Digitalization in the Luxury Fashion Industry: Strategic Branding for Millennial Consumers [1st ed.] 9783030488093, 9783030488109

The luxury fashion industry is one of the best performing and fastest growing industries in today’s business landscape,

429 44 3MB

English Pages IX, 249 [252] Year 2020

Report DMCA / Copyright

DOWNLOAD PDF FILE

Table of contents :
Front Matter ....Pages i-ix
Introduction (Anna Cabigiosu)....Pages 1-6
Front Matter ....Pages 7-7
An Overview of the Luxury Fashion Industry (Anna Cabigiosu)....Pages 9-31
The New Consumers of Luxury (Anna Cabigiosu)....Pages 33-67
Front Matter ....Pages 69-69
The Omnichannel Strategy in the Fashion Industry (Anna Cabigiosu)....Pages 71-101
“See Now Buy Now” (Anna Cabigiosu)....Pages 103-132
Additive Manufacturing and Smart Textiles (Anna Cabigiosu)....Pages 133-171
Front Matter ....Pages 173-173
The Kering Group and Gucci’s Success (Anna Cabigiosu)....Pages 175-202
A Comparative Analysis: Gucci, Saint Laurent, Balenciaga and Bottega Veneta (Anna Cabigiosu)....Pages 203-236
Concluding Considerations and Directions for Future Research (Anna Cabigiosu)....Pages 237-244
Back Matter ....Pages 245-249
Recommend Papers

Digitalization in the Luxury Fashion Industry: Strategic Branding for Millennial Consumers [1st ed.]
 9783030488093, 9783030488109

  • 0 0 0
  • Like this paper and download? You can publish your own PDF file online for free in a few minutes! Sign Up
File loading please wait...
Citation preview

PALGRAVE ADVANCES IN LUXURY

alization in the Luxury on Industry

Digitalization in the Luxury Fashion Industry Strategic Branding for Millennial Consumers Anna Cabigiosu

Palgrave Advances in Luxury

Series Editors Paurav Shukla Southampton Business School University of Southampton Southampton, UK Jaywant Singh Kingston Business School Kingston University Kingston Upon Thames, UK

The field of luxury studies increasingly encompasses a variety of perspectives not just limited to marketing and brand management. In recent times, a host of novel and topical issues on luxury such as sustainability, counterfeiting, emulation and consumption trends have gained prominence which draw on the fields of entrepreneurship, sociology, psychology and operations. Examining international trends from China, Asia, Europe, North America and the MENA region, Palgrave Advances in Luxury is the first series dedicated to this complex issue. Including multiple perspectives whilst being very much grounded in business, its aim is to offer an integrated picture of the management environment in which luxury operates. It explores the newer debates relating to luxury consumption such as the signals used in expressing luxury, the socially divisive nature of luxury and the socio-economic segmentation that it brings. Filling a significant gap in our knowledge of this field, the series will help readers comprehend the significant management challenges unique to this construct. All submissions are single blind peer reviewed. For more information on our peer review process please visit our website: https://www. palgrave.com/gp/book-authors/your-career/early-career-researcher-hub/ peer-review-process. For information on how to submit a book proposal for inclusion in this series please contact Liz Barlow: [email protected] For further information on the book proposal process please visit our website: https://www.palgrave.com/gp/book-authors/publishing-guidelines/ submit-a-proposal.

More information about this series at http://www.palgrave.com/gp/series/15396

Anna Cabigiosu

Digitalization in the Luxury Fashion Industry Strategic Branding for Millennial Consumers

Anna Cabigiosu Department of Management Ca’ Foscari University Venice, Italy

ISSN 2662-1061 ISSN 2662-107X (electronic) Palgrave Advances in Luxury ISBN 978-3-030-48809-3 ISBN 978-3-030-48810-9 (eBook) https://doi.org/10.1007/978-3-030-48810-9 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2020 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover credit: MirageC/Moment/Getty Images This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Contents

1

Introduction 1.1 Book Structure and Aim 1.2 Conclusions

Part I 2

1 1 5

The Luxury Fashion Industry

An Overview of the Luxury Fashion Industry 2.1 The Concept of Luxury and Its Attributes 2.1.1 The Concept of Luxury 2.1.2 The New Luxury 2.1.3 The Attributes of Luxury Goods 2.1.4 Brand Heritage 2.2 The Luxury Fashion Industry: Global and Regional Dynamics 2.2.1 Competitiveness and Mergers and Acquisitions 2.3 Conclusions References

9 9 9 11 18 20 21 25 27 28

v

vi

Contents

3 The New Consumers of Luxury 3.1 The New Consumers: The Millennials 3.1.1 Millennial Generation 3.1.2 The Main Traits of Millennials 3.1.3 The Importance of Millennials for the Luxury Sector 3.1.4 The Behavior of the Millennial Consumer 3.1.5 Sustainability 3.2 The Growing Importance of Social Media 3.2.1 Storytelling 3.2.2 Blogs and Influencers 3.3 The Renewed Relevance of Culture and Arts: Capsules and Co-branding 3.4 Conclusions References Part II

33 33 33 34 38 42 45 47 51 54 57 61 64

Opportunities and Threats for the Luxury Fashion Industry

4 The Omnichannel Strategy in the Fashion Industry 4.1 The Omnichannel Strategy: A New Business Model 4.1.1 Managing Omnichannel Logistics 4.1.2 Omnichannel and Big Data Usage and Protection 4.1.3 Human Resource Management 4.2 Reinventing the In-Store Experience 4.3 The Omnichannel Strategy in the Italian Luxury Fashion Industry 4.4 The Omnichannel Strategy in Italian Small-Medium Enterprises: The Siloe Case 4.5 Conclusions References

71 71 76 79 81 83 88 91 96 98

Contents

5

6

vii

“See Now Buy Now” 5.1 The “See Now Buy Now” Business Model 5.2 The Fast Fashion Luxury: Multiple Managerial Threats 5.2.1 Creativity Under Pressure 5.2.2 Order and Supply Chain Management 5.2.3 Desire 5.3 Comparing the “See Now Buy Now” in Burberry, Ralph Lauren and Tom Ford 5.3.1 Burberry 5.3.2 SNBN in Burberry 5.3.3 SNBN in Ralph Lauren 5.3.4 Tom Ford 5.3.5 SNBN in Tom Ford 5.4 Comparison of the Analyzed Cases 5.5 Conclusions References

103 103 106 107 110 112

Additive Manufacturing and Smart Textiles 6.1 The Potentials of Additive Manufacturing in the Fashion Industry 6.2 The Application of 3D Printing for the Design and Production of Luxury Shoes 6.2.1 The Artisan and Industrial Production of Shoes 6.2.2 The Digital Craftsman 6.2.3 The Intelligent Shoe Factory 6.3 3D Printing: Opportunities and Threats 6.4 The Opportunity of Smart Textiles: Technologies and Performance, Applications and Diffusion 6.4.1 Performance in Smart Textiles 6.4.2 Nanotechnologies, E- and Smart Textiles 6.5 Conclusions References

