Gucci: What Slowdown? It's Full Speed Ahead On Flagship Store - Holiday Central

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It's a make-it or break it time for retailers. The holiday selling season is always a critical time for retailers, but this year this may be even more true. With several retailers already falling victim to a drop in consumer spending, and filing for bankruptcy, retailers will be navigating through some tricky waters. Consumers are strapped for cash due to high energy and food prices, and unemployment is rising. The recent credit crunch has made it more challenging for retailers and consumers to borrow.

This blog will look at the winners and losers in the retail space. Who has the right strategy to capture consumer dollars? It also will look for trends in consumer spending and how that will impact the economy.

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Feb.06

3:49 PM ET

Wednesday, 6 Feb 2008

Gucci: What Slowdown? It's Full Speed Ahead On Flagship Store

Posted By:Margaret Brennan

Topics:Currencies | euro | Consumers | Retail Sales

Sectors:Personal and Household Goods | Retail

CNBC.com
What global slowdown? Billed as the biggest luxury store in the world, the 46,000 square foot Gucci flagship store is a daring statement in the midst of zigzagging stock prices and a shaky economy. Then again, Gucci has never been shy.

The new store opens for business this Friday and it has a very "Back to the 1970s" aesthetic. With the mirrored walls, sleek black marble stairs and gold stair banisters, Gucci's new flagship at 56th and 5th in New York City is 30 percent bigger than its former former and it is the prototype for the luxury company's 230 stores worldwide. We got a sneak peak yesterday and a tour with Gucci's CEO Mark Lee.

Development plans began years in advance of the credit market crisis but Gucci went ahead with the store (leased from Donald Trump) due to the importance of the U.S. market to branding and sales. America accounts for about 21 percent of global sales.

That's a moneymaker for parent company PPR (ticker PP on Paris exchange.) Lee said that three years ago, "we were at 369 million euros in America and last year we topped 640 million euros, so its been a fantastic growth story coming from this market!"

We'll have to see if sales at the new store are resilient to bonus and job cuts in NYC. Of course, European tourists euros could help offset the cutbacks. After all, the euro is about 13 percent higher (versus the dollar) than it was a year ago.

What does Gucci see in the U.S. market that other high end brands do not? With Asian sales now outpacing that of the American market, Gucci's CEO Mark Lee told me that he believes in the "decoupling" theory (that growth around the world is no longer dependent on U.S. strength.) Mainland China and Eastern Europe are fast growing markets for luxury goods.

Anyhow, if you want to see Gucci's new look, check out "High Net Worth" next Friday or Sunday.

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