MILAN — If there’s a lesson 2020 imparted to fashion executives it’s that digitalization and sustainability are the starting points to navigate and envision a post-pandemic world. While these two concepts became an omnipresent mantra throughout the year, their importance was underscored during “The age of new visions,” a series of digital talks hosted by the UniCredit bank to offer suggestions that could relaunch the Italian fashion industry.
Developed in partnership with Pitti Immagine, Camera della Moda, Altaroma and the Nomisma consultancy company, the initiative kicked off on Tuesday with a panel discussing communication strategies that could meet the new demands of consumers.
Hence the key role of digitalization, a field in which Italy had shown a competitive disadvantage in the recent past and which it is now accelerating to catch up with international standards.
“Digitalization is one of the biggest trends and unfortunately, under this perspective, Italian companies are a little bit behind and are struggling to regain this gap, which has also cultural roots,” said Roberta Benaglia, founding partner and chief executive officer of the Style Capital SGR private equity, which has stakes in brands including MSGM and Forte Forte.
According to Benaglia, geographical distances also played a key role in developing an advanced digital culture in some markets. “American companies started to think digitally since the very beginning because of their distance, so this tool represented a way for them to connect with the rest of the world,” she said, noticing that average online sales for a company overseas account for 20 percent to 30 percent of total revenues while “an Italian firm is satisfied if these reach 10 percent.”
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For Benaglia, digitalization does not favor Italian labels also because these “are more focused on the product and its quality, while foreign companies have more catchy offerings at more competitive prices” that could better lure consumers on digital platforms.
Yet the executive noted that Italian firms are committed to investing in digitalizing their productive processes and improving the supply chain, rather than just implementing online stores. “Digital sales campaigns and fashion shows proved to be fundamental assets for local brands, but negatively affected small-sized businesses that didn’t have the possibility to invest to implement these tools.”
According to a Nomisma study surveying fashion companies, for 17 percent of the interviewees the digitalization of the supply chain was a completely new process during the pandemic, while 43 percent of firms said they’ve boosted investments already implemented.
“Just like working-from-home, this new way of presenting collections will be irreversible. Of course, on one side there will always be the irresistible desire to go to physical showrooms and touch products, but on the other, these new tools created a new flexible way of working,” said Benaglia.
For Pitti Immagine’s ceo Raffaello Napoleone, the physical element will remain essential to the industry, which has to learn how to best integrate online and offline experiences.
“There are new ways to shop and e-commerce was already on the rise, but during the pandemic it hasn’t been the answer to everything and didn’t counterbalance losses in sales. It represents just one aspect we have to work on,” said Napoleone.
For instance, the executive mentioned the increasing role of social media in becoming platforms for shopping transactions, the impact AI and VR will have on the sector in the future as well as the boost in e-mail traffic, which could create cyber security problems. On the physical front, Napoleone pointed to how customers’ new habits will lead brands to reconsider expensive rents and scale down expansive stores.
“Because of this pandemic, we’re experiencing a tsunami. Our industry will report 29 billion euros in losses this year and this situation put all of us in a difficult position, but if we have to think about the future, the only way to reach everybody everywhere with our products is digitally,” said Camera Nazionale della Moda’s president Carlo Capasa.
In urging the help of the government to improve the digital culture, Capasa said that the pandemic also showed that the only way out from difficulties is to create synergies between public and private institutions, show a united front as an industry and take responsibility “just like many big fashion players are doing by protecting smaller businesses.”
“Our industry is made of small- and middle-sized companies and we’re risking to lose these, we have to work to preserve them and that could be done by improving our storytelling, because we do a lot of things we don’t communicate,” confirmed Capasa.
“Italy has a cultural problem with fashion which hasn’t been solved yet, a prejudice that considers this sector frivolous and which has weighed a lot on our ability to enhance the industry,” offered fashion critic and curator Maria Luisa Frisa.
She invited the Italian fashion system to step up its international role, banking on “this moment of transition not to narrate how we have been in the past or return to how we were but to redefine and redesign ourselves.”
Frisa additionally stressed the importance of education, lamenting a generational gap in fashion academics and researchers that could compete with international ones and support the industry. “Education is essential because we’re called to face new challenges in terms of contents – about gender, cultural appropriation, sustainability. There will be challenges in these territories, which will make the difference,” she concluded.
To reinforce Frisa’s forecast, the Nomisma study showed that consumers are shifting from seeking out mere products to increasingly looking for brands that could mirror their set of values, which during the pandemic have skewed toward ethical and environmental sustainability of a label as well as quality and durability of a product.
Transparency has therefore become a key prerequisite in communication, especially because customers use online platforms to look for information about a brand before a purchase. As per the report, 46 percent of Italian customers will be interested in buying sustainable goods while 78 percent of interviewees said they will want to know about the origin of raw materials and the environmental impact of the production processes.
These new preferences combined with a reduction in spending capabilities, the closure of physical stores during the lockdown as well as the drastic loss of tourist income significantly affected fashion companies. In particular, the study showed interviewees’ revenues dropping 35 percent in the first nine months of 2020 compared to last year, while projections for the last quarter of the year registered a 31 percent decrease. The negative trend will continue throughout the next 12 to 18 months, as companies are expected to lose 13 percent of their sales in this period.
In commenting about the heightened attention on sustainability, Benaglia – whose fund took a minority stake in Re/Done two years ago — noted that this is key for American consumers and that, in the last couple of years, it quickly expanded in Europe, starting from Scandinavian countries and Germany and finally reaching Italian customers, too.
Claudio Marenzi, president and ceo of Herno and president of Pitti Immagine, confirmed that the local consumers are now catching up with the trend, while when his brand first committed to sustainable practices and products a decade ago “our work was understood very little by our salesmen and not at all by customers.”
According to Marenzi, sustainability is a more Western-centric phenomenon as “the Millennials and Gen Z keen on this topic are mainly Occidental and they don’t have the same purchase power of Asian ones.”
“I don’t see Asian markets particularly sensitive to this trend, I believe they are seeking other, more traditional values at the moment,” confirmed Benaglia. “But it’s also true that Asia moves so fast that this kind of attitude could change rapidly and it could catch up very quickly.”
In describing Asia as an essential driver for Made in Italy brands, Benaglia highlighted how consumption regained traction in that region. “In light of our latest sales campaign, it’s like there has never been COVID-19. They are back to a normality which is even more euphoric than before and consumers seems even more inclined to purchase, not only online but also in physical stores, which is promising.”
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