133

113 113 114 119 121 122 123 126 129

133 138 138 142 145 150 153 156 161 165 166

viii

Contents

Part III

The Business Model of the Most Growing Brand: Gucci and the Kering Group

7 The Kering Group and Gucci’s Success 7.1 The Kering Group 7.1.1 Holding Structure 7.1.2 Group Performance 7.2 Gucci: History and Growth 7.2.1 Breaking the Rules: The Creative Direction of Alessandro Michele 7.2.2 The Heritage, Artistical and Digital Contaminations 7.2.3 The ArtLab 7.2.4 Social Networks 7.2.5 The Omnichannel Strategy in Gucci 7.3 Conclusions References 8

9

175 175 177 182 183 185 186 189 190 193 197 199

A Comparative Analysis: Gucci, Saint Laurent, Balenciaga and Bottega Veneta 8.1 Saint Laurent 8.2 Balenciaga 8.3 Bottega Veneta 8.4 Business Models’ Comparison 8.4.1 The Strategy Canvas 8.4.2 Old and New Luxury 8.4.3 Comparing Kering’s Top Brands 8.5 Discussion and Conclusions References

203 203 207 212 216 217 220 223 230 234

Concluding Considerations and Directions for Future Research 9.1 Concluding Considerations 9.2 Directions for Future Research

237 237 242

Index

245

List of Figures

Fig. 8.1 Fig. 8.2

Strategy canvas representing traditional and new fashion luxury firms’ strategy (Source Personal elaboration) Comparison of Kering’s main brands strategy (Source Personal elaboration)

221 223

ix

1 Introduction

1.1

Book Structure and Aim

The luxury fashion industry is one of the most rapidly growing and successfully performing industries, with leading firms experiencing double-digit growth. Against this background, this book analyzes and discusses the key competitive variables and resources driving the growth of luxury fashion firms. In particular, this book aims at increasing our understanding of the key drivers of internal growth and the competitiveness of luxury brands in the fashion industry by focusing on how digitalization and new technologies are shaping this business. Furthermore, the book, by disentangling new opportunities and threats correlated with digitalization and new technologies, aims at identifying the common strategic patterns of the most successfully performing firms in the industry. While the world “luxury” traditionally recalls the idea of heritage, quality and craftmanship, today, the new consumers of luxury, the Millennials, are changing and challenging the meaning of luxury. The complexity of the Millennials’ world influences the entire fashion supply chain. Millennials are ultra-connected digital natives who are used to obtaining everything immediately with a click. This is the hic et nunc © The Author(s) 2020 A. Cabigiosu, Digitalization in the Luxury Fashion Industry, Palgrave Advances in Luxury, https://doi.org/10.1007/978-3-030-48810-9_1

1

2

A. Cabigiosu

generation, and luxury fashion firms today are competing on their ability to maintain a close relationship with Millennials. Furthermore, the acceleration of information and the multiplication of information processing capabilities has made it possible to create a fashion luxury industry aligned to market demand in terms of design, production and distribution strategies. For luxury fashion companies, the web has long since exceeded the double-digit threshold in the volume of revenue, and most importantly, it is the component that sustains double-digit growth. The effects of an e-commerce world include the development of new possibilities of contact with customers, the implementation of new logistics systems, the exponential increase in transparency and, consequently, the efficiency of the market. There is no longer any possibility of price misalignment. Social media distribution channels are occupying an increasing amount of space: Instagram is leading the way, and a host of chats and other emerging applications multiply the number of fronts available. Millennials can interact with luxury firms contemporarily via physical retail, social networks and web platforms, which can be integrated, providing them with an omnichannel experience. This complexity requires considerable adjustment efforts and investment by companies, especially the many small and medium-sized enterprises that lead the production of luxury goods. Furthermore, the proximity between brand and consumer has also increased visibility with respect to product origin, quality and sustainability. In the last few years, the acceleration of the world as a whole, and the fashion industry in particular, toward sustainability has been impressive. The concept of sustainability seems to have invaded every corner of the supply chain in a very short time owing to the parallel social revolution, which makes the market’s judgment direct and immediate, and therefore transforms sustainable positioning into a competitive opportunity. However, proximity to Millennials is not only digital and ethical in nature but also concerns garments that should ideally accompany consumers every day for the entire day: heels become sneakers, tops become t-shirts, pants become mom-jeans or cargo pants and so on. LMVH and Rihanna created the brand Fenty, which is the ex-novo construction of a megabrand built on Millennials’ needs. LMVH is the

1 Introduction

3

first luxury group in the world to include a new brand in its portfolio alongside names with inimitable heritage to specifically target Millennials. Other brands are reinventing their collections: the catwalks carry clear messages of ‘zeroing’ with respect to what had preceded them owing to courageous innovations such as genderless collections or even disruptive logo changes. Zeroing, therefore, for many brands seems a necessary change of pace to better cater to Millennials. This book accompanies the reader in a journey that begins with the analysis of the constantly evolving demands of luxury fashion driven by the rise of Millennials, the main clients of luxury products. Furthermore, the book explores how luxury fashion firms are responding to Millennials’ novel needs by leveraging digital technologies that open new communication and sales channels. Finally, the book relies on the recent extraordinary growth of the Kering Group’s main Maisons, especially Gucci, to exemplify and understand how luxury firms’ business models are changing at the intersection of Millennials’ new needs and new available technologies. The first part of the book (Chapters 2 and 3) offers an overview of the industry, its performance and the major changes both on the demand side and the supply side of the sector with particular attention to the role of Millennials. After an introduction to the concept of luxury, the second chapter provides a definition of luxury and an elucidation of how it has changed until arriving at the concept of new luxury. Subsequently, this chapter offers an overview of the industry, its performance and its major regional trends and concludes with a description of the industry concentration process driven by merger and acquisitions. The third chapter presents the Millennial generation, its main traits, consumer behavior and how it affects the luxury fashion industry. The chapter analyzes the links and mutual influences between luxury and the Millennials and explains why the attractiveness of this specific target is growing and how it is redirecting the strategic choices of luxury brands. In line with this analysis, the chapter also emphasizes the relevance of sustainable strategies, the role of social media, blogs and influencers in dialogue with Millennials and finally of artistic collaborations, capsules

