The Italian fashion industry is struggling to keep afloat following the first Covid-19 pandemic hit. Photo by Arturo Rey.
Since the 1980s, ‘Made in Italy’ has earmarked the Italian Peninsula’s oneness in traditional industries. While Italy is universally known for its cuisine, art and craftsmanship, the label also vouches for the quality of its fashion manufacturing.
Earlier this year, the first wave of the Covid-19 pandemic provoked a country-wide factory shutdown and many sectors, if not all, were affected. It is particularly the case for the fashion industry. The backbone of the Italian economy standing for 1.5% of the country’s GDP has been extensively hit. If key players of the industry are still ploughing through the crisis, an upcoming second wave of the virus is forcing the ecosystem to prepare for what might be synonymous of another round of full business closure — and a continuous shift in consumer behaviour, inclined to buy less and online.
A complex supply chain
Dress Italian. This glib saying effectively whittles both the importance and reputation of the Italian fashion industry in the world. There’s a cliché that the Italians have a refined style based on high quality garments — and in all clichés lies a bit of truth. Here, it sojourns in the very structure of the country’s industrial fabric, which generates a €97.9 billion turnover. In Europe, 40% of the total clothing production is made in Italy, where the quality of the finishing materials is hard to match.
Its luxury sector is dominated by world renowned maisons such as Versace, Bulgari and Valentino. However going into a more granular level, you soon realise the supply chain is based on small family businesses and medium size enterprises spread across the country. If Lombardy holds Milan’s Fashion Week, primary materials of tremendous quality such as silk, wool and leather originate from Tuscany. Supply chains are complexed and nuanced, with small artisans nurturing big factories and vice-versa. When factories close down, hundreds of families living off this partnership are affected — and brands don’t get the precious raw material Made in Italy. As a consequence, most suppliers have seen orders drop by around a ruinous 40%.
According to a survey conducted in July 2020, one in four Italians reported to consider shopping for clothing and fashion less often after the first wave of Covid-19. Any major crisis usually has a deep impact on consumers’ psychology, on top of affecting the economy. The industry has to adapt and be flexible enough to fine-tune their creation, production and communication strategies. It needs to surf the wave, not to end up being engulfed by a drop in sales and too-sharp a consumer digital shift.
Taking action from business to politics
The sector is a source of employment for 575,000 people, according to Italian Federation of Textiles, Fashion and Accessories Confindustria. Many screwed up their eyes when the governmental decree aiming at slowing down the pandemic placed fashion factories in the unnecessary goods producer category, which forced them to close. Fashion does not save lives, but it provides employment to hundreds of thousands of people — and smaller brands cannot withstand months of halted cash flows.
Stakeholders such as the aforementioned federation, the National Chamber for Italian Fashion (Camera Nazionale della Moda) and the Altagamma foundation, decided to react and sent a list of requests to the Italian government, asking for help to transition the Covid-19 phase. They intend having the government step in and recognize that Italian fashion and its supply chain is a “truly strategic industry for the country.”
As we have seen, issues mainly stem from the nature of the supply chain, but not only. Such proposals included overall more flexibility for companies to ensure employment for all, in exchange of a reduction in working hours. They also encompassed cuts in fiscal and social security charges, funding for a lay-off fund and more state aid for economic growth. The Financial Times reported many businesses struggle when they are forced to retain employees despite having little or no work to offer — while so far, many employees have been laid-off or furloughed already since the beginning of the pandemic.
At I am writing this article, the Italian government has imposed a ban on redundancies until November in order to curb unemployment. Unfortunately, analysts do not expect the fashion industry to recover its 2019 revenues for at least two or three years. The Camera Nazionale della Moda expects revenues to stump 30-40% this year.
Retain Italy’s image of luxury manufacturing heartland
A crumbling supply chain, a rocketing unemployment rate: for all that, should we dwell on a grim state of play? There are ways to dexterously adapt through the crisis as months pass by. We know that a prolonged shop closure has had a devastating impact on sales and domestic suppliers. That is why businesses going digital will play their cards right.
Although Italy is still lagging behind when it comes to digital, the country is on its way. A few months in, businesses have reinforced their online presence to help with both national and international orders. In a normal context, Italians usually favour physical over online shopping — habit which has partly reined in the country’s digital transformation. But with the pandemic, new consumer retail habits (e-commerce) support brands which reorganize their distribution channels. This helps soften the impact of the pandemic.
One cannot talk about the future of the Italian fashion industry without mentioning the Milan Fashion Week. After many editions either canceled or digitally forecast, the latest edition went phygital on September 22-28. In total, not less than 64 shows took place, among which 23 got back to being hold physically. Some brands faced criticism for such a choice, somehow deemed irresponsible ahead of a second wave. Many chose to keep shows online, infusing an incredible creativity to keep things entertaining. Those going for physical editions strove to do so while respecting strict safety measures. Future prospects remain uncertain, and at the discretion of the evolution of the virus.
Heading towards the future, Italy’s most important bet lies on its image of both an excellent tourist destination and heartland of luxury manufacturing. Made in Italy products make up 60% of total tourism spend. The fashion industry, just like any other sector, must adapt to survive. It should also harness the takeaways learnt during the period of crisis to stand up again as the clouds get lighter.
The Made in Italy is a system built on collaboration and support through its supply chain, based on solidarity between those at the top and suppliers at the source. And this equilibrium can’t disappear. Even in the most difficult of situations, the country responds forcefully and creatively — and this time, the whole ecosystem will have to ramp up to overcome a second wave.
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