Francesca Bellettini and Remo Ruffini

MILAN — “The slogan ‘small is beautiful’ is no longer true. The Italian small and medium-sized company has to start thinking big. They need money to reorganize their business, attract the right people and become more international,” said Made in Italy Fund managing partner Alessandro Binello, during the 23rd edition of the Pambianco Fashion and Luxury Summit held at the Milan Stock Exchange on Wednesday.

Size is actually one of the most relevant factors differentiating the luxury companies on the international scene, according to  research presented by Francesca di Pasquantonio, Deutsche Bank head of global luxury research.

“Compared to the past, today companies are forced to increase the level and variety of the investments and costs to remain relevant on the market, making dimension an important element of differentiation,” she said, adding that recently, looking at the stock market, companies’ performances were in most cases linked to their business volumes. In particular, from January 2017, the share price performance of big groups increased 80 percent, compared to the 18 percent growth of smaller companies.

According to di Pasquantonio, digitalization enabled companies to develop more accessible communication and distribution models, but at the same time it triggered higher investments. For example, she highlighted that companies’ investments in advertising have doubled or in some cases tripled — not only online — and that costs related to sales and distribution tripled, compared to 10 years ago.

“Investments in the manufacturing processes and in the supply chain are key for luxury brands, since high-quality is actually considered a commodity by today’s customers,” said di Pasquantonio, also citing the importance of allocating budgets to the development of strategies based on artificial intelligence and on the creation of more entertaining and efficient stores meeting the needs of new customers.

Being part of a major group such as Kering is definitely a great resource for a luxury brand, according to Yves Saint Laurent president and chief executive officer Francesca Bellettini, who praised the “visionary approach” of François-Henri Pinault, president and ceo of the luxury conglomerate controlling the French label. “Being part of a group allows a brand to take advantage of synergistic strategies in terms of logistics, finance and treasury,” Bellettini said. “When a big company reaches certain dimensions it requires investments in technology, which a group can afford and make available for its brands.”

This integration of industrial research and development in fields such as logistics, finance and digital, is the goal of Piquadro president and ceo Marco Palmieri, who has created an accessories group around the Piquadro label with The Bridge and Lancel, acquired in 2016 and 2018 from the founding family and French conglomerate Compagnie Financière Richemont, respectively.

“If we accomplish this goal, we will be able to consider other acquisitions of brands fitting our industrial values,” said Palmieri, who is already eyeing “an Italian and an international brand,” without disclosing more details. The Piquadro group closed 2017 with revenues of 98 million euros.

Philipp Plein

Philipp Plein  Alessandro Olgiati

“I’d like to buy Gucci, but it’s too expensive,” Philipp Plein said with a laugh, ceo of his namesake group, operating the Philipp Plein, Plein Sport and Billionaire brands. In 2017, the Swiss group posted revenues of 250 million euros. “There are some good opportunities in the market and I think that with the successful acquisition of Billionaire we demonstrated we are able to build brands because I think we understand the market and we have efficient infrastructures in Lugano,” said Plein. “We have a lot of dreams,” he said, noting that people talk too much about future plans without being concrete. “I’m a working-class hero who just wants to deliver,” he said, revealing that next year his company will announce its first fragrance license, along with opening more stores.

If expansion remains one of the main goals of luxury brands, stores will have to adapt to the demands of the customers of the future, according to Sara Bernabè, country manager of Planet Italia, an international payment service provider.

“From the in-store experience and the diversification of payment methods to the exclusivity of the offering, the retail business needs to evolve to offer a more personalized and high-tech shopping experience,” she said.

According to Bernabè, this will be key to meet the expectations of the increasingly demanding international customers shopping in European countries, especially Chinese Millennials. “Eighty-six percent of them look for exclusive customized products,” she highlighted, noting that compared to North American Millennials, their purchases are less influenced by the price factor.

Chinese tourists are expected to continue to be the most numerous among the 17 million international people shopping in Italy in 2019, according to Oxford Economics data. In general, the Italian tax-free business is expected to grow 4 percent next year.

Even if attracting these customers is one of the ultimate missions of a luxury label like Moncler, the company’s president and ceo Remo Ruffini also highlighted the importance of preserving a certain “conservative” approach. “Our goal is definitely to attract and reach new customers, but at the same time we must not forget those who have followed us until today, also because they generate the biggest part of our revenues,” he said. “We don’t have to dilute the brand — we are focused on finding the right balance between what the market requires now and in five years.”

Controlling the distribution and making it more exclusive is one strategy adopted by the brand, which at the same time with its Genius Project, means to deliver an inclusive create approach.

“With Genius, we are delivering collections that fit the needs of different customers from the youngest kids to the ladies who want to be elegant for a chic dinner,” said Ruffini, referring to the variety of styles and designs offered by the designers involved in the project, including Pierpaolo Piccioli, Sandro Mandrino, Simone Rocha, Craig Green, Kei Ninomiya, Hiroshi Fujiwara and Francesco Ragazzi.

During his talk with the event’s moderator journalist Enrico Mentana, Ruffini expressed his concerns about the Italian political uncertainty. “I’m definitely worried by the volatility of the markets, which is destined to increase if the Italian political class won’t support us,” he said.

"The House of Genius" concept store in Tokyo

“The House of Genius” concept store in Tokyo.  Courtesy Photo

Despite its lack of internal stability, Italy continues to be the preferred country where luxury labels manufacture their collections. As highlighted by data provided by Pambianco’s research division, 85 percent of Italian luxury brands produce here and the whole Italian high-end manufacturing compartment is valued at 9 billion euros.

Preserving the domestic craftsmanship tradition remains key for Italian companies, which continue to invest in in-house structures aimed at training the artisans of tomorrow. For example, Venetian sneaker cult label Golden Goose will open a school next year to teach the art of making its luxury sneakers by hand, said ceo Silvio Campara.

This entrepreneurial approach gets even more strategic in view of the data provided by PwC during the summit. The study reveals that 61 percent of Millennials and 65 percent of the Generation Z members are keen to find a job in the fashion industry. According to the consultancy company’s research, they are driven by a strong passion for the sector and mainly look for competitive salaries and benefits, as well as by satisfying career development and professional stability.

Counting on a balance between digital and soft skills, as explained by Erika Andreetta, PwC retail and consumer goods consulting leader, companies will have to increase the quality of working spaces, developing a more flexible organization, improve people management and putting more focus on corporate social responsibility in order to attract the best talents of tomorrow.

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