MILAN — Before Italy’s Prime Minister Giuseppe Conte presented a package of economic measures on Monday evening, the president of the national eyewear companies’ association, Anfao, and of the Mido eyewear trade show Giovanni Vitaloni urged the government to act rapidly to guarantee loans to businesses.
“If the injection of liquidity doesn’t happen quickly, this will represent a huge problem for companies and cause devastating repercussions both economic and in terms of employment,” Vitaloni said. “In this moment, I don’t feel like advancing other requests but just this one, otherwise we lose sight of the main goal: Money must be supplied in few days, in a simple way and without bureaucratic quibbles.”
The government’s package might have answered Vitaloni’s request, as it includes the strengthening of public guarantees for 400 billion-euro-worth of loans and investments to help business, but it still has to become effective.
Meanwhile, the national eyewear industry — which in 2018 registered a total turnover of 5.1 billion euros — is another sector coping with the impacts of the coronavirus emergency. In particular, the health crisis coincided with a key moment for eyewear companies as they were approaching Mido — initially slated to run from Feb. 29 to March 2 — to present their new products and collect orders. As reported, Mido’s organizers first postponed the event to July 5 to 7, before forgoing the annual edition in light of the international expansion of the COVID-19 outbreak. Next year, the fair will run Feb. 6 to 8, moving up its usual dates.
Here, Vitaloni discussed with WWD the reason behind this decision, the current state of the eyewear companies, the estimated damage for the industry and possible recovery scenarios.
WWD: Let’s start from the cancellation of Mido and why you changed dates for next year.
Giovanni Vitaloni: The decision to cancel the show has obviously been a painful one because Mido represents the engine of the Italian eyewear industry, so the fact that it’s not possible to hold the event even in July certainly damages our sector. But objectively there weren’t the conditions to stage an event of this relevance in July and we didn’t want to further postpone it in the fall because there’s already the Silmo trade show in Paris at the end of September, which we hope can still happen as it would give a boost to the industry. Then we worked on the new dates — and we had already set these up before the COVID-19 emergency — moving them up at the beginning of February 2021 because the whole sector was united and agreed on anticipating the event as much as possible as it would give a positive boost to the commercial activity and help orders.
WWD: As president of Anfao, can you tell us more about the main concerns associates have right now?
G.V.: Well, first I have to say that the scenario changes week after week, because honestly when we took the first decision to postpone Mido the situation was in one way and today, after five weeks, it’s totally different. So, if at the beginning of March our companies thought and forecast that in any case, even with great difficulty, it would still have been possible to run their businesses in certain international markets, with the stop of all activities on March 13, all markets froze. The main problem is that today the demand is zero. There are no orders, the billing activity especially of our SMEs stopped in mid-March and therefore the current, great suffering of our companies now is due to the lack of orders. Plus, all this happened when the companies had set in motion their greatest economic effort of their whole year because Mido was scheduled at the end of February and that was the key moment for all companies to launch the collections and to enhance the communication. So they really committed with the goal to collect the orders of international customers during that week. This could also have been possible by each company individually if there was the opportunity to travel around the world, but that failed after a few days, so firms today are in an extremely dramatic moment with their activities stopped for several weeks and the forecast of a further halt for the whole month of April.
WWD: But has the production activity stopped?
G.V.: No, production has not stopped, but demand has. We represent an industry that produces PPE — personal protective equipment — so we’re allowed to continue to produce. And some companies continue to do it because they have commitments toward multinationals. But in a more general picture, there’s no demand and that’s something that could not have been foreseen four or five weeks ago….All markets are stuck right now. For example, in France, which for the Italian eyewear industry is the second largest export market, opticians have been closed for 20 days now so companies can’t supply them even if they want to. This is something that we have progressively seen happening in all markets, finally reaching in the last weeks the North-American one, that represents the bulk of Italian exports, almost 25 percent of it. So the problem today is to hold on for another five weeks without actually having demands.
I believe that our primary concern today is employment, so preserving jobs is what worries entrepreneurs, companies and laboratories. The second concern is the financial liquidity because during March companies managed to navigate the situation independently with their resources, but what will happen in April is totally unknown.…I know our colleagues in Germany and in the U.S. had injections of money directly on their bank accounts within a few days, and they were in this crisis three to four weeks after us. So our problem is receive liquidity right away, without waiting any longer.
WWD: Do you believe any delay could also cause a souring of the competition?
G.V.: Well we have to remember that the crisis we are facing is determined by circumstances and not structural. Our companies are healthy, our supply chain is extremely performing and very competitive on international markets — we export 90 percent of our production — and over the past 20 years, we managed to go through many moments of international difficulty and preserve our Made in Italy asset. So we must surely defend our competitiveness on international markets, especially from Asian productions, but everyone is dealing with hibernated markets now, not only us. I believe that we have companies that are suffering today just because of the COVID-19, otherwise they would be doing very well, as in 2019 exports event grew 4 percent despite an international situation that was negative and despite a flat domestic market. And in the first two months of 2020 we registered the same trend.
WWD: Do you think this situation will further increase the gap between big eyewear players and small or middle-sized ones?
G.V.: For sure they move at different speeds and have different concerns. Obviously, the big players operate with a very strong concept of independence, and according to different rules, our association and fair system is mainly dedicated to SMEs. But I don’t think there will be big differences between how the situation was before and how it will be after this emergency: It will simply continue to be a gap. The liquidity problem mainly involves SMEs as financial dynamics in larger groups are very different. I also believe that this year will remain in absolute value compared to the overall economic life of our industry, but we have to be ready to seize the opportunities a slight recovery in May might offer.
It is very likely that, considering how things are going, the first market resuming its activities and showing a little demand recovery will be the Italian one, as we’re in this situation three weeks ahead other European markets, and probably a month ahead of the U.S. And when markets will gradually reopen, maybe we will even have more opportunities compared to before the emergency because I believe that in the aftermath of moments like the one we’re experiencing, there’s usually an enhancement of the values represented by the Made in Italy: transparency, tradition and an ethical way of working. A certified product, manufactured in an ethical way will be even more appealing than before, as people will increasingly look for the truth.
WWD: What about Asia? Would the fact that they are ahead of us in the recovery process have impacts on the eyewear industry?
G.V.: It might, even if I was talking to colleagues in Hong Kong and there is still a great concern about a possible ebb wave, and activities are resuming very slowly. But it is true that there is a minimum of activity in the Asian markets now and this is mainly an opportunity for large companies that either operate their own stores or high-end fashion brands, that have a different appeal. Plus, it might help large companies selling sunglasses online.
WWD: Have you already estimated the economic damage of this situation?
G.V.: For SMEs, we can forecast a loss between 40 percent to 50 percent compared to their estimated sales for this year, so it’s devastating also because of the timing. They were ready to launch the new collections and had stocks for order fulfillment in their warehouses, and now it’s all pending, along with the preparation of the September lines. In our industry, the average time to ready a collection is long, it varies from nine to 12 months, so this means that the work for the September collections was already set. Now each company will have to decide how to make the best out of the outstanding lines from March and the ones set for September. I believe that every company will find the best solution, but overall the fundamental thing for all of them is that we see a recovery in demand, otherwise every strategy is pointless. That said, we are an extremely dynamic sector and we are able to react really quickly, adapt to the needs of the market and we are not afraid roll up our sleeves and commit. The sentiment is that we have to foresee a gradual recovery starting from the Italian market and a summer season of work, definitely not of holidays. July and August will be an opportunity to make up for what we have lost in these weeks.