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NEW YORK — Kids learn many lessons from pets. But at the age of 10, Renzo Rosso was in for a doozy.
This story first appeared in the April 24, 2003 issue of WWD. Subscribe Today.
He came home after school one day to the family farm in Brugine, Italy, with a gift he’d received from a schoolmate —?a rabbit.
There is one lesson kids learn mostly from rabbits and guppies, and Rosso’s farmer father, Vittorio, must have seen it coming.
“So I bring this rabbit back and then is coming seven more,” Rosso recalled in a recent interview.
But where some children would learn to be wary of people who were anxious to give away their pets, Rosso saw an opportunity.
He borrowed some money from his father, built a cage and went into the rabbit-breeding business. Within a year, he’d sold more than 150 rabbits, paid back his father’s initial investment and bought himself a few things.
Like most enterprises started by 10-year-olds, the venture petered out as its founder lost interest. But young Rosso had learned that with a touch of salesmanship, an inventory of anything — even rabbits in rural Italy — can be turned into money.
Rosso, now 47, founded the Diesel brand and changed the jeans business, pushing price points higher and convincing consumers in Europe and the U.S. to pay $100 or more for jeans that look like they’ve seen years of hard labor.
His start in the jeans business came early. In 1970, he enrolled in the Marconi Technical Institute, studying textiles and planning to go to work in Italy’s industry.
“When I was 15, I cut my first pair of jeans,” he recalled. They were bleached bell-bottoms that flared out to 17 inches, which he said disappeared at some point over the past few decades. His friends envied his new pants, he continued, “So I started producing for them, too.”
He made the pants to measure out of fabric his friends brought him and charged them the equivalent of $1.50 for his labor.
“With this money, I was better than the other friends,” he continued. “I had money to go to the bar, to the discotheque, to buy nice clothing and enjoy a better life, even to pay for my studies.”
He graduated from Marconi in 1975 and was hired by a manufacturing company called Moltex, working for Adriano Goldschmied.
“They hired me to control the production,” Rosso said. “It was a very small company, only 18 employees.”
Goldschmied and Rosso developed a few brands together and in 1978, changed the company’s name to Genius Group, which counted the new name, Diesel, among its first brands. That year, Rosso was made a partner in the company.
Rosso said he chose the Diesel name because “I was looking for a very short name, internationally pronounceable in any language.”
From the get-go, Diesel was fashion forward in its design, though in retrospect Rosso admitted the early styles were a touch extreme.
“I remember trousers with very high waists and with the suspenders, in knit and satin,” he said, describing the first unisex Diesel collection. “It was something that was very difficult, very difficult.”
But Goldschmied and Rosso hit the road selling their first collection, and by 1980 were ready to expand distribution outside of Italy.
He said, “My first trip for business was to Munich [Germany], I remember. It was also the first time I was on an airplane.”
The Genius Group steadily expanded, as Goldschmied and Rosso developed brands including Replay and Goldie.
But by the mid-Eighties, Rosso was starting to feel that trying to manage several brands at the same time left him stretched too thin.
“I felt a bit frustrated, every day to be thinking about so many brands,” he said. “And every brand had a different target and different mentality of customers.”
In 1985, he decided it was time to strike out on his own.
“I asked Adriano to have a chance to buy Diesel alone. It was the one that I felt most close to, and I sold to him the other companies,” he said. It wasn’t an easy partnership to break, Rosso recalled: “We started to fight but, after we found a good way to compromise…I gave to him all my shares, plus some cash.”
As soon as he closed on the deal for the company, which then had sales of about $2.5 million (less than 1 percent of its 2002 sales, which came to more than $600 million), Rosso hopped onto a plane to visit customers in Europe, Japan and the U.S.
He also decided the brand would focus on jeans.
“We were inspired from the vintage market and were inspired by used trousers,” he said, “even broken with holes.”
But some customers weren’t quite ready for that level of wear in a new pair of jeans.
“I remember, there were so many complaints, customers sent them back because they thought they were second quality,” he said. “Now they understand, but in the beginning it was very difficult. It was very difficult to do this kind of vintage look.”
Another challenge was that in each country in which he opened distribution, retailers wanted Diesel to tweak its design to fit with local tastes.
“We wanted to stay with the same product worldwide and I received a lot of complaints from my sales force,” he said. “Everybody was saying, ‘You don’t understand things, this country wants this, that country wants that.’ They pushed me to prepare special product by country, but I never accepted.”
Rosso said he saw international cultural trends developing across many countries, as people started to choose the same entertainment options, and suspected a similar phenomenon would take place in fashion.
“Now consumers understand and they want the same product worldwide, but in the Eighties it was very different,” he said. “Fashion was very different country by country.”
While it was a challenge to convince European buyers that the same jeans could sell in Italy and France, he ran into even stiffer resistance when he crossed the Atlantic.
“They were demanding something simple and they didn’t have the culture to understand why some jeans can retail at $100,” he noted.
Faced with the difficulty of cracking a major foreign market, Rosso decided to seek help.
In early 1990, Diesel — with revenues then of about $135 million — licensed the rights to distribute the Diesel brand in the U.S. and Mexico to New York-based Russ Togs Inc. Under the terms of the agreement, Diesel would manufacture products for the U.S. at its Molvena, Italy, headquarters and Russ Togs would handle sales and marketing.
“I signed a deal with them, but it was a mistake,” he said. “They started to produce in China, Hong Kong. They just went for numbers.”
The deal was ill-fated and short-lived. By the next year, Russ Togs had filed for Chapter 11 bankruptcy and Rosso was able to buy back the rights to his brand. He also decided to hire most of the Russ Togs staffers who’d worked on his brand — a risky move, but Rosso said he felt he’d had little choice. None of the employees from that round of hiring remains with the firm today.
