Inside Gucci’s Gen Z bet on avatars – the latest chapter in luxury’s digital epiphany

Despite a slowdown in sales in the second quarter of 2019, the brand is still hailed as the revenue and profit prop of parent company Kering: Gucci sales grew 13% over the past quarter, a drop from the 40% growth recorded in the same period for 2018.

Nevertheless, the brand has doubled its revenue over the past four years, and its success is widely attributed to Gucci’s ability to make money from a millennial audience. A total of 62% of sales were attributed to under-35s in 2018.

The strategy, led by Italian creative director Alessandro Michele, is multi-pronged. Key pillars, however, comprise a lauded investment in e-commerce, a renewed focus on sustainability and the molding of its heritage to fit the tastes of streetwear culture.

“I’m unsure I would characterize Gucci’s approach as ‘tech first’ – the brand simply wants to be perceived as hyper-creative and innovative and be able to connect with, and sell to, millennials,” says Sveta Doucet, president of luxury fashion shop Wednesday Agency.

“In its current incarnation, Gucci maintains its quality standards and certain brand identity elements, but Michele also prizes surprise ... Gucci’s willingness to adopt or try more nascent digital technologies would seem align with this brand ‘worldview’ – it’s about unexpected newness while ensuring quality.”

Its latest adoption of nascent technologies is with Genies, an avatar platform co-founded by Akash Nigam and Evan Rosenbaum. Users of the tech can dress their digital figurines in Gucci’s fashions and send them to friends on via integrations on platforms such as WhatsApp, Instagram and Facebook Messenger.

The label is planning to reveal a new “digital closet” on Genies next month, following its initial deal with the company.

The free-to-play nature of Genies may seem at odds with the aspirational luxury of Gucci, but the brand’s executive vice-president and chief marketing officer, Robert Triefus, explains that as the bulk of Genies users are aged 18-25, the partnership is key to reaching the Gen Z audience often neglected by designer brands.

“We have been able to evolve our brand through their clothing wheels and will now be able to exist in the conversations of the younger demographics through their branded actions - allowing us to continue expanding our relationship with these demographics in the digital world,” he tells The Drum.

“As technology continues to develop, fashion and luxury brands need to evolve as well. Our brand narrative and the communities we engage with are powered by digital and we want to connect with the level of self-expression that avatars provide in this day and age.”

The exercise – which forms part of Triefus’ strategy to “experiment with new and emerging digital touch-points”– is not one of performance marketing.

The marketer sees Genies as a tool to build “a long-term relationship with our customers” – particularly those it can butter up at the beginning of their digital journey and eventually convert into e-commerce customers once their spending power has strengthened.

“With Gen Z and millennials being early adopters, we wanted to seek out this partnership in order to explore another digital touchpoint with our customers,” he says. “We know they live through the internet and social media, and we wanted to be a part of that generational shift through the most innovative form of self-expression and awareness.”

For the co-founder and executive creative director of Technology, Humans and Taste, Nathan Phillips, the partnership makes “perfect sense” given the millennial and Gen Z focus of its chief executive and president, Marco Bizzarri, over the last few years.

“Innovation is part of their DNA, and Gucci has embraced progressive technologies, not only on the creative side, but also in the supply chain and manufacturing sectors. Fashion, like innovation, is all about having a point of view on culture and bringing it to life for the world."

According to Contactlab’s Digital Competitive Luxury research from 2018, Gucci, alongside Burberry, is leading the pack with regards to investment in digital. This is not driven by a desire to boost online sales per se, but an overarching “embrace of the unknown” uncommon in the heritage-heavy world of luxury fashion.

“Because digital is still relatively new to so many fashion houses, there is often a fear to experiment,” says Sara Vanore Rewkiewicz, director of Youth Oracles at fashion specialist agency ODD London. “Others look at digital and ask half-heartedly, ‘What should we do?’ while Gucci is constantly asking, ‘What could we be creating?’ with digital viewed as vital for evolving its creative vision, and creativity being key to business success.

“With reinvention in its DNA, digital is not just inevitable but also invaluable to strengthening Gucci’s brand equity. Michele understands who Gucci is intimately, and that brings a refreshing energy and playfulness, twisting cardinal codes while remaining incredibly authentic.”

This mindset has led the band to enter space it wouldn’t have five years ago. It was announced as the headline sponsor of the Fast Company’s Innovation Festival 2019, for instance, and partnered with Snapchat to give users across the world an inside glimpse of this year’s Met Gala.

But gradually, other luxury brands are beginning to follow suit. Doucet noted fashion labels’ previous concerns over the “deal-seeking” nature of digital shoppers have largely subsided, freeing them to make “significant strides in expressing their brands across ‘digital’ touchpoints”.

“Louis Vuitton has partnered with Google on its Tambour Horizon digital watch, created sophisticated app versions of its City Guides, and with the latest men’s fall/winter collection by Virgil Abloh, it released Louis Vuitton Endless Runner, an 8-bit-inspired online game,” she notes.

“In 2019, nearly all luxury brands are recognizing the power of empowering the customer journey across digital and non-digital touchpoints, as they recognize millennials and Gen Z don’t see such categorization and frankly expect such seamless integration from brands.”