Can a bank like Julius Baer learn from a luxury brand? “Absolutely,” was the thinking of Julius Baer’s Chief Executive Officer Boris F.J. Collardi when he launched the Global Advisory Board earlier this year. “The fundamental idea behind the board is to exchange views with different personalities from various industries in order to gain new perspectives for the own corporate strategy,” says Collardi (see box below for more details).
Digital natives crave for authenticity
In the first board meeting back in March, the CEO and President of Gucci, Marco Bizzarri, illustrated in a dedicated session why engaging and digitally connecting to the next generation – the so-called Millennials – brought the Italian fashion label Gucci back on track. Millennials are digital natives, the first generation that grew up with mobile phones and computers at hand. They crave for authenticity when it comes to digital communication and therefore expect a genuine relation to brands in the digital space – company websites, social media and online advertising.
Focusing on a clear brand identity
Gucci had been confronted with declining sales before Bizzarri took over as CEO less than three years ago. Together with Alessandro Michele, the brand’s new Creative Director, he quickly started a complete makeover of the brand. “A red thread throughout the overhaul was to establish a well-defined brand identity,” Bizzarri noted. The brand’s GG logo, for instance, was retrieved from the company’s archives and now prominently features on handbags, earrings, necklaces, rings, belts, socks and some fabrics, just as the Dionysus buckle has made a comeback on some shoes, handbags, belts and bracelets – establishing themselves as distinctive symbols coveted by style-savvy trendsetters. Six out of seven of Gucci’s best-selling and high-margin accessories have been created by Michele.
“Digital has changed the rules of the game”
But embracing a clear brand identity was not enough to attract the next generation. “Digital has changed the rules of the game. The digital scene is not an option – you have to be part of it,” Bizzarri explains. “As Millennials make up almost half of Gucci’s consumer base, it was vital for the brand to embrace digital communication and connect with this new, large and up-and-coming consumer group.”
Last year, Gucci managed to dethrone the long-standing number 1, Burberry, on the research firm L2's annual Digital IQ Index. This index examines investments the digital performance of 85 luxury brands present on the US market in terms of e-commerce, search visibility, social media engagement and mobile aptitude. Gucci’s stylish e-commerce site, customer service, shoppable features and online advertising, as well as the brand’s visibility on third-party e-commerce sites were among the features singled out by L2, which also underlined that Gucci’s interactions on social media doubled between 2015 and 2016.
Shaping the next decades’ consumption patterns
All businesses need to consider the importance of connecting with the Millennials, as they will be shaping the consumption patterns over the coming decades and soon move into their prime spending years. Millennials, now aged between 20 and 36 years, account for around 2 billion people, just over a quarter of the global population, according to Pew Research Center. Approximately 58 percent of them live in Asia, with 385 million in India alone, followed by 23 percent living in the US, 13 percent in Sub-Saharan Africa and 8 percent in Europe. Their affinity for technology shape their consumption patterns. They are avid online shoppers, with 90 per cent of them having bought something online during the past 12 months. They also do not hesitate to compare prices on their mobile devices, in store or before clicking on the ‘buy’ button online.
Gucci’s online presence has paid off
“It is hard to generalise, but Millennials tend to have an appetite for new things and they are driven by content, emotions and personal connections. They value self-expression and they value sustainability,” Bizzarri said. In any case, the revamp, including a far greater online presence, has clearly paid off. The business magazine Forbes valued the Gucci brand at 12 billion USD last year, making it the world’s 44th most valued brand with Louis Vuitton being the only other luxury brand beating it in the most recent ranking. Gucci’s full-year sales for the first time exceeded 4 billion EUR in 2016, with a long-term revenue target set at 6 billion EUR.Between January and April 2017, the brand’s sales jumped by a record 48 percent on a comparable basis with all regions and product categories contributing to this strong figure – clearly underlining the Italian luxury brand’s successful turnaround.
Millennials expect quick responses
Growing up with mobile devices and access to real-time responses has also made this new generation impatient. Millennials expect quick replies when reaching out to a customer service through social media, or when posting a query via text messaging. Less than one per cent of calls made to company’s customer services are made by Millennials, who definitely prefer contacts through social media or text messages, a survey by the cloud-based knowledge management firm Parature showed. They also tend to gather information and recommendations from their friends, colleagues and family members. Attractive online content that can be easily shared and shows positive consumer feedback and reviews is definitely an advantage.
For the host and chairman of the Global Advisory Board, Boris Collardi, the case of Gucci is eminently relevant for the private banking industry: “Creating an unparalleled client experience just like Gucci managed to do, embracing digital communication methods, connecting with the next generation and innovating, while respecting the history of the brand will therefore also be crucial for Julius Baer in the years to come,” Julius Baer’s CEO concluded.
Global Advisory Board
Julius Baer’s Global Advisory Board provides an external perspective as well as unbiased strategic advice on key issues and its ongoing initiatives. It was set up to help Julius Baer stay ahead in an increasingly complex world. The board is composed of five members: Nigeria’s former Finance Minister Dr Ngozi Okonjo-Iweala, the former Israeli Prime Minister Ehud Barak, Gucci’s CEO Marco Bizzarri, the author and visiting fellow at John Hopkins University, Alec Ross and Julius Baer’s CEO Boris F.J. Collardi. The board meets on a biannual basis.