Claudio Marenzi says Pitti Uomo show will "absolutely" go ahead in June
In an interview with FashionNetwork.com, Claudio Marenzi, president of Confindustria Moda - the body representing the Italian fashion industry - and CEO of outerwear label Herno, said he is still hoping that next June's edition of the Pitti Uomo show in Florence will not be cancelled or postponed. He was adamant about it: “We’re going ahead with it. Absolutely. We’ve calculated that, if the virus spreads in Italy like it did in China, we can expect the situation to improve by the month of May. Of course, it will be a different Pitti Uomo, with fewer visitors than usual.”
Marenzi said that “it’s undoubtedly an optimistic outlook, and we will have to see if, by then, public gatherings will have been authorised. There are many confined areas in [Pitti Uomo’s] Fortezza da Basso venue. We won’t give in to defeatism or pessimism, and we will assess the situation in May. We are currently evaluating which measures to adopt. If we’ll be able to comply with all safety regulations, we will certainly stage the show. Of course, if by the end of May the whole of Italy, and all our companies, are still in lock-down, then we will postpone it, and we’ll come to terms with it.”
Marenzi said that, while “two weeks ago I could hear a lot of negativity coming from textile and apparel businesses that source from China, now I hear far less of it. It actually seems that China is set to return to a degree of normality around June 20, according to current estimates.”
Two weeks ago, at a meeting between Confindustria Moda, Pitti Immagine, the Milan Furniture Fair, the Italian Fashion Chamber and Fiera Milano, with the support of the Italian Foreign Trade Agency (ICE), the potential overlap of all these events was discussed.
“At first we thought it would be a problem, but actually this could turn into an opportunity to relaunch Italy's entire fashion and design industries,” said Marenzi. The Furniture Fair and Pitti Uomo will be held in parallel, in Milan and in Florence, then the Milan Fashion Week will kick off, holding joint initiatives with the Furniture Fair, and will be immediately followed by the MIDO and Milano Unica trade shows at the beginning of July.
“The idea is that this concentration of events could set off Italy’s relaunch. Attendance at the shows will undoubtedly shrink, there will be fewer visitors than usual, since the trade fair sector is closely linked with the business travel industry, one of the worst affected,” said Marenzi.
Herno’s output capacity is currently at 50%, with about 50 people busy assembling prototypes and samples. At the label’s headquarters, there are 25 employees at work, between model-makers and production staff. The label is planning to reduce the size of its collections.
“We are working on collection preparations both remotely and on site. But virtually every business is operating at half speed,” said Marenzi. “The genuine question is whether these collections will be successful, after a negative season such as the Spring/Summer 2020 is set to be.”
E-tail sites are slashing prices by 20%, some British e-tailers by as much as 50%. Will this turn out to be a double-edged sword for fashion?
“The Spring/Summer 2020 season has been ruined for the entire wholesale and direct retail channels. The closing down of so many shops across Italy, France, Spain, in some regions of Germany and in the USA means that many people are buying online, as a result of the current situation,” said Marenzi.
“Right now, the e-tail channel alone is busy. It's a huge blow for brick-and-mortar stores. An online price war is one of the possible outcomes, but then there will be a return to normalcy. What we should then consider are the consequences that the coronavirus psychosis will have on consumers’ willingness to travel and shop,” said Marenzi.
“The web, a channel whose total value sales were overestimated until recently, is set to become a truly major channel, and perhaps its increasingly widespread use will generate a positive trend that will stay with us. If normality will return soon, then bringing forward end-of-season sales in June, rather than in July, could be an appropriate solution, or even a necessity,” he added.
The government’s ‘Cura Italia’ (treatment for Italy) decree, injecting €25 billion into the economy and releasing funding worth another €350 billion, is a step in the right direction according to Marenzi. However, the decree doesn’t apply to fashion, an industry with over 65,000 companies that employ more than 615,000 people in Italy, generating a revenue of over €95 billion. Also, an industry that is extremely important as a promotional vehicle for Italy internationally.
“This has sparked some dissatisfaction in the industry, though it must be said that the measures didn’t apply to the mechanical engineering and automotive industries either. Right now, we must consider what's best for the communities and the people affected. It’s not the time for controversy. We are letting the government do its job. Once the storm will have blown over, the executive needs to deploy a huge economic and media effort to promote Italy, and the fashion and luxury goods sectors in particular, around the world,” said Marenzi. He underlined that the whole sector, including major labels, is extremely concerned about safeguarding the fashion supply chain, and smaller companies in particular.
“We are asking the Italian government, the EU and the banking system to support SMEs, for example by financing them using tools like reverse factoring. The correct thing to do right now is to bolster the entire supply chain, by supporting wholesale clients. Not only with words or gestures of solidarity, highly appreciated nevertheless, but also in practice,” emphasised Marenzi, adding that “the situation is very serious, and has a knock-on effect on major labels, faced with huge outlays and financial tension. I would like to invite them not to pass these issues on to their suppliers, by asking for rebates and extended payment terms, or by leveraging their position of strength to make ‘indecent proposals’.”
“Within a year, the situation will be very tough”
“Luckily, the fashion industry’s structure and DNA mean it is accustomed to sudden reversals and changes in taste, style, mood, distribution channels and markets - for example, fabric manufacturers have an amazing ability to reinvent themselves every six months,” said Marenzi. He defined the current situation as “far worse than 2008. There will be many casualties, among labels, textile and semi-finished goods producers and in the distribution sector. Within a year, the situation will be very tough.”
Marenzi doesn't rule out the possibility that, once the crisis will be over, a number of small workshops and minor labels that make unique, high-quality products, may be taken over by their leading clients. “These are companies with very limited resources and a smaller chance of securing loans. It would lead to a market concentration similar to that occurring in the leather goods sector. Though it won’t happen to the big fabric manufacturers,” he said, adding that “flexibility is the name of the game now, and it’s crucial to be resilient in the face of a situation that will surely force all companies great and small to suffer a huge gap between expenditure and revenue.
"It’s just my personal opinion, but one of the lessons we might be able to draw from the coronavirus emergency is that the general financial parameters by which companies are assessed will need to be revised, in the sense that the companies regarded as attractive by the banking system might also be those with parameters other than high EBITDA and margin,” in other words, they may be those with a greater ability to repay their debts. “If the goal is to preserve the industry as a single, self-sufficient system, in which each participant is independent, these parameters will need to be revised.”
“Alternatively,” he concluded, “we’ll just have to wait. I believe this upheaval will leave a mark, because of what is happening or what might happen in future. In my opinion, one I’ve been voicing for some time, if things won't change, in 10 years four giant groups will gain the upper hand and monopolise the entire industry.”
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