FAVORABLE EXCHANGE RATES FUEL OPTIMISM OF READY-TO-WEAR FIRMS
Byline: Sara Gay Forden
MILAN — With the exchange rate still blowing a strong wind into the sails of Italian ready-to-wear exports, signs of a recovery in domestic consumption and a series of new initiatives to promote the Italian fashion industry, players here are showing a new optimism.
“The Italian fashion system is moving very well,” said fashion consultant Andrea Pinto, owner of the PAS consulting firm here. “There are concrete reasons to talk about a recovery,” he added, citing improved exports — in particular to the U.S. and to Japan, which he said appears to be moving out of recession. He also noted a flurry of new store openings in Milan and growing interest from foreign buyers in the upcoming rtw shows, scheduled from Oct. 1 to 6 here.
While there are concrete reasons for optimism, there are still long shadows being cast over the industry here by the difficulties at such leading companies as GFT SpA, still in search of a buyer, and Simint Spa, the company which produces Armani jeans, which reported a staggering $141 million (222 billion lire) loss for fiscal year ’93-’94. Because of difficulties with suppliers, there are many working in the industry who won’t breathe easily until the problems of these two manufacturers are resolved.
However, with the lira floating weakly against the dollar and the Deutschemark, the exchange rate is fueling a favorable balance of trade, proving a major source of relief for many Italian manufacturers. The lira has been moving between 1,550 lire and 1,600 lire to the dollar for the past three months, returning to the levels of last September. However, for the first four months of the year, the lira was consistently trading at more than 1,600 lire to the dollar, making prices of Italian products extremely attractive.
The Italian currency has been even weaker against the Deutschemark, and fell below the psychologically important 1,000-lire benchmark in July, hitting a low of 1,028 lire to the mark on Aug. 15.
Furthermore, the outlook is for the lira to continue at or below current levels for the near future, keeping Italy’s high-end products more accessible to foreign markets than they were before the devaluation of the currency back in September 1992.
According to Pinto, “The companies that export are doing very well. It’s the ones that don’t that are still tightening their belts.”
Istat, the national statistical agency, reported that exports of Italian textile and apparel products jumped 30 percent in the first seven months of the year to $866 million (13.6 trillion lire). Exports for the entire fashion sector, including leather goods and footwear, were up 23 percent to $11.4 billion (17.9 trillion lire) in the first four months of the year.
Exports to the U.S. jumped 31 percent, while German exports were up 11.2 percent and Japanese exports soared 59 percent in the same period, according to data issued by the Italian Trade Commission (ICE).
Italian fashion houses are further encouraged by a major promotional campaign that ICE is preparing to better target the U.S. and Japanese markets.”This will be part of the Global Fashion Project we are heading up,” explained ICE managing director in Milan, Sergio La Verghetta. “We are developing a series of marketing and promotional initiatives focusing on the American retail sector in an effort to expand the market share of Italian fashion companies in the U.S.
“While we are certainly pleased the market is absorbing more Italian products than in the past, we think there’s potential to increase further,” continued La Verghetta, who noted that the current market share held by Italian fashion products is only about 8 percent in the U.S., while it is 11 percent in Japan and about 30 percent in Europe. “The room to grow is there and the product is there, so we feel the performance of ‘Made In Italy’ is below potential in the U.S. marketplace,” he said.
ICE has a standing budget of some 7 billion lire for its ongoing promotional efforts, but this year it has been awarded an additional 6 billion lire to support a specific program targeting U.S. retailers. “We have started talking to the major retailers and want to work up some new ideas about ways to improve the penetration of Italian products in U.S. stores,” La Verghetta said. He said they hope to come up with several strategies this fall and expects that the project should be ready to take off early next year.
Meanwhile, when the international buying crowd hits Milan next month for the designer rtw shows, they will notice some major changes at the Fiera, which was getting a reputation for dingy halls and poor services. Over the summer, it has had a $955 million-facelift, complete with four new remodeled halls, new carpeting, chairs and lighting systems.
“Everything is ready to go,” said Beppe Modenese, spokesman for show organizers Camera della Moda. Modenese said the Camera is further encouraged by a significant increase in reservations from foreign buyers, particularly from the U.S. Another positive sign is a new spirit of camaraderie among the designers themselves — who have often seemed to be at each other’s throats — and new support from the city of Milan after a rather nasty battle last spring over the availability of spaces to hold shows, parties and other fashion-week events.
Among the fetes being organized for show week is a cocktail party at the Brera Academy, sponsored by the Milan daily Corriere della Sera and an opening bash at the Palazzo Reale hosted by Milan mayor Marco Formentini.
Visitors to Milan will also notice a crop of new shops. Maska, a manufacturer that has put together an ambitious promotional campaign, hoping to place its name among the front ranks of women’s apparel makers, is inaugurating its first Milan store on Corso Vittorio Emmanuele Sept. 30. It will feature an appearance by new Maska spokesmodel Dale Hadden. Bruno Magli has also just refurbished its shoe store, which is right across the street.
Elsewhere, on Oct. 4, Romeo Gigli will open his first G Gigli shop in Milan on Via Palermo, replete with furniture and tapestries by the designer himself. In addition to the G Gigli collection, the younger line produced in a joint venture with Stefanel, the store will also dedicate space to “Real World,” the cross-cultural music label launched by Peter Gabriel. Other new stores include accessories designer Piero Guidi’s on Via Sant’Andrea, Ballantyne Cashmere’s on Via Montenapoleone and that of Florsheim shoes in Piazza San Babila. Gianni Versace confirmed he is opening a megastore for his women’s apparel and home collection on the elegant Via Monte Napoleone in the former Ricordi record store location, while La Perla will be moving into the Basile space further down the same street. Accessories maker Prima Classe is also due to open its first boutique in Milan on this street Oct. 1. On Via Manzoni, there’s a new Guess Kids boutique, and Bugatti recently opened a new shop featuring a full range of apparel and accessories. A few paces down, Strenesse Group has also inaugurated a new boutique.