CIA-1

Operations Management

Study of flow design and facility layout of GUCCI

By- Group No. 7

Tanya Kumari -2128159

Soumya - 2128156

Rutvika Kundagol - 2128148

Priya Bhuiya – 2128144

Kunal Patil - 2128114

MBA PROGRAMME

SCHOOL OF BUSINESS AND MANAGEMENT

CHRIST (DEEMED TO BE UNIVERSITY)

NOVEMBER 2021
Introduction of Gucci

Gucci is a high-end Italian fashion house headquartered in Florence. The company's product
categories include handbags, ready-to-wear, footwear, and accessories, as well as makeup,
fragrances, and home décor. Gucci was founded in 1921 by Guccio Gucci in Florence,
Tuscany. Under the direction of Aldo Gucci, Gucci became a globally recognized brand and
an icon of the Italian Dolce Vita (son of Guccio). The Gucci family was entirely removed
from the company's capital by 1993, following a series of family feuds in the 1980s. After the
catastrophe, the brand was relaunched with provocative 'Porno Chic' props. In 1999, the
French corporation Pinault Printemps Redoute, later known as Kering, bought Gucci. In the
2010s, Gucci gained known for its 'geek-chic' style. In 2019, Gucci had 487 stores,
employing 17,157 people and generating revenues of €9.628 billion (up from €8.2 billion in
2018). Marco Bizzarri has been the president of the company since December 2014

OPERATION STRATEGIES AT GUCCI:

GUCCI's operations strategies are critical because they have helped them become one of the
most successful fashion retail stores in the industry. The following are the various strategies
they have used in every aspect of their operations process:

Design:

The majority of GUCCI's designs are simple with a touch of detailing to make them truly
one-of-a-kind. The "G" logo, which has become synonymous with high-end style, appears on
the majority of their designs (ThinkFashion, 2018). Much of Gucci's success, like that of a
number of other labels on the market (Prada and Armani, to name a few), is due to celebrity
endorsement. Gucci designs have been seen on red carpets and runways all over the world.
Gucci's fame can be attributed to international celebrities such as Jennifer Lopez and Halle
Berry, who have worn Gucci designs on multiple occasions.

Logistics:

Gucci works closely with a select network of trusted suppliers to ensure that environmental
and social best practices are embedded throughout the supply chain. Gucci's supply chain
recruit thousands of people who indirectly work for the House and assist in the production of
our collections. Many of these businesses have been supplying Gucci for two or three
generations. Gucci's manufacturing supply chain includes both internal facilities owned and
managed directly by the company and external facilities operated by trusted suppliers. Italy is
home to 95 percent of its manufacturers. In the fashion sector, an agile supply chain is seen as
a competitive advantage. In terms of response time, the GUCCI supply network is
outstanding. They are made up of over 600 businesses, with 70 first-tier suppliers and 500-
600 second-tier vendors. Gucci also provides funds to their partner's suppliers for the latest
machinery and technology in order to preserve quality and cooperation. They chose vendors
who met all of their standards (Stone & McCall 2006).
Production:

Gucci exclusively leaves holy Italian territory to make its noble watch collection.  The rest of
the label's fashion production takes place entirely in Italy. Gucci's products are made in a
number of different factories. Gucci has dedicated its precious Italian land to the creation of
its noble watch collection. Although most of their operations are controlled from the Gucci
House in Switzerland, these timepieces are created in Switzerland. The majority of the other
labels are made in Italy as well. The manufacturing takes place in state-of-the-art laboratory-
Esque studios, ensuring that the magnificent skins and handcrafted textiles are prepared in the
best and most appropriate circumstances. Handmade fabrics are processed on a wooden loom,
for example, and their prototyping studios ensure that they have the most critical items on the
market.

Inventory Management:

Gucci's new-season sneakers are made by robots. In the foreseeable future, a third of Gucci's
items will be mechanised. Gucci's latest trainers are made entirely by machines. The
"Reingenious" patented device is housed in Gucci's ArtLab prototype factory on the outskirts
of Florence. In the near future, the brand hopes to automate 30 to 35 percent of its production
in order to grow output and meet customer demand, notably from China. Gucci CEO Marco
Bizzarri claims that using robots will allow him to be more creative.

Cost Leadership:

Gucci's critical generic approach in many consumer segments is cost leadership. The primary
goal of employing this strategy is to maintain market leadership through effective value chain
management. Gucci can increase its market share by focusing on the middle class, which
accounts for the greater of the entire consumer market mix in most nations. The pricing issue
is often very essential to middle-class consumers, and cost leadership is the best option for
meeting their needs. Gucci places a premium on the affordability and accessibility of its
products around the world, resulting in significant brand awareness and sales growth, as well
as a solid competitive edge. Gucci routinely offers discounts and coupons to reach sales
targets and deal with competitive pressure from its nearest opponent, in addition to charging
low prices by cutting production costs and maximizing supply chain efficiency. These
discount and promotional efforts are meant to raise brand awareness and drive consumption.