4

A. Cabigiosu

and co-branding to develop exclusive collections that meet these new clients’ needs. In the second part (Chapters 4, 5 and 6), the book focuses on the understanding of actual opportunities offered by digitalization and technology to luxury fashion firms and describes how they lead to the development of the omnichannel and “see now buy now” strategies. Further, it explains how 3D printing and smart textiles are entering the fashion industry. Chapter 4 describes the omnichannel business model and the requirements it entails at different levels of the value chain, including logistics, information and human resources management, and observes the penetration of the omnichannel strategy in Italy. It also discusses how omnichannel can be a viable strategy for small and medium-sized enterprises. Finally, the chapter discusses how online and physical stores are becoming increasingly integrated, generating new ‘phygital’ experiences. Chapter 5 presents the “see now buy now” business model, its strategic and operative implications and how it fits the need of new consumers, the Millennials. Thereafter, by examining the experiences of and difficulties encountered by Burberry, Ralph Lauren and Tom Ford, which were among the first to adopt this model, the chapter discusses the relevance and potential of the “see now buy now”. Chapter 6 deconstructs how additive manufacturing, 3D printing and smart textiles are entering the fashion industry and discusses their potentials and challenges. This chapter also discusses whether and how these innovations are compatible with luxury fashion traditionally dominated by craftsmanship, with a focus on luxury shoes production, and how small and medium-sized firms can also approach digital transformation. In the third part (Chapters 7 and 8), the book relies on the examples of the Kering Group and Gucci to exemplify, analyze and discuss how the above-cited strategies and technologies are used in the most successfully performing business models today and how new clients and technologies interact with firms’ heritage to generate new business models. Chapter 7 presents the examples of the Kering Group and Gucci. Gucci belongs to the Kering Group, which is also the parent company to other brands such as Balenciaga and Saint Laurent. However, Gucci is the fashion luxury brand that has seen the most extensive worldwide

1 Introduction

5

expansion in the last few years. Hence, this chapter analyses how Gucci’s renewed strategy and business model sustain its extraordinary growth and how the opportunities described in the second part of the book apply to this case. Chapter 8 compares the business model of the most rapidly growing brands (Gucci, Saint Laurent, Bottega Veneta and Balenciaga) belonging to Kering using the blue ocean strategy canvas to identify common patterns. Results show that these brands were able to attract Millennials by hiring new art directors with a Millennial “mindset”, pursuing relevant omnichannel and social media investments coupled with an emphasis on the brands’ heritage, ensuring artistical collaborations and opening their collections to street styles. The chapter also discusses how these opportunities might become threats by examining the Bottega Veneta case, which still lags behind in terms of digitalization and the ability to speak to Millennials. Finally, the conclusion section emphasizes the complementarities and tensions between the strategic variables constituting the business models identified and emphasizes how proximity is the keyword that better describes current luxury fashion.

1.2

Conclusions

As the luxury market has rapidly grown in the last years, it has grabbed researchers and industry experts’ attentions and various studies have been published. However, there remains a lack of understanding of how luxury firms obtained these results and how digitalization affected most performing business models. Little empirical research has focused on luxury brands’ (e-)performance and consumers’ perceptions of luxury brands. Digital transformation presents the world of luxury fashion with new challenges. Especially the relationship between traditional or old luxury, digital technology and new clients’ needs is an intricate one. Innovations driven by digital technology are forcing luxury fashion brands to adapt and reshape their business models in order to adapt to changing

6

A. Cabigiosu

consumer behavior. This adaptation challenges both big groups and small and medium-sized brands. For these reasons, fashion firms seem to be on tightropes in search for a balance between old and new luxury. Luxury fashion firms compete in an environment in which new and old competitive variables coexist. However, these two sets are coherent and complementary within their own boundaries and less so with each other and challenge firms willing to design a new competitive landscape. Luxury brands need to comply with the emerging direction of business trends without compromising their heritage. In this setting, the book identifies and discusses the drivers of the internal growth strategies of luxury fashion brands in the digital era and provides a broader understanding of the current competitive scenario. Also the book identifies the main tensions that luxury fashion firms are experiencing, how the most performing brands are approaching these challenges, which become opportunities, and identify new research avenues.

Part I The Luxury Fashion Industry

2 An Overview of the Luxury Fashion Industry

2.1

The Concept of Luxury and Its Attributes

2.1.1 The Concept of Luxury From an etymological perspective, the word luxury comes from the Latin “luxus” which means superabundance, excess in the way of life or a display of wealth aimed at satisfying desires that transcend real needs. As Sombart states, luxury is any expense that exceeds what is necessary (Sombart 1967). Hence, the concept of luxury is closely linked to human needs, and a concrete definition of luxury depends on the specific time and society under analysis and might vary within these aspects. There is no unique definition of “luxury”; on the contrary, it takes on different forms and meanings in relation to the context of space and time as well as according to the perspective of the study. Luxury has a nomadic, multipurpose character that is difficult to trace back to a unique and definitive concept. In this context, eventually, the term luxury can take on a negative meaning, linked to images of exaggeration and immoderation. It is no coincidence that from the root “lux” also originates the word “luxuria” © The Author(s) 2020 A. Cabigiosu, Digitalization in the Luxury Fashion Industry, Palgrave Advances in Luxury, https://doi.org/10.1007/978-3-030-48810-9_2

9

10

A. Cabigiosu

which can be translated as “exuberance, profusion, luxury” and “lascivious and voluptuous life” (Lipovetsky and Roux 2003). The term luxury also recalls the Greek lemma “loxos” (Mattia 2013), which means growth in an oblique way, which can also be interpreted as displacement and deviation from the norm. The reference to the idea of detachment is also discussed by Kapferer (2012) who identifies its origin in the Latin “luxation”, i.e., distance, and suggests that luxury describes a considerable departure from the usual way of satisfying needs. This sphere is usually connected to experiences, objects and services and is marked by a high symbolic value for which the consumer is willing to spend exorbitant amounts well above the average price of the category to which the product belongs, which in turn is definitely not anchored to the simple sum of production costs. The term therefore suggests a sort of deviation and a distortion in which excess and distinction are mixed; it describes an attitude involving enthusiasm for all that is outside the norm. It is not by chance that the meaning of the term oscillates between two opposing polarities: on the one hand, the representation of wealth, deserving recognition of the economic and social success linked to the capacities of the individual and, on the other hand, bad taste and the absence of measure originating from the exclusive attachment to all that is superfluous and material. From these considerations, two different interpretations of the concept of luxury emerge: on the one hand, it portrays a form of ostentatious consumption that motivates the need to acquire the good to exhibit status and wealth; on the other hand, it refers to the emotional dimension (hedonistic consumption) favoring the search for gratification and personal satisfaction. Luxury in this case means giving oneself the best and seeking one’s own pleasure and well-being. From this brief etymological analysis, we can already perceive the ambivalence of the concept of luxury, as both positive and negative, and how this subject encompasses different interpretations and meanings. The meaning attributed to luxury has undoubtedly undergone a metamorphosis over time, changing form and value in different historical periods. According to Lipovetsky and Roux (Lipovetsky and Roux 2003), luxury did not begin with the simple production of expensive objects

