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One of the World’s major fashion capitals, Milan can be considered the ultimate Italian destination for luxury shopping.
This story first appeared in the May 20, 2013 issue of WWD. Subscribe Today.
From La Rinascente, one of the oldest department stores to open in Europe in the 19th century, to the plethora of flagships of international brands that started opening doors in Milan after World War II, fashion retailing shapes the city center landscape.
The Golden Triangle, the high-end shopping district featuring glamorous Via Montenapoleone as its main artery, most clearly defines the fundamental role played by luxury stores in Milan’s economy.
There, high-end fashion boutiques follow each other, offering a wide range of luxe goods from prominent brands, including Giorgio Armani, Louis Vuitton, Bulgari, Gucci, Salvatore Ferragamo, Prada, Etro, Valentino, Céline, Alberta Ferretti and Ermenegildo Zegna, among others.
“The waiting list of companies hoping to open on Via Montenapoleone currently stands at about 10 international brands,” said Guglielmo Miani, president of the Via Montenapoleone association and vice president of clothing and textile company Larusmiani, which in 1954 became the first men’s wear label to open a store on the street.
According to Miani, the demand for space and the limited amount available have caused a constant increase in rents, which are the highest in town.
The shopping district’s momentum was confirmed by Ugo De Bernardi, chief executive officer of Finanziaria Internazionale Investments SGR, which controls several real estate investment funds, including the one managing a 75,350-square-foot building on Via Montenapoleone.
De Bernardi said that based on the building’s total rented surface area, the annual cost of a lease ranges from 3,500 euros to 4,500 euros a square meter. That works out to about $422 to $543 a square foot.
The 17th-century palazzo, formerly a convent, whose main building is now occupied by the Four Seasons Hotel, is currently home to the Christian Dior store and the Burberry women’s boutique. Hermès has recently rented the third commercial space, which is under renovation.
De Bernardi added that the building has a prime location in Via Montenapoleone’s best section — with the wider sidewalks — where rental prices are 5 to 10 percent higher than at other locations on the block.
As Miani noted, Russian and Chinese customers, whose purchases made in stores on Via Montenapoleone increased by 37 and 66 percent, respectively, last year from 2011, are the biggest spenders in Milan. The average purchase made by customers from Russia is $2,500, while Chinese tourists spend about $2,200 on luxury goods in each store they visit.
“According to research conducted by Mannheimer [Renato Mannheimer, president of Milan-based market research firm IPSO], 70 percent of the tourists doing shopping on Via Montenapoleone chose to shop there for the importance of the street, which is considered a brand, not for the specific stores located on it,” Miani said.
He explained that Via Montenapoleone’s pivotal role as a luxury shopping destination is reinforced by the high-end lifestyle traditionally associated with Italy. “International customers like to shop in Milan and generally in Italy because here they can find luxury five-star hotels and top restaurants.”
The situation is different in the city’s other shopping areas, as De Bernardi highlighted. “Milan’s Golden Triangle is the only area really attractive for international luxury brands looking for big and prestigious spaces,” he said.
De Bernardi explained that in the area around the Duomo cathedral, on Corso Buenos Aires and on Corso Vercelli, which are in the sights of mass-market and diffusion labels, rental prices are down between 15 and 20 percent compared with a few years ago, before the financial crisis hit Europe.
While Swiss retail consultancy Location Group says 50 fashion stores opened in Milan in 2012, ranking it fifth among global cities for fashion openings last year, the overall Lombardy region, where Milan is located, isn’t faring as well. According to data provided by trade organization Fismo Confesercenti, in the Lombardy region, 1,964 fashion stores are expected to close by the end of 2013 — 491 have already closed in the first quarter.
Despite the overall critical situation, luxury brands are not suffering from the crisis, and many of them are increasing their presence in Milan’s prestigious shopping arcade Galleria Vittorio Emanuele. Prada, which opened its first store there in 1923, is going to open an additional store in the Galleria. Prada reportedly will pay the municipality, the owner of the Galleria, a rent of 2.1 million euros, or $2.7 million, a year for the first five years and then 3.6 million euros, or $4.6 million, annually until 2031, the contract’s expiration date.
In addition, Giorgio Armani is going to inaugurate a store dedicated to accessories in the arcade, which currently also hosts Gucci and Louis Vuitton boutiques. Versace is still negotiating the rent of a commercial space facing the new Prada store. If the deal is finalized, Versace will have to pay an annual sum valued at about 606,000 euros, or $796,523.
Gucci is also reinforcing its retail presence in town. In June, during the next Milan men’s fashion week, the Florentine brand will open its third freestanding store in Milan. The boutique, which will be dedicated to men’s clothing and accessories, will be in a building formerly occupied by an investment bank, facing the Pinacoteca di Brera in the heart of the arty Brera district, traditionally home to art galleries and antique shops. With this opening, the area, already home to a Marc Jacobs store, could become a new piece of hot real estate in town.
Population: 1.34 million (2011)
Population change, past five years: +2.5 percent (2010)
Per-capita income: 36,362 euros ($46,840); 2010
Disposable income: 25,200 euros ($32,494)
Key industries: Manufacturing; telecommunications; information technology; fashion; consulting; publishing
Fast-growing neighborhoods: Historical center (Golden Triangle, Duomo and San Babila); Porta Venezia and Porta Vittoria district; Central Station area
Number of malls: 31 within 25 miles
Mall developments: Westfield Milan mall (Segrate, 3.7 miles from Milan); Locate di Triulzi mall (Locate di Triulzi, 9.3 miles from Milan)
Other major construction projects: Expo 2015; development of luxury residential and business districts City Life and Porta Nuova
HOT SPOT: VIA MONTENAPOLEONE
The beating heart of Milan’s Golden Triangle luxury shopping district, Via Montenapoleone, connecting Corso Matteotti with Via Manzoni, hosts boutiques of most major international fashion brands, including Louis Vuitton, Gucci, Giorgio Armani, Christian Dior, Burberry, Bulgari, Cartier and Salvatore Ferragamo, among others, across its length of 0.3 miles.
According to data provided by the Via Montenapoleone association, the Milanese high-end shopping artery ranks fourth among the world’s fashion streets reporting the highest revenues per square feet.
Tax-refund giants Global Blue and Premier Tax Free calculated that in 2012 the total revenues of the stores located on Via Montenapoleone were up 30 percent, compared with the previous year. The sales were boosted by the increased traffic of international customers — especially from Russia, China, Hong Kong, Japan, Singapore, the U.S., Ukraine, Thailand, Indonesia, Turkey, Taiwan, Brazil, Malaysia, the United Arab Emirates and Kazakhstan.
According to the Via Montenapoleone association, about 25,000 people, most of them luxury customers, walk down the street every day.