Selective price reductions, commercially focused handbags and a smaller store network suggest Kering’s flagship label is abandoning the industry’s era of automatic price increases to rebuild its appeal among aspirational shoppers.
PARIS — Gucci is testing one of the luxury industry’s most deeply established assumptions: that prices should move in only one direction.
The Italian fashion house has begun selectively lowering prices on existing products as part of a wider attempt to restore sales, reconnect with customers and reverse a prolonged decline at its parent company, Kering. The shift represents an unusual departure for a sector that has spent years protecting exclusivity through repeated increases, often raising prices far faster than inflation.
Early evidence suggests that the strategy, combined with new handbags and aggressive cost reductions, may be gaining traction. Gucci’s second-quarter revenue declined by 2% on a comparable basis—its 12th consecutive quarterly contraction—but the result was considerably better than analysts had expected and marked a substantial improvement from the opening months of the year.
Investors responded dramatically. Kering shares rose 16.9% on July 29, their largest daily gain in almost 24 years, as the market interpreted Gucci’s performance as the first credible indication that chief executive Luca de Meo’s restructuring programme could be working.
The rally did not mean that Gucci’s difficulties had disappeared. The brand remains smaller than it was before the luxury downturn, consumer demand is uneven and a return to sustained growth has yet to be demonstrated. But the results suggested that its decline may be stabilising—and that a more commercially disciplined approach could succeed where relentless price elevation did not.
Gucci’s change in pricing philosophy is particularly significant because price has become one of the luxury market’s most sensitive issues. During the post-pandemic boom, many leading brands increased the cost of handbags, shoes and ready-to-wear products while focusing attention on their wealthiest clients. The strategy initially protected margins, but it also pushed entry-level and middle-income consumers away from the market.
That loss of accessibility has become increasingly visible in China, once the principal engine of global luxury growth. Bain & Company estimated that Chinese spending on fashion declined by between 5% and 8% in 2025, while leather-goods sales fell by between 8% and 11%. The consultancy attributed much of the weakness to previous price increases and insufficient product innovation, which made purchases harder for consumers to justify.
Gucci’s response is not an attempt to transform itself into a mass-market label. Rather, it appears to be a recalibration of the relationship between desirability, quality and price. By reducing selected prices while introducing commercially recognisable products, the company is trying to rebuild the ladder that traditionally allowed younger or less wealthy customers to enter a luxury brand before progressing towards more expensive purchases.
The Borsetto and Paparazzo handbag lines have become central to that effort. Kering said the products helped improve retail trends during the second quarter, alongside renewed interest generated by Gucci’s latest collections and its high-profile Cruise 2027 presentation in New York’s Times Square.
The products combine familiar Gucci signatures—including horsebit hardware, structured leather and the house’s green-and-red stripe—with practical silhouettes. That approach reflects a wider trend across fashion: after years dominated by spectacle, logos and rapid creative reinvention, consumers are showing greater interest in recognisable pieces that can remain relevant beyond a single season.
North America has been the strongest market for the emerging recovery. Kering reported that the region remained Gucci’s principal growth driver during the quarter, supported by improved sales of new leather goods. Western Europe and Asia-Pacific also showed early signs of stabilisation, although mainland China remained challenging.
The geographical shift mirrors developments across the wider industry. Bain expects the global personal-luxury-goods market to grow by between 2% and 4% in 2026, reaching as much as €373 billion, but the recovery is highly uneven. Spending is expanding most strongly in the Americas, where younger consumers are increasing their luxury purchases more rapidly than older generations, while Europe and the Middle East remain less dependable.
Gucci is therefore focusing on a customer group that much of the industry had begun to neglect: aspirational consumers who are interested in luxury but remain sensitive to price, novelty and perceived value. HSBC analysts said Kering appeared to be prioritising the right measures to rebuild momentum and re-engage those shoppers.
Pricing is only one part of the restructuring. De Meo’s plan also involves reducing excess inventory, closing underperforming stores and simplifying Kering’s operations. The group completed 84 net store closures during the first half of 2026, following 75 closures in 2025, and is targeting approximately 100 closures for the full year.
The smaller network is intended to make individual boutiques more productive while limiting the overexposure that can erode a luxury brand’s sense of scarcity. It also reduces operating costs at a time when Gucci’s revenue remains below previous levels.
Kering generated first-half revenue of €7.22 billion, an increase of 1% on a comparable basis. Gucci contributed €2.76 billion, down 5%, but its recurring operating margin rose by one percentage point to 17%, indicating that tighter cost management was partly offsetting the sales decline. Kering’s net debt also fell sharply, from €8 billion at the end of 2025 to €3.3 billion by the end of June.
Nevertheless, the turnaround remains fragile. De Meo warned that progress would not be linear and that Gucci’s third-quarter performance could be broadly flat. The brand would require a strong improvement during the second half of the year to achieve its ambition of returning to annual growth.
There is also a reputational risk in lowering prices. Luxury customers who purchased an item at a higher cost may feel that its value has been weakened, while frequent reductions could undermine the perception of exclusivity. Gucci must therefore distinguish carefully between strategic adjustments and conventional discounting.
The wider industry will be watching closely. For years, luxury companies relied on price increases to expand revenue even when sales volumes stagnated. Gucci’s experiment suggests that the next phase of competition may demand a more complex formula: sharper prices at selected levels, stronger products, fewer stores and greater attention to customers who want emotional and practical reasons to make a purchase.
That would represent a meaningful reversal. Luxury’s recent slowdown has demonstrated that heritage and prestige cannot indefinitely compensate for prices that customers no longer consider reasonable. Bain’s research indicates that consumers are not abandoning luxury entirely, but they are becoming more selective, consulting second-hand markets and demanding clearer value from new products.
Gucci’s second-quarter improvement is not yet a completed recovery. It is, however, evidence that one of the industry’s most troubled major brands may have identified the source of part of its problem.
By breaking the taboo surrounding price reductions, Gucci is making a calculated bet that exclusivity does not have to mean permanent inflation. Should the strategy deliver sustained growth, it could encourage other fashion houses to reconsider whether the future of luxury lies in charging ever more—or in giving customers a stronger reason to return.