2 An overview of the luxury fashion industry

11

and the ostentation of opulence and sumptuousness. However, one can find an ethics of luxury even in prehistory. Before being a symbol of material civilization, “Paleolithic” luxury was a cultural phenomenon, a mental attitude that saw the affirmation of man as a social being and not an animal. Another reason for the emergence of luxury, apart from an economic and materialistic perspective, is religion where luxury takes on a sacred form, made up of symbolism and closeness to the divinities. Luxury items were perfect presents for the divinities of ancient Egyptian or Roman empires. With the development of the great civilizations of the ancient world, luxury goods increasingly referred to the idea of wealth, privilege and power along with the satisfaction of abundance that goes beyond mere basic needs. Nevertheless, in this phase, negative connotations were also observed in some cultures. For example, in ancient Greece, the habit of indulging in luxury was considered a threat to society because the satisfaction derived from it could have transferred the focus of citizens from the polis to private life (Brun and Castelli 2013). Today, this is still a word whose meaning depends on multiple and very different perspectives. For example, in some religions, luxury expenses are a byproduct of the weakness of human soul, while in others they are considered the tangible proof of mundane success which is in turn linked to divine grace. Even without a detailed analysis of all stages of the evolution of the concept of luxury in different eras, societies or religions, it is nevertheless important to identify the birth of the so-called modern concept of luxury, focusing on the most recent years. Particularly, many authors identify a transitional phase in the conception of luxury after the wave of the second industrial revolution (Danziger 2005).

2.1.2 The New Luxury At the end of the nineteenth century, the term luxury acquired a new meaning related to complacency in what is excellent and expensive and to the pleasure of enjoying something comfortable beyond what is strictly necessary (Brun and Castelli 2013). For the majority of the nineteenth century, the concept of luxury was still affected by the aristocratic and

12

A. Cabigiosu

artisanal model in which goods were crafted manually by expert artisans and relied on high quality, and eventually rare, raw materials, and were sold mainly in the local market. The irruption of modernity and of the industrial revolution changed at the very heart the approach to and the meaning of luxury. Industrialization has led to enormous productivity gains and higher production volumes of more standard items to be sold beyond local geographical borders, laying the foundations for what are today global luxury companies. Initially, the new logic of luxury fashion found its best representative image in haute couture such that luxury became a “creative industry” for the first time (Lipovetsky and Roux 2003). Luxury thus tends to lose most of its negative connotations, such as decadence and estrangement from morality. During the twentieth century, luxury became a term for describing a product, an industry or an expensive and high-quality object that flaunts elegance and sumptuousness (Danziger 2005). For a long time, luxury had been synonymous with haute couture, a model based essentially on tailoring in which the designer is the guardian of the aesthetic tradition of the wealthiest classes. Each dress was a unique piece, tailor made and a work of art born to celebrate the power and prestige of the aristocracy. In time, this traditional and sartorial approach towards fashion started changing. For example, in the 1920s, designer Coco Chanel revolutionized the traditional look, enunciating an idea of fashion that was more modern and dynamic. Chanel completely changed the mood of the suit to make it comfortable and practical. However, the revolution did not happen by chance. In fact, in times of war, Chanel had to use any tissues available and also started using the jersey, and the suit became more attuned to the body without markings of the waist for a men’s jacket with pockets and straight skirts reaching the knee. Functional, practical and comfortable, it would become the Maison’s iconic suit. From the 1960s onwards, the democratization of society introduced a sort of aesthetic reformism that broke with the idea of tradition: the first collections accessible to the emerging classes were created by designers such as Pierre Cardin and Yves Saint Laurent. In 1966, Yves Saint Laurent resumed the style launched by the diva Marlene Dietrich,

2 An overview of the luxury fashion industry

13

who wore the jacket with trousers for the first time and made it her own. This was the prêt-à-porter with dresses designed for everyday life and made more affordable. In terms of communication, the identification of the brand with the figure-myth of the designer imposed its own diktat on fashion victims in the form of a total look that was increasing at that time. During the 1980s, the industrial organization system finally became established in the world of fashion. It was at this time that Italian designers such as Versace, Armani and Trussardi overtook their French cousins in terms of volume and turnover. The competition between Milan and Paris, the two European capitals of fashion, reflects the contrast between the French model of haute couture and the Italian model of prêt-à-porter favored by licensing policies and brand extension, which sanctioned the union between designers and companies. If in the past the experience of luxury was reserved for a privileged few, today it has broadened its horizons, extending to new groups of buyers and new categories of products (cosmetics, jeans, accessories, food and consumer electronics). The world of luxury has now abandoned the aura of sacredness and uniqueness that had characterized it up to that point to enthusiastically marry the cause of innovation and the future: the Italian style defined the expression of a quality of life that was not reserved only for the most elitist strata of the population and found its counterpart in the peculiarity of the production model of the industrial districts; it was capable of responding with great flexibility to the growing complexity of demand. During the 1990s, a post-fashion logic was established characterized by the proliferation of styles and sources of inspirations. Designers shaped collections but were also inspired by the emerging phenomenon of street style. It was a situation that significantly expanded the possibilities of the choice of the increasingly evolved and demanding consumer who could now assemble her own outfits by mixing and matching clothes and accessories from different designers. In this context, the product responds to the more complex needs and has multiple meanings and therefore takes on a central role in the communicative value of the brand. Since the second half of the twentieth century, there has been a trend towards massification, leading to a transformation of both the

14

A. Cabigiosu

supply and the demand in the fashion industry. The growing mass production has seen the flourishing of the “democratization of luxury” which has brought not only the wealthiest people to the market but also, increasingly, a large part of the population as a whole, thus breaking down the strong social stratification. The so-called “Neo-Luxury” offers high-quality products and services at a more affordable price to the majority of middle-class consumers. This transformation was illustrated by Silverstein et al. (2008) through the phenomenon of trading-up: the desire and intention to pay a premium price for goods that have a high degree of quality, aesthetic taste and attractiveness compared to products in the same category but that are not so unapproachable. People are thus inclined to spend more on the product categories they are interested in and in some selected brands (trading-up) and less on less interesting product classes (producing the so-called trading down) to be able to invest savings in new luxury products. This evolution also generates different interpretations of luxury, understood as social identity, search for experiences and emotions, the desire to be satisfied with oneself and gratification. Luxury becomes beauty, pleasure and dream and accompanies the consumer in an experience capable of involving the multiplicity of the senses. Interestingly, Kapferer (2012) emphasizes that the term premium is not synonymous of luxury and that the there is a discontinuity between the two. Something luxury is somehow more special than premium products. According to Danziger (2005), the label of the new luxury should not be associated only with the democratization of luxury, that is, simply referring to a more accessible luxury, but the real paradigm shift would lie in the way consumers define the new luxury, that is, as an experience or a feeling. While the old luxury only involves things, the new luxury regards the whole consumer experience. Simultaneously, the focus of attention shifts from the intrinsic characteristics of the product to what it represents. Essentially, a new competitive arena is created in which companies win or lose on the basis of creativity, innovation and brand strength and are called upon to enrich objects with symbolic values regardless of the traditional requirements of rarity and exclusivity. It is a highly profitable strategy for

