Gucci reduces wholesale to a minimum. Not only: they launch a new strategy of control, based on RFID traceability, to bring down to zero the risk of parallel markets. Let us tell you about the ways and reasons why of this decision
The concept of traceability involves an immediate comparison with that of transparency. Clarifying origin and manufacturing phases of each accessory satisfies the need for giving final consumers (but also all levels of the production chain) the awareness of what they have in their hands.
So, they can basically understand, as well, why it has such cost (be it high or low). Traceability is also the arrival point for another aspect of this path, which is control. In particular, concerning distribution. The relationship between Gucci and wholesale is a good example.
Gucci and wholesale
Rationalisation and exclusivity are the targets (not new, but strongly relaunched). One of the tools to hit them is an abrupt, determined, drastic intervention on wholesale. Gucci began to make it in the middle of the pandemic, in March 2020, cutting up to 70% of multi brand stores in Italy. In other words, cutting down indirect commercial partners from 110 to 38.
An operation which was repeated in the United States in the first part of 2021 and which is going to be expanded on a global scale within the end of this year, even if Gucci has not quantified precisely to what extent they are going to push this kind of purge.
What we know, extrapolating the data from the brand’s financial report of the first quarter of 2021, is that this commercial channel, on the whole, has lost (already) 26,1% of its volume.
Elevating the exclusivity of its offer means, thus, managing it more and more directly. That means: controlling it, to prevent some lots, some returns, some accessories from slipping into the parallel market. Here traceability comes into play.
Tracking (for checking)
The brand’s decision to provide with a particular RFID tag all their articles sent to wholesale dates back to January 2021. Target: tracking suspicious sales outside the official channels. Gucci communicated their decision to all their indirect retailing partner.
They did it sending a note where, according to fashionmagazine.it, they wrote “our company reserves by contract the right to enter accounts and registers of each point of sale to check compliance with the obligations set out in the contract”. According to the brand, the purpose of this strict control is not only legal protection of the brand, but also guaranteeing clear rules “in the interest of all involved players”.
The first time
Let us underline one aspect of this decision. The RFID tag is usually used in fashion to fight counterfeiting and shoplifting. As well as to check stockpiles in warehouses and to simplify logistics. This could be the first time that it is employed in the field of control of the distribution chain.
Image from rfidup.com