Forbes has a good piece today about how PPR, of which Gucci Group is a subsidiary, balances the high-visibility of its luxury brands, with more discrete and strategic lower-end brands. These ‘redcat’ brands operate in the less-than-glamorous world of camouflage outfits, budget furniture and elevators. Perhaps most ironically - given the current debate on anorexia in fashion - PPR also operates a discrete plus-size fashion brand for large women…
François-Henri Pinault, chief executive of PPR, believes that the traditional PPR / LVMH strategy of acquiring sleeping luxury brands can operate for mass brands too…
The 20% operating margin of the luxury business is maybe four times that of mass retail. But there’s only so much growth that a high-end producer can extract from, say, India or China. Hence Pinault’s conscious effort to take PPR even further down-market by acquiring dowdy brand names and expanding a little-known retail chain he bought on the cheap.
Is there anything wrong with Gucci being inside the same holding company as a firm that sells camouflage for wildlife hunters? “Luxury or mass brands–it doesn’t matter,” Pinault says. “It is the same skill.” — (Via Forbes)
2008 is turning into a strong year for PPR, the owner of the Gucci Group, based on strong performance in its luxury division.
