Linear stability theory and bifurcation analysis are used to investigate the role of gravity in shear-band formation in granular Couette flow, considering a kinetic-theory rheological model. We show that the only possible state, at low shear rates, corresponds to a ‘plug’ near the bottom wall, in which the particles are densely packed and the shear rate is close to zero, and a uniformly sheared dilute region above it. The origin of such plugged states is shown to be tied to the spontaneous symmetry-breaking instabilities of the gravity-free uniform shear flow, leading to the formation of ordered bands of alternating dilute and dense regions in the transverse direction, via an infinite hierarchy of pitchfork bifurcations. Gravity plays the role of an ‘imperfection’, thus destroying the ‘perfect’ bifurcation structure of uniform shear. The present bifurcation problem admits universal unfolding of pitchfork bifurcations which subsequently leads to the formation of a sequence of a countably infinite number of ‘isolas’, with the solution structures being a modulated version of their gravity-free counterpart. While the solution with a plug near the bottom wall looks remarkably similar to the shear-banding phenomenon in dense slow granular Couette flows, a ‘floating’ plug near the top wall is also a solution of these equations at high shear rates. A two-dimensional linear stability analysis suggests that these floating plugged states are unstable to long-wave travelling disturbances.The unique solution having a bottom plug can also be unstable to long waves, but remains stable at sufficiently low shear rates. The implications and realizability of the present results are discussed in the light of shear-cell experiments under ‘microgravity’ conditions.