Customer Relationship Management:

Management of Customer Relationships Gucci handles CRM in such a way that it delivers
the most excellent service to consumers who they know will spend money without looking at
price tags. Some superstars, for example, have the ability to close stores in order to shop.
They frequently show celebs what is fresh in the upcoming collection. They pamper them
with presents and VIP treatment. They don't deliver a high-quality service to those they
"believe" won't spend any money. They inform their customers about what's available in
stores and what future promotions they're preparing on their website. Gucci is most likely to
keep track of dates from regular customers and celebrities. GUCCI uses social media to
highlight its items in order to encourage purchases and engage customers. In terms of their
digital capabilities, Gucci has been named "fashion genius." They efficiently market their
products in digital media with the goal of providing a wide range of products to their clients
in both physical and online locations. They're also taken into account by select high-end
shops that offer customers an in-store inventory check for a specific item.

Process Flow

Product flow-It is the movement of the materials from the supplier to the customers. The
process includes both internal and external and operates with "customer service." Gucci has
several entries like suppliers, manufacturers, distributors, wholesalers, retailers, and
customers. Acquisition of product flow takes place in every stage from its previous location,
known as the entire product flow across the "supply chain." It is recommended that
Improving and increasing the distribution network could enhance the product flow of Gucci.
This flow of materials or services is generally downstream, which begins from the source
point to the customer point. Moreover, the upstream flow is associated with the return of the
materials or products.

Figure 1: "Supply Chain Structure" (Yang, Wu, & Shi, 2019)

Information Flow-SCM ("Supply Chain Management") includes higher operating phases of

variable information like the bill of the raw materials, pricing, order information, product
data, and the different levels of inventory. Information flow is considered as one of the
significant flows across the "supply chain" of Gucci as it provides the detail of the product
and financial flows of the organization (Farajpour & Yousefli, 2018, p. 1). Along with that, it
also involves information regarding the supplier and the distributor, the status of the delivery,
and other essential documents. The "supply chain" efficiency of Gucci could be improved by
increasing the speed of information flow with the help of IT ("Information Technology") to
increase performance.

Return Flow-Effectiveness of Gucci supply chain management is measured with the flow of
OTD ("on-time delivery") metric. It is a measurement of the chain that focuses on ensuring
the product delivery to the customer end is efficient from the time of order placing. The
responsibility of the "supply chain" never ends with delivering the product to the customer. It
may be returned due to several reasons like the wrong product or damaged product, or
mismatch in the product description. It could be referred to as the undesired event in the
"Gucci supply chain management" (Ivanov, Pavlov, Pavlov, & Sokolov, 2017, p. 2). In such
issues, Gucci needs to organize the shipping method of the returned product for performing
various experiments like testing and repairing the product. Return flow could be improved by
pre-testing the product and providing the exact match of the product with the description.
Location Criteria

 downtown areas with everyday commercial activities: downtown areas with high
commercial activity, large volume of vehicles, and a certain number of shops and
businesses.
 peer communities (mature professional commercial streets and districts): although
competition is fierce, customers can have more opportunities to compare and choose
because of their peers, so they can attract customers.
 near the public places where people live: because the population is concentrated and the
consumption demand is concentrated and large, the stable income of the franchised
stores can be guaranteed.
 facing the biggest and the most visible street, the franchised stores and popular malls are
the most efficient place, which is most affected by the volume of traffic and traffic, so
that most people can buy the goods nearby.

Facility Layout design:

The structure of a retail store (whether physical or digital) is the use of space strategy to
influence customer experience. The way customers interact with your sales affects their
buying behavior. This marketing strategy is one of many from Paco Underhill, author of Why
We Buy: The Science of Shopping, a keynote speaker, and founder of Envirosell.
The interior store building has two main components:
Store Design: The use of floor plans and space management, including furniture, displays,
accessories, lamps, and signs. Website designers with user experience (UX) researchers use
space management techniques and web design principles to improve e-commerce websites.
We will also discuss the various floor plans sold later in this article.
Customer Flow: This is a pattern of behavior and the way a customer navigates the store.
Understanding customer mobility and common practices that occur when customers interact
with sales based on store structure is essential to a sales management strategy. Vendors are
able to track this using mathematical software and data from store video and wifi signal from
smartphones. For example, solution providers like RetailNext provide shopper statistics
software for marketers to understand navigation and improve customer perception based on
store video recording. The technology is also available to track the movement of digital
customers and the conduct of online shopping. By using "cookies" and other software, online
advertisers can track customer behavior, including how customers interact with their website.
Although the outdoor store layout includes an outdoor store design and customer flow, it also
incorporates the following features:
The size of the building and the length of the access routes are accessible from the entrance
and exit.Use of furniture and outdoor space for people to come together and share
The architectural style of the retail buildingPaint color and selection of exterior building
materials .Visible entry design and external window displays
In order to create an atmosphere that strategically emphasizes the consumer's desired buying
behaviour, it is essential to use all the floor space strategically for products in-store facilities,
as facilities play an crucial role in influencing the customer experience. The shop layout
softly guides the customer to where he/she needs to go and introduces him/herself to the
store's complete offerings. Canen and Williamson (1998) argued that a good facility layout
helps increase any company's business performance and contributes to its competitive
advantage. Raymond R. Burke and Alex Leykin (2007) described retail shopping well as the
ability of the retail environment to turn consumer demand into purchases with the various
determinants such as store layout, navigation, product profiling, and presentation, describing
the shopping attitude, i.e. store entry and purchase intentions, but retailers believe (often
mistakenly) that stocking more products.
8.1 Objectives fulfilled by the use of an appropriate layout design:-

 Creating an effective merchandising presentation.

