HONG KONG — Loro Piana is finding growing demand in China for clothes made of superfine wool, cashmere and other higher-quality fabrics is presenting plenty of opportunity.
This story first appeared in the April 17, 2013 issue of WWD. Subscribe Today.
Pier Luigi Loro Piana, chief executive officer of the Italian luxury brand, said he believes China holds “a lot of potential” in an interview here Tuesday ahead of an award ceremony for the World Wool Record Challenge Cup at the Asia Society Center.
The goal of the annual competition, started by Loro Piana in 2000, is to find the finest bale of merino wool, and in doing so, to provide an incentive for breeders to provide an ever-finer product. Alberto Bradanini, the Italian ambassador to China, attended the event.
Loro Piana plans to open three more monobrand stores in Mainland China this year and one each in Hong Kong, Macau and Taiwan. The company opened its first store in Hong Kong in 2005 and its first in Mainland China, located in Shanghai, in 2007. The brand already has 11 monobrand stores and is sold at five shops-in-shop in Greater China.
These plans come at a time of slowing growth in China. Gross domestic product increased 7.7 percent in the first quarter, according to official figures, which was less than expected. Retail sales increased 12.4 percent to 5.55 trillion yuan, or $887 billion, down 2.4 percentage points compared to the first quarter of 2012.
But economic growth in China has meant more people are now in a position to purchase products at a higher quality, Loro Piana said.
Demand for Italian fabrics remained robust in China, with customers attracted to their quality, creativity and use of noble fibers, and appreciating the level of service provided by the suppliers and their flexibility in interpreting the material, he said.
More and more clothing manufacturers in Mainland China are demanding better fabrics to upgrade their product and position it at the higher end of the market, the ceo added.
The company also expects to increase its market share in cities where it is already present.
Chinese customers are seeking out special blends with cashmere and lightweight fabrics, particularly superfine wools, he said.
The ceo said the company’s turnover totaled 626 million euros, or $826.9 million at average exchange, last year, up 12.7 percent over the previous year. Mainland China and Hong Kong, which currently make up one-fifth of the company’s business and could eventually comprise 25 percent, recorded sales growth of 30 percent a year for the last two years. The company will report its 2012 annual results today.
The company saw over 20 percent sales growth in the United States and, in Europe, below 10 percent, except for certain large cities like London, Paris and Milan, which did better.
Claudia Ching, a consumer analyst at CCB International, said the market for quality apparel in Mainland China was still expecting higher growth than in other countries.
She said there would be tough competition in Mainland China’s cashmere market because of the presence of many foreign brands.
Ching also noted that cashmere clothing could be compared to down apparel, whose growth had been shrinking. “These are more unique types of fashion,” she said. “You do not need to change these or get a new style so frequently. They’re more functional. You might only need to get one.”
In the near term, Ching said sentiment for high-end products might be impacted because of efforts by the Chinese government to clamp down on corruption. “People are more cautious on spending on high-end products, not just for business dining and gifting — items like watches and jewelry — but also high-end fashion as well.”
Loro Piana said his business was not affected by gifting trends because most of the company’s clientele purchase items for themselves rather than as presents.
Loro Piana, a private company formed in 1924 whose business goes back almost two centuries, buys the winning bale in the wool challenge every year. When a better bale supersedes it, it is turned into about 40 to 50 suits by Loro Piana or an outside tailor. A made-to-measure suit fashioned from the bale usually costs $22,500 but can go as high as $27,300.
Anna Emmerson, a breeder from Lindis Ridges farm in Ashburton, New Zealand, won the challenge with a bale at 10.6 microns, setting a new record. An entry from Australia’s Robert Sandlant was 11.1 microns.
Emmerson, who also won the challenge in 2010 with a bale at 10.9 microns, said there was no secret to how she cared for her sheep.
“It’s just straight genetics,” she said at the ceremony. “It’s years and years of breeding.”