2 An overview of the luxury fashion industry

15

companies, which involves trading-up, a purchasing behavior increasingly widespread among consumers willing to pay a premium price to get possession of products of superior quality and high emotional content. More and more people are talking about luxury and not only fashion. This terminology indicates a substantial change in the sector in the recent years. Nowadays, fashion companies no longer sell clothes for people to cover themselves but sell a lifestyle, a way of being. Clothes and accessories have become tools to express identity. Diesel, Starbucks and BMW are companies that have made use of the phenomenon of accessible luxury. Unlike traditional luxury goods (e.g., Chanel, Rolls Royce and Cartier) whose price confines them to elite consumers, neo-luxury goods can generate higher sales volumes despite higher prices compared to that of other products in the same product category. Thus, exclusivity marries mass appeal. In fact, although new luxury goods cost approximately 200% more than those of competitors, they remain within the reach of a substantial proportion of consumers who are willing to own products with superior functional, technical and emotional benefits; they balance costs by purchasing goods at minimum prices in categories that are not of a similar kind of importance. The competitiveness and market positioning of luxury companies require a renewed ability to understand these changes to provide an adequate response to the needs of a more attentive and sophisticated consumption. Prada, Pirelli PZero and Balenciaga are examples of firms that have taken up this challenge, updating luxury through the avantgarde, the enhancement of comfort, practicality and the exaggeration of technological detail. Gucci also shatters the compact and aristocratic image of the brand to present itself in a more modern, bold and alluring manner. In the background, there is a new consumer figure who does not interpret in a static and univocally determined way belonging to a specific lifestyle: she is a “centaur” customer, able to move with great agility and is informed and wise in her choices; her behavior is less predictable and aimed at satisfying her own specific needs, sometimes conflicting and not classifiable according to a single model of behavior. It is luxury with a human face that no longer leaves anyone out but rather aims to understand an ever-widening world. From the stage of

16

A. Cabigiosu

the Triennale di Milano 2018, the guest of the conference Next Design Perspectives, Gucci CEO Marco Bizzarri, explained that the era of luxury exclusivity has come to an end, leaving room for a much broader and more varied concept. The exclusivity of the world of luxury is false and is now over, explained the manager, and the alternative is to focus on the opposite concept, that of inclusiveness.1 Fashion is becoming more inclusive in terms of design, which learns from streetwear how to offer people plenty of comfort and style the whole day. In the stores, the experience has completely changed. Clerks are becoming more natural, empathetic and smiling and must now convey positive emotions. Bizzarri also discussed the work done at Gucci, with the creative director Alessandro Michele, and explained that they wanted to create a new Gucci not only in aesthetic terms but also in cultural terms. “We wanted to speak to the emotional side of our consumers, through well-conceived narratives and storytelling, to be present in their lives not only with products, but also with content and values.” Inclusiveness is also driven by social networks that directly connect brands and consumers and generate a community. Within the complex world of luxury, various authors have attempted to identify macro-segments of clients, and Allérès (1990) divided the luxury market into three distinct categories that refer to different social classes. The taxonomy developed distinguishes between inaccessible luxury, intermediate luxury and affordable luxury. Inaccessible luxury is characterized by custom-made products produced in limited numbers and distributed through a highly selective network. The prices of these products are undoubtedly very high. These products project the consumer into a dimension of rarity and unsurpassed exclusivity, offering the realization of desires reserved for a small circle. Hence, inaccessible luxury is the tip of the pyramid. This class is associated with haute couture collections and precious items and reflects the idea of luxury established before the advent of the “new luxury.” Intermediate luxury products have a lower degree of uniqueness than inaccessible ones; they are produced in small quantities and distributed through selected sales 1 https://www.pambianconews.com/2018/10/30/bizzarri-finita-lera-dellesclusivita-e-lora-del-lusso-

inclusivo-246868/.

2 An overview of the luxury fashion industry

17

channels; they are sold at a price that, although high, does not reach the same levels of inaccessibility as those of the upper class. This category includes prêt-à-porter and ready-to-wear collections that better fit the idea of “new luxury.” Finally, affordable luxury includes products that allow a wider range of consumers to get closer to the emotional experience of buying luxury products. The extension of the luxury brand in categories such as perfumery, eyewear and cosmetics is a typical way to enter the world of luxury even for those who cannot afford to spend large amounts. In line with this pyramidal perspective, Kapferer’s (2012) study in its analysis of business models highlights four different levels of brands. At the top is the “griffe,” which conceptually approaches the previously illustrated theory of inaccessible luxury. The brand was described by Kapferer as a signature on a unique work. In a single definition, the author encompasses the image of uniqueness and craftsmanship: we are in the realm of art and not of simple style. The materialization of this perfection leads the consumer to feel like the protagonist of an elitist dream. At the second level, there are “luxury brands” produced in limited series with a very high quality. This lower step incorporates the output of simplified mass production in which the level of industrialization is higher. In this range of products, brand awareness generates intangible added value for expensive and premium quality products. At the base of the pyramid are branded goods produced in large quantities and sold at a lower price to a wider range of consumers. The limitation of this business model lies in the fact that the more the lower categories and products expand at an affordable price, the more there is a risk of moving away from the top of the pyramid and, therefore, from the creativity and valuable heart of the brand. Finally, it should be stressed once again that the notion of luxury is subject to significant relativity, identified on the basis of several factors, and that it is still evolving. Despite the globalization of fashion industry, the definition of luxury goods and services remains, at least partially, contingent on the gender, age and geographical areas considered. This is because of the various degrees of evolution and penetration of luxury in mature or emerging markets. Other elements that might come into play are socio-demographic or psychographic variables up to the individual

18

A. Cabigiosu

level such that the concept of luxury is modified on the basis of perceptions, motivations and attitudes (Mattia 2013). The concept of luxury, like a diamond, has many facets and multiple colors, which change on the basis of the perspective from which it is scrutinized.

