Gucci's New 'Made in China' Sneaker Models Break With Italian Tradition

Gucci has begun selling new luxury sneaker models labelled "Made in China," a break with its Italian manufacturing tradition that analysts warn could undermine the brand's high-end image as it races to win back middle-class shoppers.

News source: Google trends/CNA:  https://cnaluxury.channelnewsasia.com/

Gucci has begun selling new luxury sneaker models labelled "Made in China," a significant departure from its long-standing Italian manufacturing tradition that some industry watchers say could undermine the brand's high-end image . The move highlights the challenge facing Gucci designer Demna, who must create innovative products while keeping costs under control to attract so-called aspirational shoppers the bulk of luxury consumers who are more price-sensitive than the super-rich. Demna will present his latest collection at a Milan runway show on Friday. His success is crucial for parent Kering and CEO Luca de Meo, who took over last year to lead a turnaround but has seen an early share price bounce, fall flat this year. Gucci, Kering's flagship brand, has seen sales halve over the past three years, squeezing margins and forcing the group to close dozens of stores.

Demna's First Sneaker for Gucci

In a move reminiscent of his tenure at Balenciaga, Demna has created a futuristic sneaker model called Drip. The shoe is labelled as "Made in China," according to Gucci's website. Reuters also observed Drip models displayed in a Gucci store in Paris carrying the same label. In a statement, Gucci said that Italy would "always be at the heart of Gucci's manufacturing model and identity" but that it had decided to work with the Chinese manufacturer just as it had worked with Swiss and Japanese suppliers for products like watches and eyewear in the past.

"The partner selected offered the technological know-how and capabilities most appropriate for achieving the performance and quality standards we were seeking," the company added.

There were no broader plans to move Gucci production outside Italy, a Gucci spokesperson said.

The Drip sneaker, described on Gucci's website as "Demna's first sneaker for Gucci," went on sale last month as part of the designer's Primavera collection. Retailing at around €800 in Europe and $1,000 in the United States, it is cheaper than many other Gucci shoes, though still firmly in the luxury category. The laceless design is made from nylon, canvas or suede.

A second slip-on sneaker model, made of leather, from the same Primavera collection is also labelled as "Made in China," the Gucci website shows. The brand spokesperson said that model was produced in China for similar technical reasons linked to the shoe's design. All other Gucci shoes carrying a country-of-origin label on the website are made in Italy.

Analysts Warn of Backlash

China is a global hub for sneaker production and its manufacturers have earned strong reputations among mass-market and premium brands. Some analysts say that in Gucci's case, however, breaking with "Made in Italy" could spark a backlash.

"We think this creates a potential tension between provenance and the luxury positioning Gucci is seeking to reclaim," Berenberg analysts said in a note.

Simon Whitehouse, a Milan-based luxury business consultant, was blunter. "Made in China is not a good look,” he said.

Two Kering sources told Reuters the brand has also begun cutting prices on a select number of products, including in China, as part of efforts to regain market share.

Barclays analyst Carole Madjo said the price cuts surprised some investors, who are now paying increased attention to any further moves that could affect Gucci's image with shoppers. "Some people are wondering: should we keep buying Gucci if the price is coming down?" she said. "Having Chinese-made products could fuel the debate around the brand's price value equation."

Here is the question this decision raises. Gucci has broken with decades of Italian manufacturing tradition to cut costs and chase middle-class shoppers, but analysts warn the move could erode the very exclusivity that made the brand desirable. When a luxury house trades its heritage for accessibility, does it gain a new customer base or lose the one that made it valuable in the first place?

FAQ:

Q: What are the new Gucci sneakers made in China?
A: The Drip sneaker, designed by Demna, is labelled "Made in China." A second leather slip-on model from the same Primavera collection also carries the "Made in China" label.

Q: Why is Gucci making sneakers in China?
A: Gucci said the Chinese partner offered the "technological know-how and capabilities most appropriate for achieving the performance and quality standards" it was seeking, similar to how it has worked with Swiss and Japanese suppliers for watches and eyewear.

Q: How much do the Made in China Gucci sneakers cost?
A: The Drip sneaker retails at around €800 in Europe and $1,000 in the United States, cheaper than many other Gucci shoes but still in the luxury category.

Q: What do analysts say about Gucci's Made in China move?
A: Berenberg analysts warned of "potential tension between provenance and the luxury positioning Gucci is seeking to reclaim." Consultant Simon Whitehouse said, "Made in China is not a good look.”

Q: Why is Gucci cutting prices on some products?
A: Two Kering sources said Gucci has begun cutting prices on select products, including in China, to regain market share as sales have halved over the past three years.

Q: Will Gucci move more production out of Italy?
A: A Gucci spokesperson said there were no broader plans to move production outside Italy. All other Gucci shoes carrying a country-of-origin label on the website are made in Italy.