Luxurious Italy!


Today was the last day of Italian/Greek week here and as a result we had two guest speakers from the Italian luxury fashion industry: the CEO of Valentino and Bernedetta Zegna (I’ll let you guess what company she works for).

The CEO of Valentino was one of the most charmingly offensive people I’ve ever heard and made an almost countless number of scandalous comments.  However, before the fun, salacious stuff, here are a few other things he mentioned:

There are only two companies left in the world that have Haute Couture lines: Chanel and Valentino.  If you sell 100 Haute Couture dresses in a year that’s considered a bang-up year.  There are only 300 people (!) in the world who buy these dresses and they cost 300-400K Euros each.  What’s nuts is that the typical order is for 3-4 million Euros; apparently people turn their entire wardrobe over.

The CEO prices each dress individually just before a July fashion show at #8 Place Vendome in Paris.  He also actually sells the dresses to some clients, e.g., wealthy sheiks.  If you decide to run out and buy one, caveat emptor as he marks up the price 25% and then offers you a 20% discount.

The real volume in this business comes from accessories (sunglasses and fragrances), which can sell up to 5 million units each and ironically are outsourced.  The big plus is that you get great marketing exposure.  Apparently too it’s the way to crack the new markets (Middle East, Asia, Russia) as women there want to mix traditional clothing with Western accessories.  Underwear is his most feared accessory as it can overwhelm the master brand (think Calvin Klein).  The goal is to eventually have 30% of sales come from accessories.

Company-owned stores are critical for Valentino’s success and location is key; a difference of 50 to 100 meters can destroy sales.  Also, the stores should ideally be small as the stores are empty most of the day.  Their best store is Monte Carlo which is only 150 square meters, but grosses  nearly 5 million Euros a year-or around 35,000 euros a square meter.  Apparently Vuitton has the best stores: easiest to shop in and find a price tag.

A final interesting point before scandal: 80% of Valentino’s designs are done by designers other than Valentino himself (he’s 74 or 75 and will “leave the business one day”).  However, Valentino doesn’t let it’s designers appear at fashion shows (versus, say, Tom Ford back at Gucci), so it has to pay them a lot more money instead.  They’re trying to move the company from Valentino the man to Valentino the brand.

So, now the scandal.  You may have thought that the photo above shows quite a beautiful girl.  However, apparently she “looked a little fat in the hips” and our man doesn’t like the ad.  I think I can hear her throwing up her last meal somewhere as she chokes on her tears.

At another point, our man showed us a list of magazine covers-which apparently one cannot buy-with celebrities wearing Valentino.  Kate Moss on Vogue, Angelina Jolie, Kate Blanchette after the Oscars.  And then Salma Hayek on the cover of Town & Country (shown above).  He was “quite proud of that”-presumably because it’s a new audience.  However, the cover designers “use a lot of computers” because “Salma Hayek is actually quite fat... she looked a little tired that day.”

Also, “the new customers [outside US/Europe/Japan] are not as sophisticated and nice as the old ones.”  I’ll let you imagine how he described how they pad their haute couture dresses in anticipation of the women who own them aging.

Finally, when it was time for questions, our man decided to go to ‘al the girls’ for questions.

So with that, Bernadetta Zegna just couldn’t be expected to be nearly as flamboyant (and thank God she wasn’t).  Here’s some stuff I garnered; none of it nearly as shocking as Valentino (but still interesting):

1) Zegna did some of the first luxury advertising by placing ads for their fabrics in 1st class trains in Italy in the ‘40s.  They started as a fabric company and didn’t get into clothing until the ‘60s; you can still see their fabric branded in their suits.

2) Zegna will make you shoes, shirts, ties and suits made to order in four weeks from any of their shops.  Created in Italy and shipped to you.

3) They change their store image every 5 years; it’s a challenge as they’ve 500 stores globally.  Their sales associates are critical to their success and serve as “ambassadors for the brand” in their stores’ “immaculate environment”.

4) 52 of those boutiques are in 30 different Chinese cities and they’ve been in China since ’91.  I defy you to name 30 different Chinese cities.

5) Zegna’s a little different than Valentino: they build a store where they think there next customers will come from.  Valentino waits until they shop in Italy and then go to them.

6) One truly useless fact: Ermenegildo was potentially a little nuts.  He build a roughly 30km scenic road along a mountain behind the factory in Piedmont; it’s called the Panoramica Zegna.  It was built by hand in the ‘30s and he didn’t like the fact that the mountain was barren so he had 1 million trees planted.  80 years later there’s a huge forest there.

Ah, the luxury business.  What a gong show...

Friday, April 21, 2006

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