MILAN – Italy’s fashion industry continues to look East and to China in particular.
The region took center stage at the Milano Fashion Global Summit on Thursday, titled “2018 Luxury Reloaded.”
Michele Norsa, former Salvatore Ferragamo chief executive officer and current board member of companies ranging from Ermenegildo Zegna and Oettinger Davidoff Group and vice president of Biagiotti Group, said it was “fundamental to travel to China,” to fully grasp the reality there. He disagreed with a study presented by Gilles Moec, head of developed Europe economics at Bank of America Merrill Lynch Global Research, who expected China to “likely slow down.” Norsa contended you can’t judge based on “arid data and graphics, or you see only risks.” He emphasized the “consolidation of [president] Xi Jinping, who is approaching Mao [Zedong’s status], people call him Uncle Xi. There is a long-term view and stability at all levels.” Norsa predicted the president will play an influential role both in the Korean crisis and with the U.S.
In a video call from Shanghai, Tod’s chairman and ceo Diego Della Valle said that China is becoming the group’s number one market. In accordance with Norsa, he underscored China’s increased political stability after the last elections and “a desire to live well. For luxury, the future is rosy here.” Della Valle noted that the company is evolving “from one that offers seasonal products to deliveries every two months in store” as it changes its communication and engages more with social media and influencers, showing video clips of Chiara Ferragni donning Tod’s. The founder of The Blonde Salad has also designed a capsule collection for Tod’s. “Social media can offer opportunities, it’s a powerful tool that can accelerate business, but it must be used with caution,” he warned. He said he expected to see results of his new strategy next year. As reported, Tod’s is working on enhancing its e-commerce and on executing a new business model, after reporting a slowdown in sales in the first nine months of the year.
Michele Scannavini, president of ICE, the Italian Trade Agency, said exports grew 7 to 8 percent in the first nine months, and that China was the region that grew the most. Exports increased 26 percent in China in the nine months and fashion in particular was up 15 to 16 percent in the period. “China will surely be a driver in the next years, but India is also fundamental with the GDP growing the most in the world, up 7 percent and accelerating.” Scannavini conceded there was still a lack of infrastructures in India, but expressed his belief in an acceleration in the country’s industrial development by 2020. He underscored the relevance of demographics in the long-term, citing the 600 million people who are living in the countries part of the Association of Southeast Asian Nations.
Gabriele Maggio, managing director of Moschino, said that China was the market that was more successful for the brand, and that the region represented more than 30 percent of sales.
The summit also focused on the challenges of the luxury industry and how finance can enhance a brand. Andrea Morante, chairman of Sergio Rossi, which is controlled by private equity Investindustrial, emphasized the uniqueness of the fashion industry. “Private equity funds better have internal competence and knowledge before they invest in luxury. Often they are generalists and this does not fit with fashion, which is a unique sector,” observed Morante, who helped Bahrain-based Investcorp’s acquire Gucci at the end of the Eighties. At the time, he was chief operating officer of Gucci.
“It was all totally intuitive, but they didn’t want to spend more money in buying back business in Japan and then it was tough to convince them to invest in fashion,” by bringing in Tom Ford, he said. Morante noted that when Investcorp was planning to exit, although the company’s price tag was “reasonable”, it found no buyers in Italy or France, except for Bernard Arnault’s “half [hearted] offer,” but then Gucci went on to be publicly listed and successful. “I was frustrated for so long because I didn’t see a fashion pole taking shape in Italy, but I am not anymore because I see the positive side — the quality pool of Italian managers that have emerged and their credibility,” said Morante, citing Fendi’s ceo, Pietro Beccari, appointed to helm Dior. “Rather than a fashion pole, I would now rather think of a fund dedicated to fashion and I think [Moncler chairman and ceo] Remo Ruffini would be great to lead that, he’s worked well with funds. If he leads, everyone will follow.”
Roberta Benaglia, ceo and founding partner of Style Capital Sgr, which in April acquired women’s brand Forte_ Forte and exited its investment in the Golden Goose Deluxe Brand in May 2015, concurred with Morante’s view of Italian entrepreneurs and said “they see their neighbors as competitors.” Benaglia said, leveraging a new fund totaling 130 million euros, Style Capital, which targets Made in Italy companies, has “two or three acquisitions in the pipeline in 2018.” As reported in June, sources say that the fund is eyeing an investment in MSGM, the brand founded by Massimo Giorgetti in 2009. “We’ve been working on some [acquisitions] for two years, we get to know the companies and accompany them,” remarked Benaglia.
Andrea Ottaviano, managing partner Europe, L Catterton, said “the most difficult thing is to select the right people [to manage a brand], even more than choosing the label, because they must preserve the soul of the company and translate it in a managerial effort.”
Lavinia Biagiotti, who in now helming the Biagiotti Group after the death of her mother Laura in May, is investing in the opening of a new retail concept in Rome this month, with an eye on the Chinese shoppers. The three-story boutique will offer a “fast” level on the ground floor, for the more instinctive acquisitions of accessories, a second floor dedicated to sportswear and slow-paced shopping, and the third housing the atelier. “Millennials want to customize their sneakers, we are returning to the times of my grandmother Delia [who founded the company as a sartorial atelier in 1965],” said Biagiotti, who is planning to launch a sportswear line. She also spoke of the Ryder Cup, to be held at the Marco Simone Golf & Country Club in 2022, a location that also houses the firm’s headquarters in a castle restored by Biagiotti.
Lorenzo Serafini, creative director of Philosophy di Lorenzo Serafini, said that he was “coming to terms” with the power of and visibility of the brand on social media. “If you are not on the web you don’t exist. My fashion is romantic and not loud, almost for a contrary effect I attracted people with more visibility than mine,” he said, cautioning against “a speed that burns everything too quickly.”
Individuality and brand identity, he said, helps a designer emerge. Serafini, who worked at Blumarine, Roberto Cavalli and Dolce & Gabbana before, underscored the democratization of fashion today. “You can be challenged by anyone that has a brilliant idea, a student in Sydney that launches a successful scarf and is enterprising… Then we must see what happens in the long-term.”
Norsa said that “in the past 24 months, those brands that have shown creativity,” have distanced themselves from competitors, naming for example Saint Laurent and Gucci or Chanel and Louis Vuitton. “Heritage and distribution are no longer enough, there is a need for a project,” he noted, citing how the market had reacted negatively to Burberry’s and Hugo Boss’ new strategies.