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Opening stores in a downturn may sound counterintuitive, but for Ermenegildo Zegna, it’s a case of who dares to win.
The Italian luxury men’s wear brand opened its third Peter Marino-designed “Global Store” in Tokyo last week and is slated to open flagships in Dubai and Hong Kong in the spring, followed by a Las Vegas unit in 2010.
In an interview, the label’s chief executive officer Gildo Zegna said he would continue to “seek opportunity even in a downturn.”
“It’s not an easy time to open. Tokyo was hit very hard by the economic crisis, but we are optimistic,” Zegna said, noting the strengthening yen was “an advantage. You have to take risks in order to gain market share.”
Zegna said he expected sales for the brand, the world leader in luxury men’s clothing and accessories, to increase to around 868.5 million euros, or $1.11 billion at current exchange, in 2009, up 3 percent from last year.
“Considering a very difficult last quarter, we are pleased,” Zegna said.
However, he added that he would approach the 2009 budget on a month-by-month basis.
“We’ve made the investments using our cash flow, we are still in a positive financial position,” Zegna said, adding diligent attention to inventory and vigilant buying methods were keys to fighting the economic crisis.
“We invested heavily in the past two years and we’ve consolidated many of the investments we did around the world, such as our new headquarters and the two other Peter Marino-designed flagships in Milan and New York. We’re coming out of our investment period,” Zegna said.
While most luxury brands choose Ginza or the Omotesando or Aoyama neighborhoods for their statement stores, Zegna opted to open the five-floor, 9,000-square-foot unit on a small pedestrian-only side street in the heart of Tokyo’s bustling Shinjuku neighborhood. The area is home to department stores Isetan, Takashimaya and a diverse crop of merchants that includes Muji, an electronics store and a watch dealer.
“We chose the area because it is very modern, fashionable and there is lots of traffic….Time will tell how quickly the location will be successful,” Zegna said.
The Italian company’s textile heritage inspired most of the design elements of the store, from the door handles resembling bolts of fabric to the Italian stucco walls hand-engraved to resemble Zegna’s cashmere-blend corduroy. The store’s facade features walls of glass overlaid with a woven structure of stainless steel rods. The interiors showcase a variety of earthy materials such as rosewood, lacquered palm and marble accents.
The ground floor offers shirts, leather goods and accessories, while the basement houses the fashion-driven Z Zegna collection. The second level is home to Zegna’s more casual and sporty pieces including the Zegna Sport collection. Classic suits, including a made-to-measure service, can be found on the third floor. The fourth floor’s “Couture Room” features Zegna’s most exclusive range of handmade suits and a fireplace made of emerald-hued Iranian marble.
“The Japanese consumer is getting more price-conscious, which is something you have to watch carefully, but he is also a very fashion-conscious and detail-driven consumer and captures trends very quickly,” Zegna explained.
To that end, the brand is pulling out all the stops to lure “the highly service-oriented Japanese customer” to its flagship with enhanced customer service options such as bringing made-to-measure to the doorsteps of its clients and increasing direct marketing. Store hours will also be extended.
“Great product is not enough; you have to find other ways of attracting the customer,” Zegna said.
According to Zegna, Asia counts for 30 percent of sales, while the United States and “greater” Europe count for 40 and 30 percent, respectively. Meanwhile, Zegna said he believed emerging markets would count for 25 percent of sales in 2009.
“China is a key market for us and is still growing. Russia, however, has slowed,” he said. “We entered Japan in the Seventies and China 20 years ago. We have a good track record and brands, especially family-operated brands with a good track record make the difference.”
While Zegna said the U.S. market was “challenging” he said believed it would be the first market to recover.
“I hope the worst is over, but we keep our seat belts fastened. We’re waiting for turbulence to be over in key markets,” he said.