2.1.3 The Attributes of Luxury Goods The aforementioned considerations clearly emphasize that clients are willing to pay a premium price for luxury products. Nevertheless, it would be reductive to dwell only on the price variable to identify luxury products. Price is one of the most important attributes; it is a necessary condition for luxury but not a sufficient condition. In attempting to outline what else represents luxury, one can identify some characteristics considered as basic minimum requirements. As many authors point out (Fabris 2003; Corbellini and Saviolo 2015), luxury is a plexus of meanings that largely transcends economic value and perfectly calibrates a mix of attributes. The luxury brand experience is never characterized by a single trait; it is multifaced and the result of a mix of innovation and creativity, tradition and history, superior quality and high prices, exclusive communication and selective distribution, the imaginary and storytelling. Particularly in the fashion industry, luxury combines product attributes, creativity and brand image. The literature identified many recurring attributes of luxury fashion products. The brand name, identity, status, reputation and awareness as well as product and design attributes such as quality, craftsmanship, innovation, uniqueness and creativity are considered fundamental (Chevalier and Mazzalovo 2008; Erickson and Johansson 1985; Jackson 2004; Moore and Birtwistle 2005; Nueno and Quelch 1998; Okonkwo 2007; Phau and Prendergast 2000). Luxury products are often also perceived as rare, and selectivity is to be understood not only at the product level but also from the perspective of the customer, who feels he belongs to a small circle of elected representatives: “the happy few” (Kapferer 1997). Some luxury products are adapted to clients’ personal needs, and no one else will have access to

2 An overview of the luxury fashion industry

19

the same. Custom-made products enhance the sense of exclusivity that a luxury product can offer. These attributes must be managed concurrently and require a consistent and coherent approach to create and maintain a luxury fashion brand positioning. Excellent quality along with high prices is one of the most cited luxury features and identifies the presence of unique and precious raw materials or manufacturing processes characterized by great professionalism and rare craftsmanship. Reliability and perceived durability lead the consumer to an attitude of trust so that there is no fear of defects. Upon extremizing the concept, we can say that a luxury product is associated with an image of perfection and eternity. These features generate iconic products that have typified exclusive, aspirational characteristics. The interpretation and mixture of each of these attributes generates the so-called brand signature or ‘brand DNA,’ the company spirit that enhances rarity, exclusivity, visibility and uniqueness and in which clients find a means to express themselves. In this respect, communication and distribution strategies are central to correctly and coherently tell, share and sustain the brand DNA. Luxury stores are considered shopping cathedrals; they enjoy significant investments, are considered crucial to a brand’s marketing and reputation and do not merely support brand sales. Therefore, luxury companies often own stores to increase the control over customer relationship and experience at the point of sale. Nevertheless, despite the importance and growth of the luxury sector, empirical investigations of the dimensions of luxury attributes and their connections and development are still underdeveloped. For example, nowadays, keywords such as ‘sexiness,’ which identifies the ability to express a new sensuality in a clear break with past canons, or ‘genderless’ are widely reported by industry experts and might contribute to the growth of the luxury sector (Madsen 2018; Luna and Barros 2019).

20

A. Cabigiosu

2.1.4 Brand Heritage Brand heritage is still considered a relevant notion and brand DNA is grounded on each specific firm’s heritage (Beverland 2004; Moore and Birtwistles 2005). In the consumer’s mind, luxury products must have a story to tell and a tradition to respect, conveying the idea of something precious and refined. Many luxury brands, such as Chanel or Dior, have a long history and their success still relies on their ability to build products based on their icons, such as the tailleur or pearls of Chanel or the structured midi dresses of Dior. The investment in the culture or spirit of a luxury firm ultimately supports the brand. Today, this topic is a matter of a vivid debate. New generations and technologies have somehow questioned the ability of products built on a firm’s heritage to address rapidly changing needs and lifestyles. Today, managers wear sneakers to work. Is that coherent with the heritage and brand image of Chanel? Luxury brands are undergoing a phase labelled “re-branding,” which signals the need to profoundly revise the brand image to cater to the most crucial ‘Millennial’ needs and expectations. In this respect, many managers and CEO interviews suggest a different interpretation of the “re-branding” phenomenon. Some see a profound disengagement with the past such that brands and new designers, such as Alessandro di Michele in Gucci, Virgil Abloh in Vuitton or Demna Gvasalia in Balenciaga, are rewriting these brands’ DNA. Others see profound changes and multiple radical innovations in brand names, such as Yves Saint Laurent becoming Saint Laurent. In terms of the content of collections, they see the relevance of street style and the timing of collections. For example, Alexander Wang exited the New York fashion week but still believes that brand success is rooted in its heritage. For example, Fionda and Moore (2009) conducted a multiple case study and found that clear brand identity is a crucial distinctive attribute of luxury brands and that the fashion element of each brand has significant correlation with brand values. They also emphasize the importance of design signature along with iconic products and the history and heritage of a luxury brand, which are considered crucial as they bring an element of authenticity.

2 An overview of the luxury fashion industry

21

The “re-branding” process driven by the rise of young and talented designers also leads to the question of whether the brand or the designer comes first. This question has always accompanied the history of luxury. Until now, however, the principle of the continuity of the Maison has been guaranteed: no matter how innovative, each change made by the designer has had to deal with the heritage of the brand and in some way adapt to what it represented before them and would represent after them. This balance, however, seems to have been overlooked. Clear examples are two fashion shows, that of Riccardo Tisci in Burberry and that of Hedi Slimane in Céline in 2018. Both led the catwalk with clear messages of the ‘zeroing’ of what had preceded them through relevant variations in positioning, owing to courageous stratagems on social networks, colorful outdoor sponsorships or, again, disruptive logo changes such as that envisioned by Saint Laurent. Zeroing, therefore, is a necessary and essential step. It is an approach born with the arrival of Alessandro Michele in Gucci, a brand in which he immediately imposed a new strategic paradigm with a creative mark of rupture, which could simultaneously match the imagination (and spending power) of Millennials. The Kering group is almost reaching the zero, even ending the era of Tomas Maier in Bottega Veneta. In light of this inescapable approach, the recent Versace case appears even more significant. Several sources have confirmed that the Medusa Maison, before moving on to Michael Kors, was carefully monitored by Kering and that the improvement of the operation was blocked on an unsurpassed rock. One hypothesis seems the difficulty of applying the zeroing strategy in Versace. As proof, Kors, as soon as the operation was announced, fully confirmed the current managerial and stylistic leadership (Shamsher 2011).

2.2

The Luxury Fashion Industry: Global and Regional Dynamics

The global annual revenues of the global fashion industry in 2019 accounts for e1.64 trillion, including footwear and jewelry. Among these, women’s fashion accounts for the 51.5% of the overall amount.