“I didn’t know anything about America, I just knew a few customers,” he said. “With them [the former Russ Togs staffers], I had a chance to sell my product.”
But even with his own staff, Rosso still faced the challenge of finding retailers who were confident they could sell $100 jeans. While Riccardi, a Boston boutique, had bought into the brand early on, other retailers were hesitant.
“A lot of people were thinking I was crazy to come here to the U.S. to sell,” he continued. “America is where jeans were born.”
He found some unlikely takers.
“I started to sell to the vintage stores,” he said. He opened as an account Antique Boutique, a retailer in New York’s Greenwich Village that at the time sold mostly used clothing.
By 1995, Diesel had about 350 accounts in the U.S. and was doing $15 million in sales here. Still, Rosso faced the common frustration of finding that buyers would only order select pieces from his broadening line, making it difficult to project a broad fashion message. So he decided to open his own store.
Not one to work by half measures, Rosso approved a 14,000-square-foot location on Lexington Avenue at East 60th Street in Manhattan, catty-corner to Bloomingdale’s flagship. It required a staff of 55 and Diesel conducted employee screening in a rented movie theater. Rosso said staffing the store was as big a project as starting another company.
The company followed up its New York flagship with store openings in London and Rome. Today there are about 200 Diesel stores in operation: 105 are company owned and operated, the balance are owned by local distributors in foreign countries. The company plans to open another 20 stores over the course of this year.
Diesel has opened stores in the U.S. and overseas aggressively in recent years. In 2001, it opened two more units in Manhattan: a flagship at Union Square and a Diesel Design Gallery in SoHo. That year, Rosso told WWD he intended to open stores until Diesel’s revenue stream was equally divided between retail and wholesale. In the recent interview, he said he’d changed his mind about that ratio.
“My objective is not anymore 50-50. Maybe it’s too much. My objective today is to have a store in the most important towns in the world for advertising the brand,” he said. “I think today, the right proportion may be 35-65.”
Last year, 75 percent of Diesel’s worldwide revenue came from wholesale and 25 percent from retail.
“What changed my mind? A lot changed after 11 September,” he continued. “If you go out just to be a retailer, you become too arrogant, I think. If you do only wholesale, you are never able to show who you are. It’s better to see a lot of multibrand stores that collect nice goods together.”
Diesel’s 2002 revenues came in at $660 million, an increase of 31.5 percent from the prior year. The company did $112 million in sales in the U.S. In interviews, Rosso increasingly talks about keeping the growth of the brand under control. Diesel’s image, after all, is somewhat of an outsider brand, which means that overdistribution could strain the brand’s image.
“You have to think, first of all, how big you want to be totally,” said Rosso, who retains sole ownership of the company. “I don’t want to be the next Levi’s or Gap. I want to be a nice, cool jeans company.”
In Italy, Holland and Greece, Diesel’s volume for apparel has gone as high as Rosso wants it to, he said, though he added that there’s room to increase sales in other categories, like accessories.
In the U.S., Rosso believes Diesel’s top ideal volume will be in the range of $200 million to $250 million, and staffers at the U.S. operation have said he’s started to give them a hard time about opening new accounts.
Rosso said it’s still hard to calculate what Diesel’s potential top worldwide revenues would be, because of the great chance for country by country economic fluctuations. But the realization that one day he’ll have to apply the brakes has been a driving force behind his moves in recent years to acquire additional brands.
Diesel launched its first spin-off brand, 55DSL, in 1994, targeting snowboarders. In 2000, it expanded further afield in acquiring luxury-goods maker Staff International, through which it now produces brands including Martin Margiela and Vivienne Westwood. Last year, the company also bought a controlling interest in the Margiela design house and reached a deal with Karl Lagerfeld to produce the Lagerfeld Gallery by Diesel denim collection. The company also owns a controlling interest in the D-Squared line.
Rosso believes the ideals of casual dressing and luxury clothing are starting to merge, and spoke of a “new, coming prêt-à-porter,” in which the weathering treatments that are applied to jeans today would be used on tailored clothing.
“We will destroy a little bit the jacket…or create some kind of effect that is becoming a much more new and modern way to wear a jacket,” he said.
His enthusiasm for this idea is such that a person meeting him while wearing a traditional tailored jacket might feel a touch of relief to see that Rosso didn’t have sandpaper in his hands.
Today, two of Rosso’s six children work for Diesel — though they both are posted outside of Italy because, in Rosso’s words, “They don’t want to work for me.”
His oldest son, 25-year-old Andreas, serves as creative director for 55DSL and is based in Switzerland. Stefano, 23, attends the Fashion Institute of Technology in New York and in his spare time helps out in the marketing department. His oldest daughter, Alessia, is 17 and lives in Italy with Rosso’s former wife, Nuccia.
Rosso also has three younger children from a current relationship: twin daughters Asia and Luna, 3, and daughter India, who is less than a year old.
While Diesel’s brand image has remained fairly consistent for a decade, Rosso said he still feels a strong urge toward creative destruction, which he said is key to keeping a business booming.
“The day that everything is going fantastic, I change everything completely,” he said, adding that his employees don’t always appreciate this intensity: “They think I’m crazy.”
Currently, that impulse has Rosso trying to shake up the style of his stores. He said he wants each Diesel location to be distinctive, so that travelers will have a reason to stop at Diesel outlets in different cities.
“We have changed all stores, every store is different and also we have different goods in different stores,” he said. The goal is individuality. He added, “Business is becoming mass business. The real fashion must be back and must be fantasy and dreams.”