NEW YORK — As Diesel reboots its denim business, it has named Stefano Rosso as its North American chief executive officer. He succeeds Tommaso Bruso, who rejoined Benetton Group as chief operating officer last month.
The naming of Rosso represents a decision to strengthen Diesel’s presence and leadership in the North American market, with a focus on maintaining a strong voice as a denim leader. Rosso, 38, is the son of Diesel founder Renzo Rosso.
“We believe the U.S. and North America, in general, are one of the most important geographical areas for the development of the group,” said Rosso in an interview at Diesel’s offices at 220 West 19th Street here. He officially begins July 1. “Diesel being one of the most relevant brands inside the [OTB] group, there was a need for someone to take over this market from the family.”
Rosso believes his experience — having been practically born into the company — will be a key asset in getting Diesel back on track.
“There is a need today for Diesel as a brand to be revamped and rediscovered in the U.S. Diesel is still Diesel, but we kind of got lost in translation. Being part of the family, having lived and breathed Diesel since I was born, having had this previous experience in the market, we basically thought I could be the ideal person to come and take over,” he said.
Born in Marostica, Italy, Rosso graduated from the Fashion Institute of Technology with a bachelor’s degree in international trade and marketing. He began his career working outside the family business, collaborating with brands such as Zoo York. In 2005, he returned to Italy and began working at Diesel in various areas of the company from production to marketing to become Diesel’s 5 Pockets brand manager and then strategic brand alliances director. He created and managed some of Diesel’s key global collaborations, ranging from a limited-edition sneakers series with Adidas Originals to the worldwide partnership with Ducati.
In 2011, Rosso became director of corporate development at OTB, the parent company of Diesel, Maison Margiela, Marni, Paula Cademartori, Viktor & Rolf, Staff International and Brave Kid. In 2013, he was named co-ceo of OTB with the specific responsibility of designing the group’s corporate governance and guiding the People & Organization function.
Asked why he thinks Diesel lost its way in the U.S. over the past few years, Rosso gave several reasons, ranging from the product and communications not being localized enough to the rise of the Internet and the challenges in doing business with department stores.
“I believe in our developing phase, we probably lost contact with the need to be more locally relevant,” he said. He feels that the brand started to play the game of the “big corporation that had one single global voice and one single campaign, and was not able to adapt as quickly as some of our local competitors which are mainly Americans,” he said. Being a European company trying to make it in the U.S. was not working fully from product to marketing and communications activities, he said.
In recent years, Diesel has moved to smaller format stores and cut back on its wholesale distribution.
“We went from the huge cathedrals and huge openings, which are not as relevant for one simple reason: People don’t need to be impressed by a brand anymore. They know who they are. If they want information about a brand, they can find it through other activities and maybe online,” Rosso said. “Today, omnichannel is the answer to distribution. We don’t talk about retail or online, we talk about direct.” He said one of the key pillars of his coming to the U.S. is to establish a full omnichannel approach to Diesel’s business.
Rosso acknowledged that it’s been a very challenging environment for department stores, and it’s made doing business with them extremely difficult. “The situation with department stores is kind of rocky right now. If we want to have a more qualitative approach, we need to scale down and become smaller and more focused, and we’re trying to set fewer and clearer messages,” Rosso said. He noted that the company was set originally to hit $300 million in sales the U.S., but “we never hit it.” It’s now going the other way.
Going forward, the game plan is to have one key retail partner in the U.S. and one in Canada. While he declined to reveal these two retail partners yet, he said it would become effective for spring 2018. Diesel sells at Macy’s, Bloomingdale’s, Saks Fifth Avenue, Amazon, Hudson’s Bay, Harry Rosen and nordstrom.com.
As for which department store is doing the best with the line, Rosso declined to say. “Everybody has different issues,” he said. “Where department stores are making a hard life for brands is the approach they have. I believe they don’t care anymore about the brands on the floors. They care more about making sure they’re paying their rent. The type of business they’re doing is not selling goods anymore. It’s being in real estate. In order to have a presence inside department stores, you have to have margin guarantees, chargebacks, a series of things that are killing the margins of brands. You get to the extent where it’s not making sense to do business with department stores anymore.”
At present, Diesel does 70 percent of its business in men’s wear, and 30 percent in women’s wear in the U.S.
Direct retailing is becoming more important to Diesel, he said. In the U.S., direct retail accounts for 65 to 70 percent of the business and will probably increase in the future. At present the company has 20 freestanding stores in the U.S. “We have a few stores that are difficult, that we’re thinking we might substitute with others or close,” he said. The company also has 14 outlets. Diesel Black Gold is carried in the key freestanding stores but not the outlets.
Japan is Diesel’s largest market, followed by Europe and then the U.S., a ranking that Rosso looks to change. He’d like for the U.S. to become its biggest market.
Rosso described his top men’s competitors as AG, J Brand and Rag & Bone. In women’s, he said, “it’s everybody,” even fast-fashion companies such as H&M and Zara.
As for Diesel’s point of difference, he said, that in order to be successful today, one needs a strong look or fit and to be very good at creating desire for the brand, with all the communications and marketing around it. Which brings up the topic of whether Diesel will continue with its provocative advertising. “Provocative is maybe not the right word,” he said. “We tend to treat consumers as thinking human beings. We like to send a message, generally speaking positive through irony, but not necessarily provocative. Is it relevant 100 percent today? Maybe not as much as in the past.”
He said that today, people are more aware, and they don’t need brands to send them strong messages about how they need to live their lives. “Back in the days, brands were a means of communications and how somebody could be through the brand. Today is different. People, generally speaking, know what’s happening and have a voice about it. They can talk about it and can get to talk about an issue through their social networks.” He believes that a brand like Diesel should still send messages because it’s part of their DNA, “but maybe we have to do it in a different and more modern way,” he said. He also noted that in the last two years, the company has done all its advertising digitally.
Rosso said the way they’re approaching the North American market — via their freestanding stores — is through four key hubs: Toronto (two stores); Los Angeles (three stores); Miami (two stores), and New York (three stores). He said the brand is making sure the business, marketing and service are excellent in those hubs, which will impact the rest of the country. In addition to being on the most relevant streets and shopping malls, Rosso said there’s room to do more fun retail environments, not necessarily five- or 10-year leases, but more pop-ups to launch a new product or initiative. He feels taking a localized approach should help the brand.
Looking ahead, Rosso predicts that the business will get smaller first. “2018 will be the most important year for us. The end of 2017 and beginning of 2018, our focus is to secure our core business that is denim and the male area. 2018 should be the relaunch of female and our core retail network.”
As for when he expects growth will come again, he said, “around 2019. This process takes time. We’ll be resizing, fixing and operating new stores and changing them.”
Turning to the overall health of the Italian company, he said Diesel will be turning 40 years old next year and has had many successful years. “The last couple of years we got a bit of a backlash. It’s hard to be always relevant and up to speed and be top of the list,” he said. He added that in trying to keep the size, sales and figures up, “we didn’t deliver enough of a strong message.” While the company has a clear plan, it didn’t communicate that message properly.
“This has been a struggle and has impacted the business as well,” he said. Over the last year, the company has started moving in the right direction, but it hasn’t had an impact on numbers yet. “I feel we’ve put in the right steps in order to be successful and be at the point we want to be. We realized size doesn’t matter anymore. It does matter, but it’s very tricky. When you want to push the growth too much, you risk losing control of who you want to be.”