MILAN — Great changes and new opportunities are emerging as the legacy of the three years of economic doldrums. The postrecession future of the fashion industry was discussed by a panel of international executives during a summit organized by Pambianco consultancy here on Monday, titled “Fashion: Nothing Will Ever Be the Same.”
Robert Polet, president and chief executive officer of Gucci Group, highlighted the appearance of two major cornerstones: “The development of China and emerging markets, which we’ve never, ever seen in this business, and the technology, internal and external.”
The direct contact with customers and the fact that technology allows the company “to engage with millions of customers one-on-one” made “a dream come true,” said Polet. As for the “ultimate luxury experience,” he identified it with the Gucci app, “which costs zero. It’s the same as if you had the bag and it shows you are part of the [Gucci] crowd.” Polet also urged small and medium-size companies to make changes through technology. “This is your biggest opportunity, or you are doomed,” he said.
The executive said that, year to date, Asia Pacific is the fastest growing market for the group, gaining 25 percent and accounting for 30 percent of turnover. Sales in Europe rose 27 percent, accounting for 34 percent of revenues. As the Chinese government allowed Chinese to travel in groups around the world, Gucci realized 70 percent of sales increase in Europe come from Asia and Chinese people traveling. Describing this as a “tremendous influence,” Polet predicted “it will happen soon in the U.S., too.” The executive also noted how 60 percent of customers in China are men. “The next growth will take place when women will be coming out,” he said.
According to Gregorio De Felice, chief economist of Intesa Sanpaolo, one of Italy’s main banks, sales of the Italian fashion industry grew 7 percent, led by exports, with a recovery in the U.S. and 30 percent growth in Hong Kong and China. De Felice said he expected emerging countries to grow and account for 43 percent of exports in 2013.
Polet commented how the crisis pushed customers to take the time to understand the product, question it and forgo impulse buying. “This is normal behavior,” he said. The crisis also prompted Gucci’s management to “change tactics and react quickly.” In October 2008, when the crisis hit the luxury industry and American retailers reported a 26 percent drop in volumes, Polet recalled the company went “for cash flow, rather than growth and profit growth. It took us 10 days, and we never thought it was possible. We realized where the fat was. It’s fantastic to do this every five years.”
Renzo Rosso, president of Only The Brave Srl, parent company of Diesel and Staff International, said the crisis “helped clean up” the industry of “too many brands, too much improvisation and confusion, with unrealistic prices that did not reflect the product.” Rosso closed stores that were not profitable — in the wrong locations, for example. The entrepreneur, who is writing a book about his experiences, to be published by Rizzoli and due out early next year, said the Web was a “wonderful tool,” and that he was thinking of developing a 3-D online store. Diesel’s e-commerce store is developed by the Italian provider Yoox.
Tod’s Group chairman and ceo Diego Della Valle was more cautious about selling luxury goods on the Web. “We must be prudent because the product must remain exclusive,” he said. Despite the fact that his company is listed on the Milan Stock Exchange, Della Valle also urged his peers to put their “soul back in the company. Our mission is the quality, and sometimes we look too much at numbers.”
He was also skeptical about diluting brands. “Must we really license everything out? Are we losing sight of what the customer wants from us?” he wondered, adding that industrialists must clearly identify the size they want their companies to be. Della Valle, who just returned from a trip to Asia and the U.S., said it is “easy” to access China now in terms of costs. “The growth is abnormal in certain countries, but what will happen in four or five years? What is gold now can become lead.”
Polet, Rosso and Diego Della Valle all insisted on the value of keeping production in Italy.
Gianluca Brozzetti, ceo of Roberto Cavalli, said “the family is the fundamental asset, the soul of the brand. Customers don’t care about who runs the business, they want to see Cavalli and his lifestyle.” Michele Norsa, ceo of Salvatore Ferragamo, said family-owned companies are generally “a more ethical” working environment. The Florence-based company registered a 25 percent growth in sales in first nine months of the year. Generally speaking, he said, “next year will not be easy, with new critical elements appearing. We will not go back to the dynamics of the years 2006 to 2008. A lot will depend on China.
“Keep very realistic objectives for 2011, keep costs and debt under control,” said Brozzetti.
“And never lower your guard,” concurred Gian Giacomo Ferraris, ceo of Versace, who predicted a re-entry in markets that were “cleaned up” during the crisis.
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