2015MILAN — In a Copernican shift, the customer is now firmly at the center of the Ermenegildo Zegna group’s universe.
To better service this international customer, Gildo Zegna, chief executive officer of the Italian men’s powerhouse, has set in motion a new company model, reorganizing its structure. While the most visible result of this project is the return of Alessandro Sartori to the firm, Zegna has been working behind the scenes creating new key management roles and developing a new retail, marketing and digital strategy.
“I don’t like to use the term revolution, this is more of a disruption,” Gildo Zegna told WWD in an exclusive interview. “This is an important change that signals we are out of our comfort zone.”
Sitting at his desk in his luminous office at the Milan headquarters of the company, surrounded by framed articles on the firm and personal photos with the likes of Giorgio Armani or Pope John Paul II, Zegna revealed the changes that he deems necessary to expand the customer base. These rely on new roles within the group: one single brand manager, for a consistent overview of all labels; a digital and marketing officer, Luxottica alum Luca Lo Curzio, since Zegna believes “marketing is digital today;” a head of omnichannel, Zegna’s son Edoardo, and a head of retail experience, who is in charge of the homogeneity of stores, training store employees to be digitally experienced.
Sartori, who left Berluti earlier this year, will have responsibility across all Zegna brands and for all creative functions as artistic director, a new role. The collections were previously designed by Stefano Pilati. Sartori joined the Trivero, Italy-based group in June, and will unveil his first collection for fall 2017 in January with a runway show.
“Alex [Sartori] is the man that more than any others represents our brand; he was a fabric designer for us in the Nineties,” said Zegna. Sartori first joined the firm in 1989 and was at the creative helm of Z Zegna for eight years. “I remember when I first interviewed him as a kid in the Nineties at my father’s home. Since then, he’s built his experience from ready-to-wear to fashion and leather. He understands CRM, the new digital marketing and he thinks about the customer.”
Zegna remarked on Sartori’s “authenticity” and influence on “style, even more than fashion. Style is more modern than fashion.
“We need to be innovative the Zegna way, we can rely on an integrated pipeline, from sheep to shop. What other company has this across the board, from farms in Australia to the stores? And he knows how to interpret these values,” Zegna continued.
“He brings positive energy, a modern way of thinking, a new strategic vision and is a well-rounded designer, very much in line with my way of thinking.”
Zegna also ticked off Sartori’s ability to “mix style and innovation, leveraging his knowledge of the new reality of trends and consumers. He is a unique communicator, his ability to create relationships and engagement with customers in all parts of the world is unique, and not only digitally, but one-to-one. And he is sensitive to marketing changes.”
An artistic director will help the company with “clarity, a single creative mind and leading voice.”
Zegna emphasized the role of digital and retail. The company will give customers a choice whether to buy online or offline. “It’s not about selling more through omnichannel but it’s about what can I give you in terms of additional service, how customers use the time in the store. A brand that does not engage customers digitally is perceived as ancient.”
Zegna said the company will see results from the omnichannel strategy in the second part of the year.
He underscored that digital information will help the company know the customer’s shopping history, allow him to set up appointments, speed up made-to-measure orders and help with personal styling.
No major store overhaul is in the works, but “small innovations, for venues that are more engaging and more welcoming. We realized sometimes we projected rigidity.”
The focus is also on visual presentation and storytelling and the approach should be more local and less global, he added.
The stores will be consumer-centric with a “more immediate retail experience to trigger emotions. I know these may just sound like nice words, but we are basing this strategy on research that found that our customers were loyal but static. The changes will help expand our customer base and attract new consumers.”
The organization has also been simplified with the new function of a single brand manager.
“There is too much offer and too many channels, too much of the same product on the same consumer,” said Zegna, who has been working on a new homogeneous sales and distribution channel.
Zegna remarked on the “industry problems, which are increasingly similar for everyone.” Customers continuously cross borders and keeping tabs on them is more and more difficult. “To say what is China or what is Australia is difficult. It is the traveling consumer that makes the difference, the Australians or the Chinese on the move.
