Gucci's new 'Made in China' sneaker models break with Italian tradition

PARIS, Sept 24 — Gucci has begun selling new luxury sneaker models labelled "Made in China", a break with its Italian manufacturing tradition that some industry watchers say could undermine the brand's ​high-end image as it races to win back middle-class shoppers.

The move highlights the challenge facing Gucci designer Demna, who must create innovative products while keeping costs under control to attract so-called aspirational shoppers, the bulk of luxury consumers who are more price-sensitive than ‌the super-rich.

Demna will present his latest collection at a Milan runway show on Friday. His success is crucial for parent Kering and CEO Luca de Meo, who took over last year ⁠to lead a turnaround but has seen an early share price bounce ​fall flat this year.

Gucci, Kering's flagship brand, has seen sales halve ⁠over the past three years, squeezing margins and forcing the group to close dozens of stores.

In a move reminiscent of his tenure at Balenciaga, Demna has created ‌a futuristic sneaker model called Drip. ‌The shoe is labelled as "Made in China", according to Gucci's website. Reuters also observed Drip models displayed in a Gucci ⁠store in Paris carrying the same label.

In a statement, Gucci said that Italy would "always be ⁠at the heart of Gucci's manufacturing model and identity" but that it had decided to work with the Chinese manufacturer just as it had worked with Swiss and Japanese suppliers for products like watches and eyewear in the past.

"The partner selected offered the technological know-how and capabilities most appropriate for achieving the performance and quality standards we were seeking," it added.

There were no broader plans to move Gucci production outside Italy, a Gucci spokesperson said.

DEMNA'S FIRST SNEAKER FOR GUCCI

The Drip sneaker, described on Gucci's website as "Demna's first sneaker for Gucci", went on ‌sale last month as part of the designer's Primavera collection.

Retailing at around €800 in Europe and $1,000 in the ​United States, it is cheaper than many other Gucci shoes, though still firmly in the luxury category. The laceless design is made from nylon, canvas or suede.

The Drip is a break from Gucci's more traditional white leather laced Ace sneakers, and its sock-like shape is reminiscent of Demna's chunky sneaker designs at Balenciaga which were a streetwear hit in the late 2010s.

A second slip-on sneaker model, made of leather, from the same Primavera collection is also labelled as "Made in China", the Gucci website shows. The brand spokesperson said that model was produced in China for similar technical reasons linked to the shoe's design.

All other Gucci shoes carrying a country-of-origin label on the website are made in Italy.

China ​is a global hub for sneaker production and its manufacturers have earned strong reputations among mass-market and premium brands. Some analysts say that in Gucci's case, however, breaking with "Made in ‌Italy" could spark ‌a backlash.

"We think this creates ⁠a potential tension between provenance and the luxury positioning Gucci is seeking to reclaim," Berenberg analysts said in a note.

Simon Whitehouse, a Milan-based luxury business consultant, was more blunt. "Made in China is not a good look," he said.

Two Kering sources told Reuters the brand has also begun cutting prices on a select number of products, including in China, as part of efforts to regain market share.

Barclays analyst Carole Madjo said the price cuts surprised some investors, who ‌are now paying increased attention to ​any further moves that could affect Gucci's image with shoppers.

"Some people are wondering: should ‌we keep buying Gucci if the price ⁠is coming down?" she said. "Having ​Chinese-made products could fuel the debate around the brand's price value equation."

(Reporting by Tassilo Hummel, additional reporting by Helen Reid in London and Elisa Anzolin in Milan; ​Editing by Ros Russell)

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