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As other designer brands hunker down under the weight of the recession, Piazza Sempione follows a different beat.
“There are huge opportunities,” said Enrico Morra, chief executive officer of the 18-year-old Milan-based brand. “The world is becoming more real. With landlords dropping prices, you can open a store and reach the breakeven point after a year or a year and a half. That’s fairly achievable.”
Piazza Sempione is finally getting its U.S. rollout in gear after several seasons deliberating on strategy. LVMH Moët Hennessy Louis Vuitton bought the brand in July 2006 from founders Marisa Guerrizio and her husband, Roberto Monti, through its L Capital private equity fund. Last January, seven key Piazza Sempione managers, including Morra, received shares in the business.
Piazza Sempione’s highest profile unit and first street location in the U.S., at 34 East Oak Street in Chicago between Prada and MAC, was officially unveiled last Wednesday with a cocktail party for top customers. The 2,100-square-foot shop was built at a cost of over $1.5 million, conceived as a prototype for future locations.
The decor reflects the brand’s understated and relaxed sensibility, with warm tones of white and gray, a glass facade and a light-filled environment. The textured wallpaper and smoked blond oak floor underscore the Italian brand’s reputation for fabric innovations and classic sportswear with a twist. Wood partitions feature illuminated sandblasted glass niches that serve as accessories displays and the tables, stools and armchairs are covered in brushed silver leather and trimmed in Piazza Sempione’s signature blue.
Another unit is scheduled to open in The Shops at the Bravern, a new luxury complex in Bellevue, Wash., opening this September with Neiman Marcus, Hermès, Louis Vuitton and other luxury stores. Piazza Sempione is also negotiating for space on Madison Avenue and in King of Prussia, Pa., and deals could be unveiled soon.
According to Morra, rents along stretches of Madison Avenue in the 60s have dropped from $1,200 or $1,100 a foot to as low as $500 or $600, enabling a shop there to be a profit-maker, as well as an image maker.
Despite disappointment with Piazza Sempione’s year-old shop in The Palazzo in Las Vegas, the brand is prepared to forge ahead. “We have to build now for the future,” Morra said, noting the Vegas store experienced construction delays, and then traffic never really materialized due to the city’s downturn and the bankruptcy of the center’s owner, General Growth Properties.
On the other hand, Morra said the Short Hills, N.J., store, the brand’s first in the U.S. opened in November 2007, “is working very well.” And in Chicago, Piazza Sempione exceeded $200,000 in sales in the first three weeks, Morra said. “I expected business to be less than half of that. The town’s reaction has been very good.”
The store is projected to $2.8 million in annual sales, and will build upon a base of business Piazza Sempione already has in Chicago at Neiman Marcus, Saks Fifth Avenue and Barneys New York.
Morra declined to specify Piazza Sempione’s financial performance, but said this year revenues and earnings before interest, taxes, depreciation and amortization will increase 10.5 percent and 31 percent, respectively.
“All of the company is working to make it in the United States,” said Morra. “We have a huge rollout plan, but we have to be very selective” with locations. “If things go well, we could open 10 to 15 more stores in the next three to four years. Today, not many people are opening stores. They are very scared.”
The retail plan must be balanced with the proper wholesale distribution, which Morra said should not be too wide, and should remain focused on building volume at existing doors. “We have strong [retail] partnerships. We understand the market. We get weekly results from every door.”
In light of the recession, “we are working with our fabric suppliers and manufacturers on our pricing. We know we have to reach consumers with an even more appealing price. In this crisis, there’s a new consumer who is getting smarter. The concept of perceived value is getting more important. We think we are already a good value for a designer brand. But we will have a lot better opening prices, at least 15 to 20 percent lower,” Morra said, citing wool-cashmere jackets at $850 to $1,200, which were formerly $1,200 to $1,500. “You have to have a vision for the long term, but you also have to react very tactically, day to day.”