 Creating a balance between sales and shopping space.
 To provide sense and variety.
 To entice the customer to purchase more merchandise.
8.2 Parameters for Designing Store Layout:
1. Choosing of right floor plan: A free flow format gives you the most creativity. You're
now not constrained to ground patterns or cabinets that need to be placed at certain
angles. And in assessment to the opportunity layouts, you're now not prodding humans to
use a direction around your shop; as an possibility, clients are inspire to browse and flow
in any path.
2. Beware where you lead the shoppers: The location absolutely outdoor of the transition
area is in which most shops make a number one impact. Customers always turn right after
getting into the store and keep to navigate the shop in a counter clockwise route. Ebster
points out that this customer behavior repeats itself again and again in client studies.
Although researchers and design specialists have specific reasons for the response, in
fashionable, many endorse displaying immoderate-margin merchandise and valuable
information just to the right of the doorway (outside of the transition quarter).
3. Ensuring that product quantity is appropriate: Store Inventory is one of the factors for
retail business as right stock has a firm hold on the visitors and also help in forecasting
the display and the layout of the stores based on consumer's demand.
4. Maintaining space between products and fixtures: It's proper enough to have shelves
which are packed with products (if that's what you're going for) so long as you still
deliver your clients their remote region. You need to keep away from the butt-brush
effect, which consistent with Underhill, is a phenomenon in which customers should
abandon a display or product they had been searching right away they have been bumped
once or twice from in the same.
5. Freshen up your display regularly: Gucci is determined for customer driven policy as it
frequently changes it store collection in order to gain more customer viewership and buzz
in retail market.
6. Don't forget to cross merchandise: Gucci has a tremendous approach towards cross
merchandise display as most of the formal bestsellers have that display which create a
unique impact on the visitors to try and buy the product.
7. Make sure your employees are on point: The store assistants are trained and being advised
to be more vigilant in observing the consumer's behavior in what they like and what do
they linger and what they try for better retail business.
8.3 Store layout design strategies of Gucci
 Gucci has a free-flow layout in which no deliberate effort is made to force customers
into predictable traffic patterns, facilitating roaming. For this retail store design, no strict
constructive standards have been followed, and customers have more flexibility to
communicate with products and navigate on their own. The architecture is characterized
by an unstructured flow of customer traffic around displays of a number of shapes
around narrow aisles.
 This design provides a calm, friendly environment that facilitates shopping, stimulates
purchasing instincts, and helps to increase the time spent in the store by customers. It
increases cross-selling between departments and gives the retailer great versatility
without altering the overall design to adjust localized layouts (Beisel, 1993). Easily
recognizable signs typically designate departments, and to promote sales,
complementary departments are usually placed close together.
 Gucci strategically positions spotlighting directed at the walls as they are one of Gucci's
most popular locations, as the right side wall is generally considered the highest sales
area as customers, when entering the store, appear to turn to the right. So Gucci places
her best-selling merchandise, Gucci women, in that area.
 Gucci's internal layout plan incorporates the Gucci women's section to the right of the
entrance, followed by the Gucci Basic section to the left, to the Centre of the store, and
then, in the back and around the fitting rooms, Gucci TRF is found. The shop is very
tiny, and the bear walls take centre stage to ensure that customers are not disturbed when
shopping for the latest collections. Gucci store layout has the broader aisles to protect
customers from the butt-brush effect i.e. If a customer is touched, bumped, or otherwise
interrupted while interacting with the merchandise, they may be likely to move on or exit
the store altogether.

8.4 Area- Analysis of layout:

 Decompression Zone- The decompression zone, also referred to as the transition zone,
refers to the space just outside the retail store entrance. To familiarize themselves with the
new environment, the client requires this room for change. It is not a region for high-
margin merchandise. It has prominent signage that induces customers to join the shop or
 brand details. However brief, customers need time to adapt to new lighting, smells, music,
and visual stimuli in the shop.
 Primary Zone – It includes 50 to 80% of the customers of a store. It is nearest to the
store with the highest population density of clients and the highest sales per capita.
 Secondary Zone – Geographic region that comprises an additional 15 to 25 percent of a
store's customers. It is situated outside the primary city, and it disperses customers more
widely.
 Discovery Zone- A geographical region with a sufficient number of retail facilities to
meet the needs of its population for a particular product or service and enable retailers to
flourish.