MILAN — “No man is an island and the most important challenges have to be faced together. Today Italy needs Europe more than ever, because alone it can’t win, so it’s time to relaunch the European dream and the creative industries can be the engine to set this in motion after the pandemic,” said Altagamma president Matteo Lunelli during a webinar on Wednesday.
The Italian luxury goods association has been putting the remote way of communication to good use during the coronavirus crisis, hosting webinars to track evolving consumer behaviors and market trends. This time, the organization held a digital roundtable inviting local politicians representing Italy at the European Union to discuss key measures needed to relaunch the country’s economy.
In particular, Altagamma presented the Position Paper, a document offering insights into the contribution luxury goods make to the local economy and 10 recommendations to hand out to institutions before the Extraordinary European Council on July 17 and 18, when the Next Generation EU recovery package for the post-pandemic will be discussed.
The 10 steps to be taken include acknowledging the luxury goods industry as strategic for Europe; investing in education and professional training; promoting and relaunching tourism with a higher positioning; supporting investments in innovation; pushing and promoting sustainability; strengthening the single European market; safeguarding the free circulation of goods, services and people within Europe; protecting intellectual property; guaranteeing selective distribution to protect luxury brands’ positioning, and supporting the growth of Italian small businesses.
“Italian and European institutions haven’t affirmed a strategic centrality of the luxury goods sector yet, but this is a key industry,” said Lunelli. In a global market worth 1.1 trillion euros, last year Italian luxury goods makers generated 115 billion euros — that is 6.85 percent of Italy’s gross domestic product — with exports accounting for 53 percent of revenues and employing more than 400,000 people. In Europe, revenues totaled almost 800 billion euros, representing 4 percent of the continent’s GDP and 10 percent of its exports.
Lunelli underscored how the sector is not key only from an economic point of view, but for its “cultural value, which is an essential element for the European repositioning in the global competitive context.”
“We also need to abandon the idea that luxury is something elitist and that these companies don’t need help,” he added.
To present the demands of the industries Altagamma represents, Lunelli was joined by vice presidents Paolo Zegna, who is Ermenegildo Zegna Group’s president and helms the association’s fashion division; Emilio Pucci’s deputy chairman and image director Laudomia Pucci, helming the talents and human capital category; Lamborghini’s president and chief executive officer Stefano Domenicali for the automotive industry; Lifestyle Design’s ceo Dario Rinero in charge of internationalization; San Domenico Hotels’ managing director Aldo Melpignano for hospitality, and Frescobaldi’s ceo Giovanni Geddes for the food division.
In particular, Zegna underscored that the fashion industry was one of the hardest hit by the crisis, but in keeping a proactive approach, he urged for a strong alliance “between institutions and private players, between Italy and Europe” to win a “battle that single operators can’t fight alone.”
Like Lunelli, he demanded a change in the cultural perception of the luxury industry. “We’re still afraid in considering this and the fashion industry as standard bearer for Italy…but we will need to rebuild our image as a country after the pandemic and we will have to use fashion as a standard bearer to do that, as it’s loved and appealing globally, so all other industries will benefit from such an operation,” he said.
Another pressing point for him was the training aspect. As reported, last year Altagamma released a tome forecasting shortage of skilled workers in high-end companies by 2023. Out of the 236,000 jobs expected to be missing, 70 percent are technicians, as specialized schools are not enrolling and training enough students to meet the companies’ demand. The gap is a result of institutional and technical issues since schools are managed independently by each region, and also due to the little appeal these types of jobs hold for younger generations, which is a key element that needs to be improved for Zegna.
In this area, Lunelli asked for support on a European level, that could lead to the creation of a pole for high-end professional training or to coordinate different schools, guaranteeing a unified standard of practice and promoting a coherent communication to make artisanal professions more appealing.
Laudomia Pucci underscored how many companies started to implement their own laboratories, educational and internship programs to fill the existing gap, but agreed that a lot needs to be done to encourage young people to enter these kinds of professions. “Simplification — reducing tax wedges and facilitating bureaucracy for employment, for instance — and promptness will help our companies grow in the future,” said Pucci.
As the Position Paper mentioned supports and incentives for investments in sustainability and digitalization for companies, Zegna highlighted that these operations will cause an increase in the cost of products. Entrepreneurs will therefore need to be motivated to keep investing with common custom control regulations on a European level, so that fair competition is guaranteed.
The fight against counterfeits and protection of intellectual property were hot topics throughout the webinar. “We have a company like Cassina, which has been producing Le Corbusier pieces for 50 years, but for each product we make, there are nine fakes in the world,” said Rinero, adding that tighter controls against counterfeits are “beneficial also for the government, as only companies respectful of the law pay taxes.”
Rinero admitted that the design and furniture industry was less impacted by the pandemic compared than other sectors, as the lockdown put at the center of consumer attention the importance of having a pleasant and functional domestic environment and represented a business opportunity for Italian design companies.
“But on the other hand, things are not going that well because our structure is fragile and this sector needs to evolve. We have to create four to five big groups that can drive the other SMEs to growth, but this can’t be done without fiscal relief and therefore the help from institutions,” said Rinero.
As people are spending more time at home, restaurants and bars are significantly affected by the pandemic. Albeit exports for high-end food companies represent 67 percent of their revenues, the domestic market remains the most important for them, accounting for 25 to 33 percent of sales. Geddas asked to cut the VAT tax for the rest of the year to encourage customers to spend and help operators to survive the crisis; to fight against the custom duties imposed by other countries importing Italian food and wine, and to implement a strong, efficient communication campaign to promote Italy and encourage at least European tourists to return to the country.
Tourism’s recovery is essential for the domestic economy and overall image of Italy worldwide. According to Altagamma, tourism represents 13 percent of the country’s GDP and 60 percent of luxury goods sold in Italy are bought by overseas visitors. The association’s goal is to relaunch tourism with a higher positioning, focusing on attracting higher-spending tourists.
“Companies operating in this sector will see revenues drop 60 to 80 percent this year,” said Melpignano. “Most of these are small businesses with little political and institutional weight, so aiding the high-end players in this industry is important because they can help and enhance the recovery of the smaller and annex players.”