MILAN — Global economic conditions have gone from bad to worse since Gaetano Sallorenzo joined Replay as chief executive officer a year ago.
Although the downturn may have tempered his expectations for the denim brand, Sallorenzo is pushing ahead with a growth strategy that will see Replay introduce innovative retail concepts, become more flexible with its collections and expand the label’s presence in Asia.
Sallorenzo, who was president and ceo of ck Calvin Klein Sportswear and ck jeans for Europe and Asia before joining Replay, said he spent much of his first year streamlining the company’s structure. In February, he tapped Gigi Vezzola as creative director, putting him in charge of supervising the global image of the Replay, Replay & Sons and We Are Replay lines.
Several of Sallorenzo’s initiatives will be implemented during the second half of this year, including the launch of online sales this summer and unveiling an eco-friendly concept store in Florence during international men’s wear exhibition Pitti Uomo in June.
“I’m realistic and I believe 2009 and 2010 will continue to be difficult,” Sallorenzo said at the company’s Milan showroom. “It’s an epochal change, and we are all in a post-hangover mood.”
Replay parent company Fashion Box reported 2008 sales of 305 million euros, or $448.3 million at average exchange, compared with sales of 340 million euros, or $465 million, in 2007.
“We suffered in the last quarter, compared to the first nine months of the year,” Sallorenzo said. “I hope to stay in line in 2009, but I think the customer is taking a break until after the summer.”
Despite the difficulties, Sallorenzo believes the company is well positioned.
“We have no debt, nor do we want it,” he said. “We are solid, but must be financially careful.”
Sallorenzo’s plans for the eco-friendly concept store in Florence will serve as a model for a planned overhaul of Replay’s Milan flagship. The owners of the Milan building, which is in a key shopping district steps from the city’s cathedral, have received approval to build a new facade. The renovation will enclose an existing square, a designer staircase and other stores to create a new luxury mall. The redesign will allow Replay to expand its selling space — how much isn’t known — from 8,640 square feet in a high-profile venue. The timing of the project is still undetermined, but Sallorenzo said he hoped the store would be ready by the end of the year. The new concept, supervised by Vezzola, will revolve around ecological themes such as water, fire and earth.
“We are aiming at reducing the use of electricity by 40 percent, through the use of a system that allows to recycle air from the foundations of the building,” Sallorenzo said.
In September, Replay will launch a collection of 40 eco-friendly pieces, embellished with special azure stitching and an azure logo.
“We will use 50 percent less water and dramatically reduce electricity during every step of production,” Sallorenzo said.
The executive is also seeking to respond to retailers’ request for greater flexibility when it comes to the collection. Sallorenzo said retailers are demanding smaller collections and more frequent updates in order to generate excitement in their windows. Smaller collections are also a way to be more efficient and cut costs, he added. Accordingly, three mini-collections are earmarked for September, October and February. For the holiday season, Replay will launch a denim tuxedo with grosgrain and brushed denim lapels.
“Without turning into Zara, we need to create more frequent retail moments, propose a package with a marketing idea, window possibilities and different labeling,” Sallorenzo said. “Retailers today need new ideas that are very focused. The challenge is to continue to invest in innovation.”
He remains optimistic about the denim market, believing customers are looking for more innovative pieces rather than basics.
“If they buy less, they buy more particular things that have a strong impact and are less seasonal,” Sallorenzo said. This hasn’t meant that customers are automatically going for lower priced items, they just may be purchasing fewer higher priced items.
“We sell more easily jeans that retail from 150 euros [$200] up,” he said.
Even so, Sallorenzo acknowledged retailers want more competitive prices. To that end, the company has been working on the structure of the collection, expanding its product range to offer “a wider pyramid,” and reducing the high-end selection.
“Rather than making 30 different pairs of jeans selling at 200 euros [$267], now we offer 10,” Sallorenzo said. “The challenge is to do the prettier things at lower prices and with the same mood because customers are more and more after value for money and no longer willing to pay a premium for a logo.”
Exports account for 80 percent of sales, and retailing constitutes 40 percent of revenues. The company counts 200 stores and 3,000 points of sale.
Sallorenzo said he plans to create a joint venture in China with the company’s local partner, Si Fang, this fall. Replay has 12 stores in China. Through the new agreement, Replay plans to reach 50 stores in two or three years in China.
In February, the group formed a joint venture with SK Networks Co. Ltd. in South Korea. First steps include the opening of one flagship store by the end of the year and seven corner shops in the country’s main department stores. A store in Tokyo is also a priority for the brand.