ITALIAN DIFFUSION LINES COME INTO THEIR OWN

Byline: Sara Gay Forden

MILAN--Once little siblings of the signature collections that spawned them, many Italian designer diffusion lines that were launched in the late Seventies and early Eighties have grown up.
Lines such as Giorgio Armani Le Collezioni, Emporio, Cheap and Chic, Versus and Missoni Sport have come into their own, with an autonomy and identity that don't have anything "secondary" about them.
"The second lines were born at a certain point in time," said Armando Branchini, vice president of Intercorporate, a Milan-based management consulting firm specializing in luxury goods. "They had a lower price point, were a little less fashion-forward and were oriented toward a wider market than the first lines.
"The winners are the ones that have evolved over time to take on their own autonomous identity, while the less successful ones never really came into their own," he said. "If you think of the fashion system as a solar system, some became planets and others remained satellites."
Giorgio Armani Le Collezioni, for example, launched in 1979 and made by GFT SpA, is a textbook "diffusion" line. It is now positioned as a collection, going head to head with the top lines of Donna Karan and Calvin Klein in the U.S., although priced slightly below them.
Racking up some $100 million in worldwide retail sales, according to market analysts (GFT claims it's the number one diffusion line in the U.S.), Le Collezioni is priced an average 35 percent below the top Borgonuovo line, which has a much more circumscribed distribution.
"Le Collezioni has become the face of Armani in the major U.S. department stores; it's one of the anchor collections for U.S. retailers," an Armani spokesman said, noting that the business, which derives 25 percent of its sales from the U.S. market, had doubled in two years due to high sell-throughs with the major retailers. Bookings for the spring-summer '95 collection were up 20 percent compared with prices of a year before, a healthy increment for such a well-established collection.
The Emporio Armani collection, which Armani insists isn't a second line, made its debut in 1984 to cater to a younger, hipper market. It has since evolved into a leading ready-to-wear collection for a different generation, complete with its own retail distribution chain.
Another one-time "second line" that has come into its own is Gianni Versace's Versus, which was launched in 1990 with Ittierre, the Isernia-based manufacturer that is making a name for itself producing designer diffusion collections. Ittierre also produces Versace Jeans Couture.
Versace Jeans Couture is registering exponential growth. According to Carlo Di Risio, Ittierre's managing director, it has become the top-selling designer jeans, with more than 1 million pieces sold for spring-summer '95, bringing in well over $64 million (100 billion lire). The line did $2 million (30 billion lire) in the U.S. market alone. Ittierre also has Trussardi Jeans, and has just launched Dolce & Gabbana's younger collection, D&G--the latest diffusion line.
"Although technically, Versus is called a second line--which it was when it was launched--now it has become a tried-and-true first line for young people," said Di Risio, who noted that while Versus' fashion identity was "way out in front," it was still in a "growth phase" in sales and distribution. Versus racks up some $50 million (78 billion lire) in worldwide wholesale volume, of which about $1.9 million (3 billion lire) is derived from the U.S. market.
"When these lines were launched years ago, they were towed along by the first lines--they didn't have much content of their own," Di Risio observed, talking about second lines in general. "Within the past four or five years, they have not only come into their own, some of them are even more fashion-forward than the collections they followed. If you think about it, Gianni Versace's first line grows more and more classic each year, while Versus keeps looking forward--it's a generational factor as the target customers grow older and a younger generation is growing up in their wake," he said.
He estimated that bookings for the spring-summer '95 Versus collection were up about 30 percent compared with a year earlier.
At Valentino, chief executive officer Giancarlo Giammetti prefers to discuss diffusion lines by talking about the Miss V line of ready-to-wear.
Produced under license by GFT, it is priced about 50 percent below Valentino's first line and is designed to carry a woman through the working day, but not into the evening. He described Oliver, Valentino's younger, trendier line, as "less brilliant, and sold very little in the U.S."
Miss V has an average wholesale price tag of $230 and generated roughly $16 million (25 billion lire) in sales of the spring/summer '95 collection, up 50 percent from a year earlier.
"Miss V is a complete collection with three seasons - perfect for the U.S. market," Giammetti said. That's where it registers about $1.9 million (3 billion lire) in wholesale volume each season, and expects to grow in the next few years, Giammetti said.
Another kind of example is set by Moschino's Cheap and Chic line, which made its debut in 1988 and--in the U.S. market, at least--has sailed far beyond the first line, which has only limited distribution there.
