officer of the Richemont Group, a position that has been vacant since March 2017. Then both Richard Mille and Audemars Piguet issued statements that they were pulling out of SIHH after 2019.
But one of the biggest shakeups was the news that American Michael Kors intended to buy out the fashion house Versace for $2.1 billion dollars. It happened during Paris Fashion Week, so post-show conversations were filled with many different speculations about the implications of this deal. There was one common theory about what triggered the move: Gucci Killed Versace.
There are always highs and lows in the luxury market, but right now, with social media and FOMO culture driving a frenzy of logomania in everything from high-end sneakers to watches, one would assume that two brands with equally identifiable trademarks and bright and bold designs would both be buoyed by this consumption craze. But somehow, it seems that Gucci not only came out on top, it made Versace seem old and tired in comparison.
The funny thing is that this Montague versus Capulet story wasn’t won on the fields of social media. Versace boasts more than 14 million Instagram followers, making it perhaps the most influential social media platform for luxury brands. But its online outreach wasn’t translating into profits: Forbes reported that the brand took in a total of $810 million in 2017, with a profit of about $17 million. Gucci, on the other hand, reported that it’s half-year sales in 2018 were equivalent to its full-year sales in 2015. This year, the brand has already reported
profits before taxes and financial items at $1.72 billion in the first half of 2018.
How Did It Happen?
Here are the facts. Both labels are strongly linked to their founding families. The Gucci dynasty has been around a little longer, founded in Florence by Guccio Gucci in 1921 (Gianni Versace SpA wasn’t born until 1978), but both houses specialized in capturing a uniquely Italian form of glamour and opulence.
Both companies also had to survive actual killings. Guccio’s grandson Maurizio was murdered by a hitman in Milan in 1995. And Gianni Versace was slain by a serial killer in 1997.
The stories of these luxury houses diverged when Gucci became part of the Kering Group in 1999. Over the next two decades, creative directors like Tom Ford worked to reign in the brand to make it a little less loud and to focus on the high-end aspects of the collection.
The real coup de grâce for labels like Versace came when Gucci appointed Alessandro Michele as creative director for all collections and global branding. This means that everything—from suits to watches—is a result of Michele’s vision.
And what a vision it is! Michele was hired by Tom Ford in 2002 and worked in several of the firm's ateliers before taking over the top spot himself. His style is deeply personal, influenced by his own fascination the Gucci archives, antique textiles and clothes, and gender-bending ways of accessorizing. His first collection in 2015 looked like the kids had joyously raided their grandparents' closets and consumers young and old loved it!
Cause Of Death
Gianni Versace had also been a 360-degree designer. While the company thrived in the years after his death, it never fully recovered from the 2008 financial crisis, when luxury buyers went into stealth mode and eschewed Versace’s flashier offerings.
And while there’s a retro reverence for Versace (Migos and Bruno Mars both name-checked the brand in their songs “Versace” and “Versace on the Floor,” respectively), it hasn’t translated into cultural relevance (or profit) in the same way as Gucci has.
Part of the reason is that Versace never really had a signature product range. For most fashion houses, the handbags and perfumes are the real breadwinners, not the clothes. Versace does have an "it" bag like Hermès, no signature scent like Chanel, no must-have watches like Gucci.
This Is Where The Watches Come In
It is said that Kors wants to buy Versace to in order to create the first American, multi-brand luxury conglomerate (last year they purchased Jimmy Choo for $1.2 billion and are reportedly trying to scoop up Coach owner Tapestry). Kors does good business in the fashion watch category, but if they really want to encapsulate the whole high-end lifestyle, they need to pay more attention to Versace’s timepieces.
Currently, the brand's most upscale watches are some automatic chronographs priced in the mid $2,000s. Other than having the Medusa logo placed at the 12 o'clock or the designer's name on the bezel, there is nothing about these timepieces that screams Versace.
The new Versace would do well to follow the lead of Ralph Lauren who used Richemont movements from the likes of Piaget and applied haute horlogerie standards to their watches. Or even do like Gucci and make some truly outré watches that are proud to fly the Versace freak flag high!