MILAN — The customer is king, more than ever today for luxury executives.
The curtain rises on Milan Fashion Week Tuesday as luxury brands grapple with current and looming uncertainties, and securing the loyalty of customers is more key than ever through personalization, communication and the best service.
“Luxury is exclusivity, rarity and uniqueness, when customers feel that a product was made almost solely for them,” Brunello Cucinelli often says.
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Analysts and bank reports, consultancy studies and the news in general are enough to bring agita to even the most seasoned executive.
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Last week, the European Central Bank cut its key interest rates by 25 basis points, after a first reduction in June, as inflation is easing and estimates pin consumer price growth slowing to 2.2. percent in August in the eurozone. However, the area’s gross domestic product grew by just 0.2 percent in the second quarter of 2024.
This is in contrast to the U.S., where the Federal Reserve is expected to cut interest rates this week as inflation slows to 2.5 percent but the job market has shown signs of weakness and consumers remain financially stretched.
A September report by HSBC flagged a weak macro environment, expecting only 2.8 percent organic growth for the global luxury goods sector in 2024, down from an earlier forecast of 5.5 percent.
Italy’s Camera della Moda earlier this month forecast a 3.5 percent decrease in 2024 sales of the fashion and connected industries (including textiles, clothing, leather goods, footwear, jewelry, eyewear and cosmetics) to 97.7 billion euros compared to 2023.
Chairman Carlo Capasa said the 6.1 percent contraction in sales in the first half of 2024 follows the slowdown the industry started to experience in the second half of last year.
While he addressed geopolitical instability as well as weak internal demand as key elements impacting the performance, he acknowledged that after COVID-19 the industry’s sales grew by double digits, a pace unlikely to be sustained in the long run.
Exports remain a silver lining, continuing to be a driver for the Italian fashion industry, and projected to grow 5.5 percent to 93.7 billion euros in 2024 on 2023.
Next year poses a lot of question marks as executives and investors keep a close watch on China trying to navigate the country’s luxury slowdown, while wars continue to rage in Eastern Europe and the Middle East.
Despite the cloudy skies, several publicliy listed Italian brands reported a strong set of results in the first half, from Brunello Cucinelli, whose revenues rose 14.1 percent to 620.7 million euros and net profit climbed 31.1 percent to 66.1 million euros, to Prada Group, which posted a 26 percent uptick in net income to 383 million euros and a 14 percent gain in revenues to 2.55 billion euros.
Strategizing
Brand building, staying the course while investing strategically and pursuing strong and direct relationships with customers remain key in this scenario for Prada and other luxury brands.
“Our priorities for the Prada brand are very clear and unchanged. We will continue to foster the desirability of the brand, building on its unique creativity and solid roots in contemporary culture,” said Gianfranco D’Attis, chief executive officer of the Prada brand, which will hold its spring show on Thursday. “At the same time, the dialogue with our audiences will continue to benefit from a sharp communication, coupled with marketing and retail initiatives to further amplify Prada’s voice in the second half of the year.”
The company is planning 10 openings and six relocations in Asia, the U.S. and Europe by the end of 2024. “We will continue to leverage on our existing retail network, to enhance customer experience toward retail excellence,” D’Attis said. “From an organizational point of view, our people are at the heart of our business, and we will continue to encourage internal development and attract new talents.”
Brunello Cucinelli, who holds the title of executive chairman and creative director of his namesake company, is equally focused on “keeping the brand fresh,” his only concern to avoid at all costs delivering “a product that looks old.” He expects his company to report a 10 percent increase in sales in the year, as well as in 2025, and Cucinelli, a longtime supporter of Italian production, is investing in doubling its manufacturing plant by restoring an existing industrial site in Solomeo, Italy, and guarantee production until 2035.
In the 2024-25 period, the company also plans to open new manufacturing sites in Italy, in Penne and in Gubbio, supporting the plans to double turnover, as expected, by 2030. In the second half, a store will open in Toronto and one in Wuhan, China, and the company will expand its London boutique on Sloane Street by the end of the year.
The Importance of Retail
Fendi is also gearing up for a busy — and milestone — year. The brand saw a major C-suite change in June, as Pierre-Emmanuel Angeloglou was named CEO, succeeding Serge Brunschwig, who held that role for six years.
In 2025, the brand will mark its centenary with Rome as a protagonist, since it was founded and is headquartered in the country’s capital, where the company has funded several restoration projects over the years, including of the Trevi Fountain.
However, Milan will also see key moments during the celebrations with the reopening of the Fendi space in Via Solari, renewed and expanded, in the first part of 2025. The company has been holding its ready to wear shows in the venue for years. On Tuesday, its spring show will be presented at Superstudio Maxi.
