Guardian of Italian luxury: Lust not Love
Italy is at the forefront of the highly competitive luxury industry, having given birth to most of the current and contemporary coveted brands and designers. Italians are known to have shaped, trained, promoted and then seduced us to buy their luxury products and services. Italian production and craftsmanship are respected as part of the highest standards in the fashion / furniture / service sector and the âMade in Italyâ brand is a world benchmark for quality and distinction. .
Luxury by definition, is equivalent to LUST, from the Latin words LUXURIA (excess), and LUXUS (extravagance), becoming LUXURE in French. In Elizabethan times, the idea of ââluxury was associated with adultery, transforming to mean opulence or splendor.
In previous centuries, luxury was a matter of craftsmanship and the possession of objects inaccessible to others. Part of that has changed with the rise of mass production, the globalization of business, and global access to just about anything and everything.
Not all luxuries are created equal
What is luxury EXACTLY and what makes Italian luxury brands stand out from other countries and brands in terms of ideas, designs, execution, purchase and use ? Is it the quality of the materials? Design? The price? The availability or the scarcity of the brand?
The concept of luxury begins with the idea of ââexclusivity, knowing and / or feeling that not everyone will have access to the product / experience that the brand is selling. Where do these ideas come from? Usually, they are triggered by the prism of quality, comfort, elegance and evolve as consumers around the world seek to acquire (and frequently collect) products identified as luxury.
Combination of events
What luxury is today is different from what it was decades ago. Research has determined that globalization, the internet, digital technology and life experiences have broadened the perception of quality and exclusivity, currently defined by aspirations and lifestyles that have transformed over decades.
Research also reveals that high-end luxury consumers acquire brands / products / services in order to differentiate themselves from others; However, contemporary luxury purchases are not necessarily or entirely based on price, and bragging rights may not focus on money as the âone itemâ. When asked about their motivation to buy, some affluent buyers did not think the best travel experiences were the most expensive; their luxury travel idea included attributes / dimensions beyond (or beside) the price. Luxury hotel brands that target the luxury consumer find that their guests value diversity, inclusiveness, creativity and openness, seeking a sense of purpose supported by the brand.
The transition is from external satisfaction to internal satisfaction. High income earners (HENRY – not yet rich high income) seek experiences that help them learn, differentiate themselves, express who they are and have a purpose beyond relaxation and comfort. The luxury passes from the acquisition or places to visit to more about what they want to be and / or become.
Luxury. The Italian way
Italian companies that design and produce luxury products are the world leaders. Italy ranks fourth in the personal luxury goods market, after the United States, China and Japan. The Milan-based Altagamma Foundation (2020 report) has determined that the luxury goods industry is worth around 115 billion euros (US $ 130.3 billion). The âMade in Italyâ label was worth US $ 2,110 billion (2019) according to the annual report produced by Brand Finance, placing Italy 10th in the world for the most successful and profitable national brand value. In Italy, the fashion industry alone is valued at almost US $ 20 billion and Italy is the international leader in the leather sector (since the 1500s) accounting for 65 percent of European leather production. and 22 percent of world production.
Italian manufacturers backing Italy’s biggest luxury brands (i.e. Gucci, Prada and Giorgio Armani) have been forced to shut down due to the pandemic and orders have plummeted around the world. This situation has been complicated by delays in government payments of state social security and government guaranteed loans, risking the production of 40 percent of the world’s luxury goods.
We shouldn’t be surprised to learn that many iconic Italian brands are no longer Italian controlled. Mediobanca’s regional study reports that up to 40 percent of major Italian fashion brands are owned by foreign companies. Of the 163 companies with annual sales exceeding $ 100 million, 66 are owned by foreign companies, 26 are owned by French investors, 6 are British, 6 are Americans and 6 are Swiss companies.
Versace was sold to Michael Kors, Gucci, Bottega Veneta and Pomellato belong to the French group Kering; Pucci, Fendi and Bulgari belong to the French group LVMH; Giorgio Armani, Dolce & Gabbana, OVS, Benetton, Max Mara, Salvatore Ferragamo and Prada remain the most profitable companies which remain under direct Italian ownership.
Etro recently sold a 60 percent stake to private equity group L Catterton controlled by LVMH and will soon be headed by a new CEO, Fabrizio Cardinali, currently COO of Dolce & Gabbana. The Etro family has become a minority shareholder and the future of the brand, known for its paisley textiles, is uncertain. Some luxury brands continue to rely on China (exclusively), and that may be a mistake.
