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The Observer from London, Greater London, England • 33

The Observeri
London, Greater London, England
Issue Date:
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l)D)n)r Qfl09 SSft lltet uGT) ptfft parr 'I think it was a case of too many cooks in the It also seems that most of the cooks were wielding fairly heavy meat cleavers, hoping to season the soup with each other's blood. The first victim of the tribal wrangling was Paolo, one of Aldo's three sons, who, in 1978, found himself ignominiously ejected from the company after 10 years as its senior designer. At the time it was reported that Paolo was pulling against international expansion urged by Maurizio, though Maurizio now places the blame for the company running out of control on cousins Roberto and Giorgio. Paolo's departure in such bad odour triggered a decade of messy law suits which had more threads and turns than a plate of spaghetti. Paolo was sued by his father, brothers and cousin for attempting to set up his own label and, though thwarted in business, he had the satisfaction of seeing information he leaked to the authorities turn into tax investigations against his own family.

US tax evasion charges against Aldo Gucci were proved in 1986 and the 81 -year-old was given a 12-month sentence in an American jail a year after he had ner, Paul Dimitriuk, who inspired the move to buy into Gucci, is confident that the rationalisation of Guccis inside the company will allow for better management and a clear strategy: 'You cannot blame any one person for what happened. The younger members of the family all had their own ideas on what was best. It was a classic third generation Investcorp is now happy to leave the day-to-day running of the company to Maurizio and his right-hand man Giorgio Mamima. Dimitriuk, who sees Investcorp as the 'catalyst and peacemaker' in the saga of Gucci, is determined that the first task Gucci needs to tackle is that of exclusivity and how to regain it. In the masterplan which Maurizio Gucci and Investcorp have drawn up, more than half the 2,500 points of sale for Gucci goods will go.

The rationalisation process has already started with 1,000 US oulets being cut to 400. The pattern of reduction will be to cut Gucci franchises but expand the number of specialist shops. Maurizio has also cancelled Gucci's $20 million advertising budget for 1990 and is conduct- cIt is important thatyou have that sense of history about a product. That's why Gucci, the trademark, is a good reference point. People who work for Gucci should know about that history, be proud of it and most of all feel a part of it.

they do not want to be chosen, they want to feel that they are choosing. It's no longer stylish to have initials on It also makes the job of fakers that much easier, as both Gucci and Louis Vuitton have found to their cost. In the product area Maurizio believes there are two key factors. 'The emotion of purchase and the pleasure of For most people the emotion of parting with up to 520 for a handbag would be quite enough to mark a memorable occasion, but Maurizio is intent on turning it into something of a religious experience. The importance of customer service is something Maurizio learnt while working in Gucci's Milan shop during his school holidays.

'The packaging is very important as it is the first contact a buyer will have with the product. If the person who makes the packaging does not do a good job then everything else is futile Quality animates Maurizio Gucci. It propels him into an almost evangelical frenzy, which must make it all the harder for him to see tatty goods illegally bearing his grandfather's initials. 'It is that love of detail which my grandfather learnt at the Savoy, it is the click of a Dunhill lighter when you open it. True quality runs right through a product and is not something you can copy.

'It is important that you have that sense of history about a product. That's why Gucci, the trademark, is a good reference point. People who work for Gucci should know about that history, be proud of it and most of all feel a part of it. This is one reason why Maurizio is currently investing around $10 million in restoring Villa Bellosguardo, formerly the Florentine home of opera singer Enrico Caruso. It is scheduled to be finished in 1991 and will house a mini museum of the Gucci product and the Gucci Foundation, set up by Maurizio to support arts projects.

It will also be Gucci's principal training school for its 7,000 employees. The villa, Maurizio hopes, will provide a sort of symbol for the new focus of Gucci. But with Gucci revoking licences, slimming outlets and upping prices, there must be a danger that the company will slip from the $43 million pretax profit level it reached in 1988. 'There will obviously be a period of transition when that might be the case, but by 1991 or 1992 Gucci should be a $1 billion estimates Maurizio. 'Many people think of Gucci as an elephant of a company, very clumsy and slow moving.

But it is more of a panther, very quick to respond when it is touched If Maurizio Gucci is to put the company he fought to control out of the pages of Italian tabloids and on to the cover of Vogue, it will be more a case of proving that Gucci is a leopard which can change its spots. Italy's famous fashion dynasty wants to turn back the clock in search of former glory. Emily Bell reports ASK Maurizio Gucci what his model company is and his response is swift and simple: 'Gucci I960'. The 42-year old chairman of the most famous name in Italian fashion has made it his aim to drag the company back 30 years and restore some of its former glory. His task is not an easy one.