"Cheap and Chic is the true commercial expression of Moschino," said Intercorporate consultant Branchini. The collection, which is being continued by Moschino's design team after the designer's death in September, does about 15 percent of its total volume in the U.S. market, where it is distributed in 110 doors, according to commercial director Giorgio Bolognini. He noted that spring/summer '95 bookings were up 25 percent.
"Our strategy is to expand the distribution further with the opening of Moschino shops-in-shops or corners with the major department stores," Bolognini said.
Romeo Gigli's younger G Gigli line, produced by Interfashion, a subsidiary of Stefanel, made its entrance in early 1991, but has only been present in the U.S. market for four seasons, according to Beppe Cecchin, managing director of Interfashion.
With a healthy 25 percent increase in spring/summer '95 orders, there were prospects for further growth in the years ahead, Cecchin said. G Gigli is currently sold in 55 doors in the U.S., where it registers about $4 million in wholesale volume, equivalent to 15 percent of total G Gigli exports, and 10 percent of total sales of the line.
"With a consistent business increase and the good sellouts of our most important clients, we have established the great potential for the G Gigli line on the U.S. market," Cecchin said. "We are improving our own logistics to guarantee the indispensable service required by this market: timely deliveries with the right selection and product mix, fast turnaround times, assistance to clients and sellout monitoring and advertising support."
Now that the mature diffusion lines have carved out their respective niches, the newest entrant--D&G, the new young line by Dolce & Gabbana--is expected to shake things up.
According to Ittierre's Di Risio, response to the line in just two seasons has been far beyond even the most positive expectations.
"The growth is incredible," Di Risio said. "We knew it would be good, but we never dreamed it would be this good."
He said the collection showed a 170 percent increase in bookings for spring/summer '95, compared with the debut collection in fall/winter '94.
The distribution strategy for D&G includes a mixed wholesale-retail formula; D&G stores are slated to open in Milan in January, then in Rome in July and in New York, London and Paris in 1996, Di Risio said.
"The idea is to open a new store every six months," he explained. In the meantime, Ittierre is establishing a subsidiary and showroom in New York that is slated to open by the end of the year, Di Risio said. While the above-named collections offer stellar examples of successful diffusion line strategies, some of their siblings haven't come as far. Krizia Poi, Oliver and Studio .0001 by Ferré have remained true secondary lines, while Options, Byblos's second line, has disappeared from the market altogether.
"I believe that second lines can be a correct strategy to develop a market when they are positioned in connection with a strong first line in the high end of the market--there are important synergies in the product, image, production and distribution that can be exploited here," said Carlo Pambianco, founder and president of Pambianco, a fashion consulting firm here.
"Too often, however, second lines have been launched to save a first line that was no longer competitive--in these cases, the second line quickly begins to lack clarity," he said.
Another factor might be exchange-rate fluctuations and the 1992 devaluation of the lira, which made Italian designer merchandise much more competitive in the U.S. market, analysts pointed out.
"After years of having a false exchange rate, which practically priced the Italian designers out of the market, now things have returned a little more to normal," said Intercorporate's Branchini.
"Now a consumer is much more oriented toward buying a first line rather than a second line--the value ratio is much higher," he said. "For example, in terms of price/value, it makes much more sense now to buy Krizia's first line rather than Krizia Poi."
Krizia chairman Aldo Pinto confirmed that the fashion house is focusing much more on the first line in the U.S., where it is opening its first company-owned boutique in New York on Madison Avenue at East 66th Street in December.
"Our Krizia Poi business in the States is not important enough due to price factors and we are concentrating on our Krizia main line at the moment," he said.
However, it may never be too late to revive a second line, if the strategic potential is in place--which is what Marzotto is betting with Studio .0001 by Ferré, which it produces and distributes under license from Gianfranco Ferré.
Marzotto took the diffusion line, which was launched in 1988, off the U.S. market for a few years and plans to bring it back with a splash, starting with the fall/winter '95 collection, according to Sergio Garretti, president of Marzotto USA.
"We are starting with the right foot this time," said Garretti, who was hired by Marzotto last year to revamp its U.S. business. "It is a strong, well-defined line and Ferré himself is dedicated to the creation of it, to making it the more accessible interpretation of the first line.
"We are establishing a distribution policy that includes agreements with Saks Fifth Avenue and Neiman Marcus, as well as leading specialty stores," Garretti said.

To Read the Full Article
SUBSCRIBE NOW

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus