MILAN — Once a beacon for Italian fashion companies, the U.S. is increasingly losing its pole position as regions such as China, India and the Middle East become engines for revenue growth.
And American retailers are starting to take notice.
“Emerging countries may distract [Italian manufacturers] from the importance of the U.S.,” said Burt Tansky, chairman of the Neiman Marcus Group Inc., during a conference organized here Friday by Altagamma, the Italian association of luxury goods companies. “We have specific needs, such as light weights of fabrics in the increasing warming trends of fall, or more colors, and we are concerned if emerging countries take precedence.”
The executive reiterated how trading down in slow times is “not an option” for Neiman Marcus, and underscored how relevant Italian brands are in terms of the luxury business. “The U.S. market requires more creativity and thought,” said Tansky, fearing an “imbalance” in priorities as Italian brands may shift their attention to customers who have entirely different needs from those in America.
Gildo Zegna, chief executive officer of Ermenegildo Zegna, downplayed these differences. “Business is increasingly global, and needs in the U.S. are similar to those in the rest of the world,” said Zegna, noting how multiple collections or lightweight merchandise are requirements in the U.S., but also in emerging countries, as well.
Zegna, together with Santo Versace, chairman of Versace, Francesco Trapani, ceo of Bulgari, and Michele Norsa, ceo of Salvatore Ferragamo, all said the American market continues to be very important. However, the executives did not deny they are being lured by emerging markets.
“It costs less to invest in China and we have immediate returns,” said Versace, noting at the same time that no area is overlooked. Even a mature market such as Europe continues to be “important,” and said a number of brands are turning their attention to “second-tier cities in the U.S.,” now that big cities there have been covered.
“In 10 years, Asia will play a key role, it’s undeniable,” said Norsa. Trapani said the big challenge was to put forward “a global strategy, while penetrating local needs.”
The executive said brands need to “be able to localize our proposals to local needs,” and that, while it may not be achieved for all markets, it should be done in the U.S. and the top areas. Trapani, who was somewhat positive about 2008, although a year “more difficult” than 2007, said “global companies can compensate a slowdown in mature markets with business in Russia, the Middle East and Asia.”
Altagamma expects sales in the U.S. to grow 6 percent in 2008. Asia is forecasted to grow between 15 and 20 percent. The U.S. accounts for 30 percent of the total luxury goods market.