Most company chairmen would be ecstatic if their operations had grown at the same rate as Gucci over the past 15 years: sales of around $400 million, profits of $43 million, 2,500 outlets worldwide and a range of more than 10,000 products. But popularity is the greatest threat to the label, which has lost much of its cachet through over-use, underpricing and a roaring black market in shoddy fake goods. But the facts behind the decline of the House of Gucci are more complex than a marketing strategy that simply got out of hand. The past 12 years have seen the third generation of Guccis playing out the most extraordinary and vicious family feud in a shamelessly public fashion. The fact that Maurizio is now able to count himself as the last Gucci in the business is as much a tribute to his tenacity as it is to his business acumen.

'My grandfather, Guccio Gucci, founded the business in 1922 in Florence. He had worked at the Savoy in London as the Maitre d' from around 1915, where he learnt the importance of quality and service which were the principles he brought to He also introduced the interlocking insignia and the red and green trim which distinguished the brand. The patriarch of the company had three sons, Vasco, Aldo and Maurizio's father Rodolfo. While Vasco and Aldo entered the business from the start, Rodolfo worked in films until after the war when he decided to make his long-term future in Gucci. The label enjoyed its best years between the mid-Fifties and the early Seventies when the elegant and wealthy were proud to have Gucci as their cobbler; Grace Kelly and Jackie Kennedy among them.

The company's problems started once the third generation began jockeying for position behind the chairman since 1955, Aldo Gucci. Maurizio Gucci talks about the ensuing scrum with classic understatement. 'In about 1978 our thinking became a little Calling the situation a little foggy is rather like calling the Pope a little Catholic. Maurizio is still upset by the memory of a protracted struggle which left him jointly holding the company but tore the family apart. Maurizio Gucci: Intent on reviving the mystique.Photograph by Richard Mildenhall illl I Member of IMRO urn relinquished the chairmanship of the company to Maurizio.

But Maurizio himself was in for a rough ride at the hands of his close relations. His father Rodolfo died in 1983 leaving his 40 per cent stake to Maurizio whose interest thus rose to 50 per cent. Maurizio's outright control instantly became a sticking point for uncle Aldo and his sons Roberto and Giorgio, who then alleged that the transfer of Ro-dolfo's shares to Maurizio had been fraudulent because Maurizio was claimed to have forged his father's signature on the document. While this case continued Maurizio was arrested in 1987 on the grounds of illegally exporting capital. The charges meant that Maurizio had his 50 per cent stake sequestered and it was not until 1989 that he cleared his name and took up his place as chairman again.

Maurizio's only contact with his cousins was at Aldo's funeral in January this year. Aldo's death marked the end of the second generation in the Gucci dynasty and his heirs have sold their stakes in the business. In March 1989 the investment company Investcorp stepped into the fray by taking the. remaining 50 per cent of the shares for an estimated $300 million, giving it joint control with Maurizio. Investcorp's managing part CT-Aiiyin Postcode Aji; NER FRJ ing an agency review to centralise its marketing effort.

'We must have one image and one Despite the US accounting for more than a third of Gucci's sales, Maurizio sees it as imperative that Gucci should re-establish its image as Italian, bringing back the mystique and history behind the brand. His revamp of the company will concentrate on two main areas: human resources and product. His first major investment is in the design and marketing specialist Dawn Mello, who is currently shaping Gucci's 1990 collection. Mello joined fresh from her success in turning the New York store Bergdorf Goodman from a frumpy shop into a place in which to be seen. Mello also sees her chief task as putting Gucci back where it was in the Sixties.

'Gucci was something you had to save your pennies for. You didn't give the maid She is currently working on modifications to the timeless Gucci loafer. The silhouette is being adjusted, 'so subtley you won't see it, but you will be able to tell by the way it fits the foot', and colours and textures added. The price may also be adjusted, but perhaps not so subtley. A more radical step Maurizio Gucci will be taking is wiping the Gucci products clean of the famous Gucci logo.

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1 MWI 1 1988 latest figures Total sales $400m Pre-tax profit $43m of which Gucci SPA (Italy) and Gucci USA sales $250m Pre-tax profit $25m Investcorp may take Gucci public INVESTCORP, the Bahrain-based company which acquired the outstanding 50 per cent stake In Qucci last March, is well placed to take the company to market. It would be an obvious move for the company to make as the deal bears the same hallmark as that which Investcorp struck with high society Jeweller Tiffany In 1984. Investcorp took three years to put Tiffany on the stock market. Managing partner Paul Dimitriuk has not ruled out putting Gucci Into the public domain. 'It is certainly one of the options we are considering and it Is something that we have discussed with Maurizio Qucci in the Gucci's profits last year touched $43 million on sales of $400 million.

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