By Luisa Zargani and Tiffany Ap
with contributions from Samantha Conti
 on November 25, 2018
Models on the catwalkDolce & Gabbana show, Runway, Spring Summer 2019, Milan Fashion Week, Italy - 23 Sep 2018

BEIJING — “It’s a landslide of colossal dimensions, and the speed of it all is frightening,” said Alessandro Maria Ferreri, chief executive officer and owner of The Style Gate consulting firm, referring to the media and business storm that has hit Dolce & Gabbana.

Ferreri echoed what many are thinking, as the brand’s intended tribute to China last week backfired, setting off an intense backlash from celebrities, consumers and retailers alike. How and when will this stop, and will the Italian house be able to put its troubles behind?

Aside from the losses of the canceled event itself — not your ordinary runway show, but an event in Shanghai involving some 500 looks — harm to Dolce & Gabbana’s sales is definitely on the cards. As it stands, the brand’s products had been scrubbed from the sites of major Chinese e-commerce players, including Tmall, and Secoo. Certain global retailers also distanced themselves: Luisa Via Roma pulled the brand’s products, as did the Chinese platforms of Yoox Net-a-porter Group. 

Lane Crawford dropped Dolce & Gabbana products from its 10 stores and e-commerce platform, and in the immediate aftermath, police and guards were stationed at brick-and-mortar Dolce & Gabbana stores across China. However, not all retailers backed away. Rinascente kicked off a Dolce & Gabbana takeover of the Milan and Rome stores “as programmed,” without providing additional comment.

According to media reports, Dolce & Gabbana sales are expected to total 1.3 billon euros this year. Assuming that China accounts for 30 percent of the brand’s sales, in line with the estimate given by McKinsey for the broader luxury industry, it means that some 400 million euros are at risk.

Rebecca Robins, global chief learning and culture officer for Interbrand — the consultancy that puts together the annual list Best Global Brands, a ranking based on brands’ actual and perceived value — said the snowballing impact reflected just how deeply modern consumers care about company values.

“I think what’s interesting is that we’ve got a more demanding consumer than ever. We’re holding brands to account more than ever before. A responsible business is not a ‘nice to have’ and how brands behave and act is crucial,” Robins cautioned.

Good crisis management necessitates a quick and bold response, she said.

“Look at what Starbucks did when they had the issue about racism in one of their stores,” Robins said. “They decided to close all of their stores for an entire day and invest in training. When things go wrong the answer is always how do the brands respond and react? Are they taking a bold decision, are they taking bold action? How quickly does that show up? Is it deep and meaningful?”

Dolce & Gabbana’s response did not appear completely synced. It took two more days to get the original offending videos taken down from the brand’s Instagram, Facebook and Twitter accounts, as opposed to only Chinese social media platforms. The company’s initial response was to claim a hacking, which was met with skepticism, then came an apology statement. When those two moves failed to contain the backlash, the group then tried a more personal, direct-to-camera video address from the two brand cofounders Dolce and Gabbana, in which they expressed how much they loved China. 

“Thirty years of brand building evaporated in 48 hours and employees are the ones who will pay the price,” said Ferreri, who has worked for the likes of Bloomingdale’s and Macy’s in the Middle East, the Al Tayer Group, Harvey Nichols and Furla. He, among others, wondered if perhaps a sale of the brand could be in the cards.

“People are angry with the designers, the boycott is aimed at the owners of the brand, and the brand is a vehicle for the protest,” said Ferreri, adding that the loss of retail partners would depreciate the value of the company in such a way that it could make it more affordable and appetizing for a big group.

If that were the case, “it’s unlikely Domenico Dolce and Stefano Gabbana would stay on and if a big name designer such as Tom Ford arrived, just as an example, the brand would be able to restart,” he said.

A number of sources also wondered if perhaps Gabbana would be sacrificed and ousted from the company, which is majority owned by the Dolce family.

“There are many theories, including perhaps a division of the brand, but the results of this are unexpected and uncertain as well as difficult to put in action due to slow and complex industrial processes,” said Milan-based marketing and strategic consultant Armando Mammina. “I think a reset of the brand without any structural damages to the business volumes is difficult and even more so in the long-term as they are connected to mechanisms and factors exogenous to company strategies in terms of marketing and communication.”

Some worried that the ripple effect could impact the standing of Italian brands in general with the all-important Chinese consumer. Carlo Capasa, the president of the Italian Chamber of Commerce, commented that “this is a great damage for made in Italy and fashion, even if they [Dolce & Gabbana] have always said they are not part of the system.”

Other observers downplayed a long-term, negative view. One luxury goods analyst, who spoke on condition of anonymity and defined the ad campaign that sparked it all “incredibly silly and in bad taste,” said that “if the designers present their official apologies to the institutions, not only to the masses, and do it in a credible, way, I think it will all die down.”

Another source also believes the Internet “has a short memory” and that the pace of fashion is so quick, things could peter out. Still, the source focused more on how “nobody took any step to defend the designers.”

“It’s significant how this issue did not create any division and how it was such a united front in terms of reactions, which were so loud also outside the fashion world, trickling down to the man on the street,” the source said.

In the past, the brand has been able to weather public anger on many issues without sustaining too much damage. But it could be the current reckoning is adjusting not just for behavior from the past week but a long history of spats and name-calling, particularly by Gabbana.

“They circulated negative energies for years, they never wanted to be part of the Italian institutions, including the Camera della Moda, and it looks like they do not have anyone to lean onto,” the source added.

In September, Gabbana insulted influencer and entrepreneur Chiara Ferragni, commenting under a photo of one of her Dior couture wedding dresses, “cheap.” So it was little surprise when Ferragni responded to the brand’s current fiasco with the word, “karma.”

Gabbana has also criticized the appearance of pop singer Selena Gomez, and gone on the attack with many others who question his support of U.S. First Lady Melania Trump, a longtime customer who often wears the label’s designs while accompanying husband President Donald Trump on overseas tours. The issue led to a feud with high-profile stars like Miley Cyrus but at the time, the house seemed to relish in the controversy, mocking the public outcry by selling expensive #BoycottD&G T-shirts. The designers’ views on “traditional families” angered Sir Elton John and many celebrities three years ago too — and the list goes on.

A source drew a comparison to the #MeToo movement. “Things today can’t be taken lightly anymore. If you are wrong, you pay the consequences. The production of content is so important for brands that they have to be aware of how powerful it can be and strategies need to return to be central.”

One observer concurred, saying that “the conversation on a brand increasingly takes place outside of the brand’s control. For this reason, the attention to all that can be amplified or interpreted the wrong way must be huge.” Asked if there were any suggestions for the designers, the source said “now is the time to be silent and hope that people will forget.”

A donation to a Chinese cultural institution, suggested by another source, “would ring false and a facade. They should have gone on China’s national television after the reactions to the campaign emerged, but they didn’t realize what was happening. They should have had someone help them do that.”

See Also:

Related: Dolce & Gabbana Cancels Shanghai Show, Chinese Celebs Flee Furor >> 

Related: YNAP Drops Dolce & Gabbana, Following Major Chinese Retailers >> 

Related: Dolce & Gabbana Under Fire From Chinese Netizens for China Ads >> 

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