MILAN — Mature markets will offer great potential for Italian companies offering high-end products, according to the “Export the Dolce Vita” report released Tuesday by Confindustria, the confederation of Italy’s industrial companies, and Italian financial consulting firm Prometeia.
The research forecasts that, in 2022, the 31 mature markets in the world, which are expected to see a big increase in their gross domestic product, will import high-end Italian products worth a total of 70 billion euros, or $76 billion at current exchange rate, almost 20 percent higher than in 2016 when they were 59 billion euros, or $64.9 billion.
According to Confindustria Centro Studi’s director Luca Paolazzi, the “Export the Dolce Vita” research takes in consideration 17,000 Italian companies, exporting “beautiful and well-crafted” products, featuring an average price 20 percent higher than mass products. With a total business of 130 billion euros, or $141 billion, this segment represents 20 percent of total Italian exports worldwide.
“Those we define as ‘beautiful and well-crafted’ items are those industrial products with a sophisticated artisanal touch and which are able to generate emotions in those buying them,” said Paolazzi. “This added value of our country’s production is based on three different assets: the cultural and artistic heritage; the country’s incredible landscape and the Italian inclination to high-end craftsmanship.”
Exports represent only 30 percent of Italy’s gross domestic product, according to Carlo Calenda, the Italian Minister of Economic Development, highlighting the importance of international trade for Italian companies. “The goal is to have exports accounting for 50 percent of our total business, in order to have our economy depending as least as possible on the domestic demand,” he said, citing Germany as a good example to follow.
“We have to have companies competing in the long-term with an offering satisfying international demand,” he added, pointing to the necessity to establish a “trust pact” between the government and entrepreneurs. “The government should not only provide companies with tools but it also should suggest to them where to invest their capital.”
Focusing on the different sectors of Italian high-end production, the “Export the Dolce Vita” forecasts that, in 2022, mature markets will import luxury fashion and textile products worth a total of 21 billion euros, or $22.8 billion, up 24 percent compared to last year.
“This is one of the most challenging sectors, since Italian fashion is already a leader in many mature markets, including the United States, Switzerland and Japan,” said Prometeia’s partner Alessandra Lanza. “In addition, this is the sector that mostly suffered from the concurrency caused by the international crisis. In the mature markets, some scaled down buying in the mass-market segment, while others started asking for different, unique products, which is what luxury fashion brands have to deliver if they want to remain competitive in this scenario.”
Italian exports of high-end footwear and jewelry are also expected to increase in the next five years.
The research forecasts that Italy’s exports of luxury shoes will increase 26 percent, compared to 2016, up to 9 billion euros, or $9.8 billion, while jewelry will register total revenues of 4.1 billion euros, or $4.4 billion, with a 18 percent increase compared to last year.
In 2022, Italian exports of high-end eyewear will post double-digit growth, with a forecast increase of 21 percent to 3.3 billion euros, or $3.5 billion, compared to 2016.
According to Lanza, the aforementioned predictions for Italian companies might be even more positive, “if they will be able to conquer new market shares in the respective segments across the mature countries.”
The forecasts indicate the U.S. will remain one of the best-performing and most appealing markets for Italian exports over the next five years.
In 2022, the U.S. will be the largest market for Italian exports of high-end goods, generating revenues of 13 billion euros, or $14 billion. According to the research, in five years, the U.S. will be not only the biggest mature market with 320 million residents, but also the richest among the mature countries with a gross domestic product per person of 50,000 euros, or $54,000.
In addition, the research highlighted that among the international tourists visiting Italy, those coming from the U.S. are the biggest spenders — in 2015, they spent in Italy a total of 4.3 billion euros, or $4.8 billion, or about 1,166 euros, or $1,294, each.
“The United States are a priority and a challenge,” Calenda said. “It’s not an easy country, it is a protectionist market and it challenges Italian companies from different points of view — costumers, distribution and regulations.”
Despite the positive scenario, U.S. President Donald Trump‘s tariff proposal, aimed at boosting the internal manufacturing business and limiting imports from Mexico, Europe and Asia, if approved, might have a negative impact on Italian exports to the country.
“If they will do what it’s in their plan, Italian high-end companies will lose a total of 1.4 billion euros [$1.5 billion],” Lanza said.
“Of course, I’m worried by the trade protectionism, but, at the same time, the luxury business went through so many challenges,” said Gucci chief executive officer Marco Bizzarri, exhibiting optimism about the strength of the luxury compartment.
The U.S. is definitely a key market for Gucci, which, in the first quarter of 2017 posted revenues of 1.35 billion euros, or $1.44 billion, up 51 percent compared to the same period last year.
According to Bizzarri, North America accounts for 21 percent of Gucci’s total business and it increased 46 percent in the first quarter of the year. The country is also the best performing in terms of online business for the Italian brand. “E-commerce’s revenues represent 10 percent of Gucci’s total business in the country,” added Bizzarri, highlighting how the brand is greatly appreciated by Millennials in the United States. “Fifty percent of our total revenues are generated by Millennials,” he revealed.
Bizzarri highlighted the importance of the digital world for Gucci, adding the online environment needs to get integrated with bricks-and-mortar.
“When Gucci launched e-commerce in 2002 it was conceived as an online catalog. Now it is a strong communication tool offering us many options to develop our storytelling,” the ceo said. “The physical retail space is changing at the same time and the challenge in the next few years will be to find innovative solutions to create a deeper engagement with customers by developing tight human relationships and generating experiences and emotions.”
Gucci currently operates 517 stores worldwide. “We won’t close any stores but in the next two to three years we won’t open new ones,” Bizzarri said.
“Digitization is also one of our most urgent priorities,” said Confindustria vice president for internationalization Licia Mattioli, highlighting that, despite the fact that online commerce in Italy grew 17 percent in 2016 compared to the previous year, it still represents a small percentage of the country’s business. “Italian companies only posted 3.5 billion euros [or $3.8 billion] of revenues from online sales last year.”
Education will be crucial to guarantee a rich future for Made in Italy, according to Bulgari ceo Jean-Christophe Babin. “I think that Italy should revise its educational system to give more and more importance to manual work, which is at the base of Italy’s artisanal craftsmanship,” he said.
In keeping with this vision, in March Bulgari opened a school in the Valenza, called “Bulgari Jewellery Academy,” an in-house technical training center for new employees. “We will train more than 300 goldsmiths in the next three years and the most talented of them, in 10 years, will be able to create one-of-a-kind pieces in our Roman laboratory.”
But Made in Italy luxury is not only about products, according to Babin, who pointed to the exclusive experiences offered by the Bulgari Hotels in Milan, Bali and London, as expression of the company’s high-end quality.
According to Babin, Bulgari will open new hotels in Dubai, Shanghai and Beijing by the end of the year, as well as a location in Moscow in three years.
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