MILAN — The pressure is on.
The pulse of the Italian fashion community is racing, as designer collections get ready to hit the runways here starting Feb. 26. Even though a favorable rate of exchange continues to help boost exports, Italy’s fashion houses realize — as perhaps never before — that they are competing for success in a still-slumping market, where newness is hard to find and some sense a growing indifference to the designer name.
Even Giorgio Armani, whose business is one of the most profitable at the designer level, was forced to reckon with the bottom line with his A/X Armani Exchange project in the U.S., which has failed to produce expected results.
Last week, Armani announced his decision to buy out the interests of Milan financier Francesco Micheli in Simint SpA, the Italian company behind the A/X Armani Exchange business. It was a transaction that increased the stake in Simint held by the designer’s company, Simint Spa, to 22.5 percent from about 18 percent, while Armani’s sister, Rosanna Armani, acquired a 17 percent stake in Simint from Micheli.
Armani’s move may well signal a larger trend of designers seeking more control over their production and distribution operations. The experience of troubled designer-label manufacturer GFT SpA, which produces for Armani, Valentino, Ungaro and Montana, among others, has been enough to make designers think twice about how to structure the long-term future of their businesses.
Although the GFT story appears to be close to resolution with the sale of the company to Mexican entrepreneur Fabio Covarrubias, the final chapter has yet to be written.
With the Italian market in a deep funk (clothing sales in the first five months of 1993, the latest available figures from the Federation of Italian Apparel Distributors, fell 10 percent), most of Italy’s leading designer houses have been saved by their penetration of foreign markets. This has been buoyed by continuing exchange rate benefits after the devaluation of the lira in September 1992.
“It’s true, the Italian market is a bit sad these days, and I think it’s going to be tough for the rest of the year,” said Gianfranco Barbetti, commercial director for Gianfranco Ferre. “There is money in Italy; It’s just that people don’t want to show off,”
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The big spenders are either out of money or are keeping a low profile as Italy’s epic corruption scandal has toppled an old guard of entrepreneurs and politicians. Many are holding their breath while a group of would-be leaders spanning the political spectrum from the left to the right jostle for position in the weeks leading up to general elections March 27.
Barbetti said that while Ferre’s Italian sales are down 10 to 12 percent, presales of his new fall daywear collection abroad jumped 33 percent compared to a year earlier.
“Over the years, the only problem I ever had with my product is the price. Let’s face it, it’s a very sophisticated, expensive product. But the weakness of the lira is a clear advantage. That’s the main reason for my increases,” Barbetti said.
In general, Italy’s productivity and creativity in the apparel sector, combined with its exposure on foreign markets, has taken long strides toward offsetting the domestic slump. Preliminary figures for 1993 show that the trade surplus for the textile and apparel sector, including leather, furs and shoes, amounts to some $17 billion (29 trillion lire) at current exchange, which more than makes up for the nation’s energy deficit.
Estimated 1993 sales of women’s apparel alone totaled $10.8 billion (or 8.3 trillion lire), up 4.6 percent from a year earlier, while exports of women’s wear rose 7 percent in the first half of last year.
Signs of a general economic recovery in the U.S. market are another reason for optimism among fashion executives here, though there are worries that the combined effects of natural disasters in the West and bad weather in the East will keep people out of the stores, squelching the recovery.
“Everybody is worried about the bad weather sweeping the country, it’s slowing down the shopping,” said Krizia chairman Aldo Pinto, who has just returned to Milan from a visit to the States. “Meanwhile, with aftershocks still shaking Beverly Hills and L.A., a lot of people are not in the mood to spend money,” he added.
As market forces work to weed out the weak, the stakes for the survivors are higher than ever. In this context, the fashion show has become an ever-more crucial moment in the life of a fashion house, regardless of whether the company has organized pre-collection sales, catalog or other ways of reaching its clients.
“No matter what, when the shows and the presentations are over, the buying appointments are made, and if your show is a success that’s going to affect your business for the next six months,” said Andrea Pinto, a consultant in the sector. “That’s why the Milan show structure is doubly important for the Italian fashion community.”
In fact, just setting a show calendar for the fall-winter presentations turned into an unprecedented logjam this month as the designers jockeyed for the best position, and several — including Krizia and Versace — decided to hold two shows for the first time to accommodate more buyers and press.
The process of fitting 60 shows and 40 presentations into six days lasted for several tumultuous weeks and threatened to hold up the whole business as no invitations could be sent out until the final schedule was set. A breakthrough finally came on Friday, when the calendar was issued with the apologies of Camera della Moda president Giuseppe Della Schiava (the schedule appears of page 24).
Gianni Cigna, chairman of Laura Biagiotti and vice chairman of the Camera della Moda, chalked the problem up to a lack of what he called “team spirit” on the part of the designers, though he acknowledged that the set-up at the Fiera — or fairgrounds — isn’t all that it might be.
“The concept of the fair in itself isn’t wrong — although it can be more or less pleasant depending on how it’s done,” Cigna said. “But every year we pay the Milan fairgrounds 2.5 billion lire to rent the facilities there, and we have to pay them regardless.” He said the Camera understands that there are designers who want to show in their own facilities.
“All we asked is that they do so after 5 p.m. so we can concentrate the shows in the fiera during the day,”Cigna continued. “We are getting pretty tired of all this individual chest beating — everybody wants to do their own thing at their own time. We should be ashamed of ourselves.”
As the dust settled, the Milan lineup showed at least one defector. London-based Rifat Ozbek announced he was taking his show to Paris, where the Chambre Syndicale was quick to give him a date. Ozbek aide Robert Forest denied that the calendar fiasco was the main reason for the move, but he acknowledged that it made it more tedious to show in Milan.
“We’re off to Paris, and that’s a part of our growing and moving, but one of the drawbacks of Milan is that everything does seem to get done at the last minute — and that increases costs,” Forest said. He did say Ozbek was planning to open a showroom in Milan.
Another departure from the Milan scene, though for different reasons, is that of the Gucci luxury house, which confirmed last week it is closing its Milan headquarters and returning to its traditional home in Florence under cost-cutting measures.
While designers were arguing over the show calendar, the mid-market producers and retailers were getting together to try and make the most out of fashion week. They have scheduled their showcase, usually held several weeks earlier, to overlap with the designer shows in order to take advantage of the flock of foreign visitors in town for the event. Such names as Etro, Malo, Marzotto and Anna Purna will be among those set up in a showroom exhibition area that will also include designer diffusion lines.
Furthermore, Promozione Moda Italia, a joint-venture founded last year by the producers and the retailers, has published a handy guidebook listing the approximately 350 showrooms in Milan, complete with names, addresses, phone numbers and handy maps of the city.
“The heart and mind of Italy’s fashion system — which includes the full cycle from the yarns through the weaving of the fabrics, to the finished product and the distribution — is in Milan,” said Promozione Moda Italia president Vittorio Giulini, who has been on a whirlwind tour to present the guide in Milan, Dusseldorf, New York and Tokyo.