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The Italian Way: The future of the fashion industry

Tuesday 07 Jul 2020

The first Italian Way event, organised by UniCredit in collaboration with Confindustria Campania, looked at how companies in the fashion industry can restart after the Covid lockdown

Thanks to the global recognition of Made in Italy, Italian fashion holds an international leadership position and acts as a national manufacturing pillar. But the industry was also hit hard by the global lockdown. How best to survive and restart in the post-Covid economic scenario?

This was the focus of the first Italian Way event, held in Naples on 16th June, which was dedicated to the fashion industry and organised in collaboration with Confindustria Campania.

Joining the discussion were Remo Taricani, Co-CEO Commercial Banking Italy at UniCredit, Annalisa Areni, Regional Manager South at UniCredit, Vito Grassi, Vice President of Confindustria and President of Confindustria Campania, Carlo Casillo, President of the Unione Industriali Napoli’s Fashion & Design Department, Giuseppe Attolini, Vice Presidente at Cesare Attolini Spa, Lavinia Biagiotti, President and CEO at Biagiotti Group,  Andrea Miranda, Managing Director at Kocca Srl and  Carlo Palmieri, Vice President Sistema Moda Italia with responsibility for the South of Italy and e Vice President at Pianoforte Holding Spa.

At the event, UniCredit presented sector-focused research on the effects of the pandemic before leading a discussion about ways how the fashion industry can both recover and capitalise on new opportunities. Participants agreed that companies in the sector will need to take advantage of new consumer habits, the exponential growth of e-commerce and strengthen their use of multiple-channels.

UniCredit Fashion Sector Report

1

A big impact on Italy’s fashion supply chain

The Italian fashion supply chain has a strong global reputation with global sales accounting for more than 70% of total Italian fashion turnover. But today the sector faces a competitive and particularly delicate international framework.

The halt of many Chinese factories could be particularly damaging to Italy’s fashion industry given the large amounts of clothes and accessories produced in the Asian country. China represents 36% of the sector’s global exports and the impact on Italy’s fashion supply chain will be, at least in the initial stage, greater for companies with significant exposure to China in terms of exports, procurement of raw materials and end products.

2

Two outlooks: soft and hard

UniCredit outlined two possible scenarios for Italy’s fashion supply chain –  a more conservative (“soft”) scenario and a second more pessimistic (“hard”) outcome. Both predict a deep fall in 2020 and a recovery in 2021.

In the “soft” scenario, turnover will fall by 1/5th from 2019 levels before recovering in 2021. In the “hard” scenario, the decrease could be higher, down by ¼ from its pre-Covid value, but also with a significant rebound in 2021.

3

Those with most debt and least variety are most affected

Companies’ risk profiles are predicted to deteriorate due to less revenues, reduced profitability and worsening of their financial structures. The worst hit will be those with most debt and those with the least geographical diversity. Other companies that will also be vulnerable will be those with a high level of demand but with a smaller stock rotation.

4

Pillars to restart: innovation and finance

In order to survive and restart in the post-Covid economic scenario, companies must take advantage of new consumer habits and to the exponential growth of e-commerce, which is changing the scene and companies’ organisation models. The strategies to restart therefore need to include:

  • Flexibility: a push towards a cross-channel approach, with shops becoming not only traditional exhibition spots but also distribution hubs for e-commerce.
  • Quality: sector companies will need to continue investing in high-quality products that ensure Made in Italy is recognised globally
  • Innovation: the Italian fashion industry will need to introduce new strategies that can increase their sale channels, such as virtual catwalks, digital showrooms and 3D designs

Speaker quotes

Remo Taricani, Co-CEO, UniCredit Commercial Banking Italy

“With our The Italian Way programme we want to reflect on which strategies should be adopted by key Made in Italy sectors in order to restart. Our study today demonstrates that the Italian fashion system is supported by strong foundations and represents pillar of Italian manufacturing. However, the risk of losing its competitive position is currently very high.

Flexibility, cross-channeling and the Made in Italy quality will be key factors to consider for Italian fashion companies to survive the post-Covid era. E-commerce is also an important opportunity, recording a great increase during lockdown, as it allows even small companies to reach high-level foreign clients. UniCredit concretely supports internationalisation initiatives, such as Easy Export, thanks to which we have helped more than 1,100 companies access new markets, increasing their foreign revenues of 24%.”

Vito Grassi, Vice President of Confindustria and President of Confindustria Campania

“The crisis caused by the pandemic also offers a great opportunity to reduce the structural and economic gap between Southern Italy and the rest of the country. Better accessibility for companies means reducing deficit in infrastructure, transport networks, energy networks and digital ones. This much desired breakthrough would give companies in Southern Italy, including those in the fashion industry, new energy to quickly recover the lost ground due to the lockdown.”

Carlo Palmieri, Vice President Sistema Moda Italia with responsibility for the South of Italy and e Vice President at Pianoforte Holding Spa

“Reshoring must be strongly supported. We are discouraged by the effect of the cost of labour. We need tax benefits to encourage a production comeback in Italy.”

Carlo Casillo, President of the Unione Industriali Napoli’s Fashion & Design Department.

“Reshoring could be a unique opportunity. What I say to banks is, believe and support fashion.”

Lavinia Biagiotti, President and CEO at Biagiotti Group

“I look to the future with faithful eyes while I work at our 2021 and 2022 collections. After a strong impact on three seasonal collections we believe in the ones to come.”

Andrea Miranda, Managing Director at Kocca Srl

“We have equipped ourselves with experts to reduce the impact of the crisis and find the right strategy to restart. We felt worried for not having developed our e-commerce earlier but now we are accelerating this area of the business.”

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