“A coordinated and consistent way of thinking” helps to be reactive, and results are immediately visible. “It was not long ago we were talking about emerging markets, but it seems a topic from another generation.”
Zegna also waved away distinctions between Millennials and Baby Boomers. “It’s beyond that. We don’t think in terms of such categories. Father and son can share an experience the same way.”
Asked about the see-now-buy-now format, Zegna said collections are “increasingly less about seasons and more about projects, taking into account the interests and desires of local consumers. It’s more about the consumers and the nationality rather than the country. How can you describe the character of an English, a Swiss or an Australian?
He noted that the company has been selling “a lot” of trans-seasonal products. “The weather has an incredible influence.”
Capsules need a “speedy” reaction, but the company can rely on its supply chain, Zegna said. But the company will also continue to have seasonal collections.
In addition to capsules, customers request highly personalized products. Zegna revealed that Sartori was working on a project that “brings [personalization] to the limit.” It is expected to be unveiled in November during an event to present the newly renovated flagship on London’s Bond Street, whose space has been doubled after two years of work.
In 2015, the company saw a 4 percent gain in revenues, which reached 1.26 billion euros, or $1.4 billion at average exchange rates, although its performance was dented by declines in Greater China as well as investments in the manufacturing operations and in global expansion in Japan and the Arab Emirates, for example.
Zegna addressed the slowdown in 2015 and said 2016 looked “even more uncertain. It’s difficult to find reassuring signals. The macroeconomy, every single political fact impacts our sector, which is very vulnerable and affects currencies. Our role is to read this uncertainty in the best possible way and interpret it to be prepared, keeping everything under control. I would be worried if I had not changed the group’s organizational model. I took my time, I started a year ago. Will it work? I think so. I am positive, and there is a lot of energy and resources to invest.”
He also argued for a balance between creativity and commerce. Zegna praised Armani for reiterating last month that designers should “show clothes that can be sold.”
A few days after Corneliani’s sale of a majority stake to Bahrain-based Investcorp, Zegna reiterated that the company has the necessary resources to grow without the help of partners and that it is not looking at an initial public offer.
Asked about the U.S., Zegna admitted it has been a “tough year” in that region in 2016, and he believed business will be “not easy” there until the end of the presidential elections. “It’s difficult to see other markets compensating the U.S.,” he observed.
Zegna has shifted the focus from geographic areas to sectors he perceives to be fashion’s main competitors: travel, technology, design, sports, art, vintage cars and hard luxury. “Customers are splitting their budgets. It was different until a few years ago. These are epochal changes,” he noted.
The group completed its industrial reorganization last year, investing in strengthening control of its supply chain. Zegna has created a state-of-the-art manufacturing center in San Pietro Mosezzo, near Novara, for its clothing division. This is in addition to three centers for the production of casual garments, outerwear and leather apparel, and accessories in Parma, Italy. A center specializing in knitwear was set up in Verrone, near Biella, Italy. These work alongside the historical textile mill in the country’s town of Trivero.
To engage its customers, Zegna is planning to organize visits to its manufacturing plants, to its Oasi Zegna territory or to luxury car maker Maserati, with which the company has comarketing projects, “to spark emotion and interest.”
“Our must is to return to grow with new projects, as the market is not growing,” he remarked. “There aren’t new territories, and we are looking at filling the spaces left by others.”
One of the areas Zegna sees as showing growth potential is the United Arab Emirates. Last year, the group formed a joint venture with the Dubai-based Al Tayer Group to expand its reach in the Middle East. According to the agreement, Al Tayer took over from its former partner, UAE Trading, as the main operator of Ermenegildo Zegna boutiques and other points of sale in the UAE. Zegna said the company will relaunch the store at Dubai Mall next year.
In the fall, the company will open a boutique in Tehran and reopen a unit in Berlin.
Zegna was quick to point out that he still believed in its wholesale business. The executive held a dinner for around 100 wholesalers during Milan Fashion Week, signaling the importance of this channel.