22

A. Cabigiosu

The fashion industry enjoyed a growth of between 4 and 5% since 2013 and, particularly, the luxury industry witnessed gains, driven partly by the return of luxury consumption in Asia. This positive growth continued at about 4–5% in 2018 and 2019 and it is expected to continue in the range of 3–5% through 2025 despite the complexity and turbulence of the global environment in which luxury firms operate (Bain and Company 2018; BOF and McKinsey 2020). These data do not consider the Coronavirus Pandemic crisis in 2020. In 2019, the global luxury market size was valued at e281 billion, showing a growth of 4% from 2018 (Kering Financial Document 2019). In 2018, the most rapidly growing brand was Gucci, which experienced an increase in revenue of 36.9% (Kering Integrated Report 2019). Interbrand2 had the second highest growth in brand value (+23%) among all luxury brands in 2019, followed by Dior (+16%) and Louis Vuitton (+14%). In 2019, apparel represented 23% of the total personal luxury goods market, showing an increase of 5% compared to 2018. Leather goods generated a revenue estimated at e57 billion in 2019. The category expanded at a rate of 11% between 2018 and 2019. Shoes represented 7% of the luxury market in 2019 and increased by 12% on a reported basis. Watches generated a revenue of e39 billion in 2019, representing 14% of the total personal luxury goods market, and the revenue was up by 1% versus 2018. Finally, revenue from jewelry increased by 12% in 2019 to reach e21 billion, representing 7% of the personal luxury goods market (Deloitte 2019). In 2019, the retail channel’s directly operated store network accounted for sales amounting to 39% of the total worldwide personal luxury goods market against the 61% of the wholesale channel (department stores, independent high-end multi-brand stores and franchise stores). The six most diffused sales formats were mono-brand stores (31%), specialty stores (20%), department stores (18%), online stores (12%), outlets (13%) and airports (6%) (Kering, Financial Document 2019).

2 https://www.interbrand.com/best-brands/best-global-brands/2019/ranking/#?filter=Luxury&lis

tFormat=ls.

2 An overview of the luxury fashion industry

23

Luxury firms are primary located in Europe, US and Asia, and Italy accounts for the highest number of luxury brands in the Interbrand ranking (24 up to 100). By nationality, worldwide luxury fashion is characterized by the volume of Chinese (32%) and American consumers (22%). Chinese consumers increased their share by two percentage points versus 2018. Generations Y (Millennials) and Z contributed 100% to market growth in 2019. Those of this population in China and South-East Asia are more dynamic and attracted by personal luxury goods (Kering, Financial Document 2019). Over the past ten years, China has accounted for 70% of the expansion in the luxury fashion market segment, and this dominance is expected to continue till 2025. Example of brands that have been very successful in China are LVMH, Gucci and Lululemon, the last of which increased its revenues in China by 68% in the second quarter of 2019. In this case, physical retail is still crucial—85% of shoppers engage with both online and offline touchpoints compared to 80% in 2017. Chinese consumers are expected to drive growth, with the boost provided by the rising middle-class. Europe still accounts for 17% of sales and the other Asian countries for the 11% followed by Japan (10%) (Kering, Financial Document 2019). India, Philippines and Indonesia are among the fastest-growing major economies, but mainly for the modest fashion market. Russia is the ninth largest luxury market in the world. In terms of the luxury industry, market growth faced a decline and then a stabilization, and in 2018, brands such as LVMH and Dior reported the highest sales in the region since 2014. Furthermore, the Middle East is an established fashion market with a growth potential owing to the propensity of clients to spend substantial amounts. For example, in the United Arab Emirates (UAE), shoppers spend over six times more than Chinese shoppers (BOF and McKinsey 2020). The Eurozone continued to experience growth albeit at a slower pace in 2018 and faced a decrease of 1% in the middle of 2019. Spain and France have outperformed the Eurozone, with Germany and Italy experiencing slight contractions in their growth. The cause of this deceleration

24

A. Cabigiosu

can be attributed to higher energy prices, a high-valued Euro, trade uncertainty and weakened global demand. The Eurozone has undoubtedly been impacted by the trade wars between China and the US. However, the debt to the Gross Domestic Product (GDP) in the Eurozone has also contributed to the slow growth. Despite this backdrop, the Eurozone has reached its highest level of employment and wage growth, fueling private consumption. Finally, the Eurozone will not be insulated from Brexit, but the exact impact is difficult to predict (Deloitte 2019). Many factors might impact the future of the luxury industry: the recent slowdown of economic growth in many countries, the recent adoption of protectionist policies in US and China, the digital revolution and the impact of technology on production systems, the influence of Millennials and Generation Z and the Brexit in the Eurozone. Overall, estimates for 2020 are positive with growth in the number of Chinese consumers (+10%), leather goods (+6%) and the digital sales channel (+13%). The marginality of high-end companies is estimated to grow by 4.5% owing to the extraordinary performance of large conglomerates. This performance is primarily due to the consolidation of the main growth drivers of recent years: the rise of Chinese consumption, the increase in expenditure by young generations and the rise of online channels (Osservatorio Altagamma 2019). To remain competitive in this continuously evolving, complex, digital and global landscape, firms need more competences and resources. The minimum size required to survive as an independent global luxury fashion firm is estimated to be one billion euros. Smaller firms risk being trapped in a local competition that, for example, does not lead to success in countries such as China or does not benefit from e-commerce to the fullest. Therefore, from the year 2000 onwards, we have observed an increasing number of mergers and acquisitions (M&As) in which the biggest groups, mainly LVMH and Kering, are acquiring numerous luxury fashion brands, increasing the level of concentration in the industry, while smaller family firms are struggling to survive.

2 An overview of the luxury fashion industry

25

2.2.1 Competitiveness and Mergers and Acquisitions Since the mid-1980s, many companies operating in the luxury sector have started increasing investments in M&As to promote rapid growth and increase their competitiveness. Year after year, this process increased the level of the concentration of the luxury fashion industry, especially in Europe, where several smaller family businesses are located. These firms, such as Gucci or Fendi, have a strong brand image, reputation, a clear value proposition and positioning but also lack the resources to face threats and opportunities mainly related to the emergence of new markets and new technologies. In 2000, M&A operations had reached considerable numbers, but in the last twenty years, they have more than doubled. LVMH, Mayhoola, Kering and Michael Kors are examples of groups that have undertaken the most important and expensive acquisitions in the past twenty years, creating portfolios of brands extremely diverse to make their market position robust. Among the most valuable acquisitions were the Kering purchase of 42% of the Gucci Group for $3 billion in 1999, the acquisition of Christian Dior in 2017 for $13.7 billion by the Arnault family, the Michael Kors acquisition of Versace for e1.83 billion in 2018 (Euronews) and the Mayhoola (a company owned by a leading investor in Qatar) acquisition of Valentino for e858 million in 2012 (Sowray 2012). The study “Fashion Luxury Private Equity and Investors Survey 2019” conducted by Deloitte highlights precisely this race for consolidation in the luxury market and the growing interest of investors in the sector. A total of 265 M&A transactions in the world of luxury were recorded in 2018, of which 73 focused on luxury fashion and took place mainly in Europe (Deloitte 2019). Large groups continue acquiring fashion companies with valuable reputations, assets, and a well-defined heritage. They provide them substantial financial resources to promote their brand and develop their vision worldwide. Companies have begun acquisitions of new and consolidated brands to seek different identities and continue their growth by serving multiple segments.