In the second half of 2025, the company will open a new flagship, Palazzo Fendi Milano, in Via Montenapoleone at the corner of Corso Matteotti. Last year, a Palazzo Fendi opened in Seoul and in Tokyo Omotesando.
Starting from Tuesday, Fendi will roll out the new Peekaboo Soft bag, first unveiled in February and it’s the focus of the fall ad campaign photographed by Steven Meisel and fronted by Vittoria Ceretti.
Collaborations Help
Roberto Cavalli’s CEO Sergio Azzolari also underscored the importance of “creating a deeper connection” with customers. “All our activities are focused on increasing the visibility and the relevance of the Roberto Cavalli brand at a global level. Every new store opening, every product launch or collaboration has the goal to strengthen our presence in strategic markets, maintaining a constant dialogue with our customers.”
Fueling the relevance of the brand, and adapting to different contexts, including beach clubs, events and festivals, are all key, he continued.
For example, Cavalli forged ties for a four-season collaboration with LeSportsac, part of the American brand’s 50th anniversary celebrations, which debuted in September during Dubai Fashion Week. The Italian brand, designed by creative director Fausto Puglisi, was a guest at the event, staging a runway show.
The second half of the year was characterized as being “particularly intense and demanding,” Azzolari admitted, but investments are not stalled. A new store is expected to open in Los Angeles by the end of the year — no doubt a strategic location given how Taylor Swift, Miley Cyrus and Beyoncé have been wearing Cavalli looks by Puglisi — and additional product drops will follow. Azzolari is also accelerating the opening of a store in Dubai, a market that is billed as “strategic and growing rapidly” for the brand, and the city “fundamental” to strengthen its visibility in the Middle East and North Africa region.
The executive is also leveraging the launch of a fragrance first licensed to Inter Parfums in 2023, and a focus on accessories and on menswear in the second half of the year.
Fabrizio Cardinali, CEO of Etro, concurred with his peers, admitting the first part of the second half has been “challenging,” which leads him to maintain “a prudent approach, with the utmost attention to embrace more significant growth for 2025.”
The executive said that “the persisting crisis of the Chinese market and of part of the Southeast Asia in a global geopolitical scenario that is complicated and the wait-and-see approach of the central banks are the main factors that determine growth that is below the expectations in our sector. In this scenario, our house chooses to further strengthen our direct and business-to-consumer sales channel with an especially attentive focus on CRM activities.”
Etro has just opened its first directly operated boutique with the new Etro concept in China, in Shenzen’s MixC mall.
“We have relocated our New York headquarters in new offices and we will open in a few days a new store in Houston Galleria,” Cardinali said.
Marking the 40th anniversary of Etro’s signature Arnica, Etro will offer an expansion of the line of accessories realized in the fabric, a cotton jacquard treated with resin. While mum on details, Cardinali said that further emphasis will be given to the brand’s home collection in 2025 through a new partnership agreement. In the meantime, in Tokyo, the first floor of Etro’s Ginza boutique will be entirely dedicated to the home collection.
Cardinali also highlighted the beginning of the collaboration with Coty, its licensee for the beauty and fragrances lines.
Uniqueness
Under a new owner for the first time in 16 years, Bally will present its spring show, designed by creative director Simone Bellotti, on Saturday. In August, as reported, an affiliate of Regent, the owner of Club Monaco and Escada, said it acquired Bally International A.G. from JAB.
Nicolas Girotto, who has been helming Bally as CEO since 2019, said the company is “working on a global business strategy for 2025 that will allow us to strengthen our network and optimize operations.” He waved the “Swissness” flag, saying that Bally will continue to increasingly leverage this feature, a “strength that makes us unique and distinguishes us in the eyes of our international customers. Our goal is to bring Bally into the future without ever losing our identity as a Swiss brand.”
In October, Bally will open a pop-up in Hankyu in Osaka, with a selection of dedicated products. At the end of November, reflecting its heritage, it will launch the Mountain Capsule, with references to Swiss village Appenzell and Swiss nature, he said.
Girotto praised the strong reception of the fall 2024 collection and the “clear” creative direction of Bellotti, named to the role in 2023. “Despite the social and economic global scenario, marked by traffic slowdown in stores and changes in the shopping trends, the new collection was very well-received. The fall collection has just arrived in our points of sales and with e-tailers such as Net-a-porter, registering excellent results.”
Girotto said that, in a context of evolution and instability, “our attention is mainly focused on the customer, to offer experiences that are increasingly personalized. Our commitment facing the challenges is to remain connected with our customers.”