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MILAN — Diesel is extending its “Reboot” strategy from product to retail.

This story first appeared in the March 16, 2015 issue of WWD. Subscribe Today.

Taking a cue from creative director Nicola Formichetti’s goal to elevate and reinvent the brand, the Italian fashion group is investing in an ambitious plan to renovate its store network with a new concept, aiming for more intimate and sophisticated spaces. The new strategy will first be visible in New York, as the company has just closed its Fifth Avenue unit and is working on a new flagship on Madison Avenue, on the corner of 59th Street, which is slated to open this fall.

“We want to transmit Formichetti’s mantra to be creative, his return to the brand’s original spirit, and his ‘Reboot’ plan, from image to business,” chief executive officer Alessandro Bogliolo told WWD. To this end, the company is investing in opening and relocating 120 stores, in addition to 30 to 40 refits each year, over the next three to five years. “Big was beautiful until a few years ago,” contended Bogliolo. “Consumers have changed a lot, now they are looking for a strong experience, but more elevated and personalized.”

Covering 3,240 square feet, the Madison Avenue unit will be a “statement flagship with great visibility, in a superprime area” a few steps away from the Apple store, said Bogliolo, who joined Diesel in October 2013 after working at Bulgari and Sephora, and succeeded Daniela Riccardi. The Fifth Avenue store, which covered 9,720 square feet and three floors, “no longer reflected our objectives,” and was located, he added, on a street that is now home to several large entry-price stores.

“The clientele on Madison is different, more exclusive and educated and looking for quality. The priority is to be present where there is our core target of customers, sophisticated and discerning.”

The new concept is being developed with interior and retail architect Masamichi Katayama and his Tokyo-based firm Wonderwall. While it is still too early to disclose details about the new blueprint, Bogliolo said it will “not be a revolution — we will have an injection of modernity, but on our trademark mix of industrial and vintage, maintaining that spirit and contrasting materials.”

There will be a focus on Diesel’s core denim business, revisiting its presentation, in a bid to telegraph the company’s expertise in the category. “It is not by chance that we debut the new concept in New York. [Owner] Renzo Rosso opened the first-ever store on Lexington [Avenue], with the then-revolutionary denim wall. He started from there. Now we have the ambition to reinvent and completely restudy the presentation of denim for the customer’s experience,” explained Bogliolo.

The executive conceded that this is generally “a difficult moment” for the denim business, but was upbeat about Diesel’s reaction through innovative treatments and washes and its “brand elevation,” as well as its “efforts to push the brand to be the coolest of the biggest, as we say internally. We are obsessed with coolness,” he laughed. He noted that pieces that are more expensive with special treatments are the ones that sell the most.

Bogliolo said Diesel is planning to remodel its other stores in New York and around the world. Globally, the company has 370 stores, of which 120 are directly operated, and 400 concessions in department stores. Japan is Diesel’s main market, accounting for more than 20 percent of sales, followed by the U.S., with a little less than 20 percent of revenues. Canada, where Diesel has a partnership with Hudson’s Bay, is now part of the North American business, overseen by the subsidiary’s ceo Tommaso Brusò. Diesel’s parent company OTB SpA will release 2014 sales figures in April. In 2013, Diesel revenues totaled 1.1 billion euros, or $1.45 billion at average exchange rates.

In three to five years, the company plans to open 50 stores, mainly in China, where there are now 15 units, and where there are plans to double the group’s network. Diesel is developing this region, which was previously “more difficult” for the brand’s category, but where consumers “are now discovering the value of upscale casual,” noted Bogliolo. Last year, Diesel opened a store in Shanghai, and in a month it will unveil a unit in Chengdu.

Australia is also seen as a priority, and a store opened in Melbourne three weeks ago.

Diesel’s retail channel accounts for 55 percent of total sales. The company has been streamlining its wholesale distribution since mid-2014, leaving points of sales, especially in Europe and the U.S., that “did not work in terms of image. We are giving up a significant part of revenues, as this voluntary reduction will cause a contraction of around 20 percent in sales in 2014, but it was necessary to requalify this channel and correct its excesses,” said Bogliolo. “This is a concrete sign of the determination, focus and long-term vision of the brand and of an approach that is not only financial.”