In December 2015, Fendi extended its reach and opened Private Suites, a 7 bedroom hotel. This project is part of an evolutionary process for this iconic company which started as a handbag and fur store in Rome in 1925, and now supplies clothing for men, women and children from head to toe. The brand is also found on timepieces, as well as on a Casa line of furnishings and accessories.
Palazzo Versace was featured on the Australian Gold Coast (2000) and billed as “the world’s first fashionable branded hotel”. This may not be true in practice, as the Ferragamo family (properties in Florence, Rome and the Tuscan countryside) have been in operation for over 20 years. The Armani Hotel Dubai opened in 2010 in Burj Khalifa, the tallest building on the planet. In 2011, Armani opened a location in Milan that overlooks an entire city block. Bulgari opened a hotel in 2004 and the Italian jeweler has expanded to London and Bali with the intention of opening properties in Shanghai, Beijing and Dubai. Interestingly, brand expansion is not always successful; the Missoni Edinburgh hotel and the Moschino House in Milan opened in 2009 and 2010, closed in 2014 and 2015.
What to do
The Italian economic system is based on 93 to 94% of small and medium-sized enterprises. In 2019, the Italian fashion industry accounted for 1.3% of the total national GDP and the growth was despite other economic challenges in the country. An increase in the international promotions of Italy as a tourist destination and the core of luxury manufacturing would help revive the economy, as âMade in Italyâ products account for up to 60% of total tourism spending.
Italian fashion brands are trying to expand markets, promoting brands as “global” in Asia, the United States and Europe. The still independent family brands are looking for investors to compete and develop. Private equity investors, recognizing the enduring value of Italian design and manufacturing, are looking for new opportunities. It is likely that making-to-order for select customers will recover faster than general luxury, as higher expenses require psychological adjustment.
Digital enhancement is another opportunity for brands in search of survival and growth but it is not a slam / dunk because luxury brands will have to abandon their certainties, their comfort zones and their economic model as well as their lack of ‘interest in innovation, his penchant for ivory towers, and secret gardens, the male-centric business model and the rigid approach of those who have won trophies in the past. The technological path is about the need to multitask, encourage and promote different points of view, while integrating both online and offline businesses.
Leading Italian luxury
If you are a small or medium-sized Italian company and want to enter the American market, the one-stop-shop is the Italian Trade Agency (ITA) which works in cooperation with the Ministry of Foreign Affairs and Economic Development. Based in Rome, one of its many roles is to secure foreign direct investment in Italy and to raise awareness / strengthen knowledge of Italian companies and its regulatory environment. The agency was established in 1926 and is perhaps the oldest government department responsible for promoting economic trade.
Sometimes Italian entrepreneurs ignore the US market as it is dominated by big Italian brands and it can be difficult to find joint venture partners. ITA therefore facilitates meetings both virtually and in person. More recently, ITA (funded in part by a grant from the Italian government), launched a web platform known as EXTRITASTYLE (Extraordinary Italian Style) with the aim of helping Italian entrepreneurs to develop their presence in the States -United.
ITA also offers training courses for companies new to international platforms, including Amazon, Alibaba, and WeChat. In addition, the agency supports the distribution in department stores of products ranging from fashion to food.
The management of the operation in New York since 2019 is Antonino Laspina. When I recently met her in her Manhattan office (surrounded by stunning Italian leather furniture and accessories), it was clear that Laspina is very comfortable representing Italian luxury goods. Born in Sicily, he graduated with honors in political science, foreign trade and export management. He also studied diplomacy at the Italian Society for International Organizations (SIOI). He joined the Italian Trade Agency in 1981 and has been posted to Asia, including Seoul, Kuala Lumpur, Taipei and Beijing.
In 2007, Laspina was named one of the “10 Greatest International Friends of Chinese Fashion” by the China Fashion Week Organizing Committee. This exceptional achievement was quickly followed by the development of the Prospero Intorcetta Foundation, of which he was elected president. The foundation is dedicated to the Sicilian Jesuit who lived in China in the 17th century and for the first time translated many pieces of Confucius’s work into Latin. In 2008 Laspina became a member of the Board of Trustees of the University of Kore, Enna, Italy
Since 2015, Laspina has focused on on-demand service innovation for international business development, including marketing and training. He is a member of the Young Leaders’ Group (Italy-United States Council (1998).