26

A. Cabigiosu

In Europe, two market leaders, namely the conglomerates LVMH and Kering (formerly PPR), acquired many brands in different industries ranging wine to jewelry but mainly focused on fashion. Today, they have a rich portfolio of brands and the structure of the luxury market is almost oligopolistic. The name LVMH itself was generated from the merger between Moët Hennessy and Louis Vuitton in 1987. In 1988, LVMH acquired Céline and from 1999 onwards, it started a comprehensive internationalization process, purchasing 25 leading brands. In the fashion and leather goods division, the Maison has 18 brands which, in 2018, recorded sales of e18,455 million: Berluti, Céline, Christian Dior, Emilio Pucci, Fendi, FENTY, Givenchy, Kenzo, Loewe, Loro Piana, Louis Vuitton, Marc Jacobs, Moynat, Nicholas Kirkwood, Patou, Pink Shirtmaker and RIMOWA. Kering’s most important initial acquisitions were those of the Gucci group and Yves Saint Laurent in the 1999. This was followed by those of Bottega Veneta and Balenciaga. Partnerships were also forged with artists such as Stella McCartney and Alexander McQueen. In 2005, FrançoisHenri Pinault became the new President and CEO of PPR, which revolutionized the group due to the sale and acquisition of Maison Fancy. In 2013, Pinault transformed the PPR group into Kering. Currently, the division of Couture and Leather Goods owns the following brands: Gucci, Bottega Veneta, Saint Laurent, Alexander McQueen, Balenciaga and Brioni. These acquisitions almost always preserve the brand’s creative independence and identity but also add support functions that are centralized at the corporate level and serve all brands. Currently, ICT and finance are examples of centralized functions. Moreover, several projects, for example, in the sustainability field are developed centrally and support all brands. Less information is available about the development of economies of scale and scope for primary activities such as production or logistic, which are still often decentralized at the brand level.

2 An overview of the luxury fashion industry

2.3

27

Conclusions

This chapter has provided a definition of luxury and a detailed discussion of how it has changed in time till arriving at the concepts of new luxury and zeroing. Thereafter, this chapter has also offered an overview of the industry, its performance and its major regional trends. Finally, the chapter has provided a description of the industry’s concentration process driven by merger and acquisitions. The chapter shows how the notion of luxury is subject to significant relativity, identified on the basis of several factors, and how this concept it is still evolving. Inaccessible luxury was characterized by custom-made products produced in limited numbers and distributed through a highly selective network. The “new luxury” has a lower degree of uniqueness and it is more inclusive and nearer to our everyday life, especially to that of Millennials. Coherently, luxury brands are undergoing a phase labelled “re-branding,” or zeroing, which signals the need to profoundly revise the brand image to cater to the most crucial ‘Millennial’ needs and expectations. Despite the globalization of fashion industry, the definition of luxury goods remains, at least partially, contingent on the age, sociodemographic or psychographic variables up to the individual level. The concept of luxury has more facets than expected, which change in time and on the basis of the perspective from which it is scrutinized. The growth of the luxury market worldwide has increased the interest among researchers and the number of studies on the marketing of luxury products has increased. Particularly in the last years we observed a growth of the Chinese, Indian and Middle East markets. As luxury markets expand globally, more cross-cultural research is needed to better understand how clients’ behavior and needs are impacted by their country-specific culture. Another question relevant to global expansion is till what extent luxury fashion firms can standardize their offering worldwide. Firms can develop multiple collections targeted to different countries or try to push more “global” collections. This is a crucial point especially for smaller firms with limited resources. Interestingly, this is a relevant topic that once again recalls the need to understand how the concept of luxury is

28

A. Cabigiosu

continuously evolving: can remain garments available worldwide and, at the same time, be perceived as rare enough to be desirable? Also in this case the answer may be country specific. Globalization has led to the shift from small family-owned businesses to multinational enterprises, such as LVMH and Kering, through M&A strategies and the building of global value chains, new distribution channels, a democratization in the approach toward consumption, and the rise of so-called “accessible luxury”. In this scenario of new luxury and global growth, bigger firms and groups are those better equipped to face many raising opportunities and threats. How do they operationalize the new luxury concept? Who are their main clients and how do they satisfy their rising needs with emerging technologies? These are still underdeveloped research areas and the next chapter will offer some insights and answers. Nevertheless, while the growth of emerging markets has protected the luxury sector from the global economic crisis in 2008, in 2020 the industry globalization and performance are challenged by Coronavirus. We do not now yet which will be the exact impact of this Pandemic crisis over the industry growth and how long it will last. We can expect that this crisis may led to further polarization between bigger and smaller firms, firms with healthy and critical balance sheets prior to the crisis, firms with digital capacity and online platforms and firms dependent on wholesalers, firms that learned to communicate with clients via social media and firms still focused on the relevance of fashion shows, firms with more agile supply chains and firms with long supply chains that may face long shortage.

References Allérès, Danielle. 1990. Luxe-Stratégies marketing. Paris: Economica. Altagamma. 2019. Altagammma 2019 worldwide market Monitor, available at https://altagamma.it/studi-e-ricerche/. Accessed on 27 Jan 2020. Bain and Company. 2018. The personal luxury goods market delivers positive growth in 2018 to reach e260 billion—A trend that is expected to continue

2 An overview of the luxury fashion industry

29

through 2025, available at https://www.bain.com/about/media-center/pressreleases/2018/fall-luxury-goods-market-study/. Accessed on 12 Oct 2018. Beverland, Michael. 2004. Uncovering ‘the theories- in-use’: Building luxury wine brands. European Journal of Marketing 38 (3/4): 446–466. BOF and McKinsey. 2020. The state of fashion 2020, available at https:// www.mckinsey.com/~/media/McKinsey/Industries/Retail/Our%20Insights/ The%20state%20of%20fashion%202020%20Navigating%20uncertainty/ The-State-of-Fashion-2020-vF.ashx. Accessed on 10 Feb 2020. Brun, Alessandro, and Cecilia Castelli. 2013. The nature of luxury: A consumer perspective. International Journal of Retail & Distribution Management 41 (11–12): 823–847. Chevalier, Mazzalovo, and Gérard Mazzalovo. 2008. Luxury brand management: A world of privilege. Singapore: Wiley. Corbellini, Erica, and Stefania Saviolo. 2015. Managing fashion and luxury companies. Firenze: Rizzoli ETAS. Danziger, Pamela. 2005. Let them eat cake: Marketing luxury to the masses—As well as the classes. Chicago: Dearborn Trade Publishing. Deloitte. 2019. Fashion & Luxury Private Equity and Investors Survey 2019, available at https://www2.deloitte.com/it/it/pages/about-deloitte/forms/glo bal-fashion—luxury—form-registrazione.html. Accessed on 27 Jan 2020. Erickson, Gary M., and Johny K. Johansson. 1985. The role of price in multiattribute product evaluations. The Journal of Consumer Research 12 (2): 195– 199. Fabris, Giampaolo. 2003. Il nuovo consumatore: verso il postmoderno. Milano: Franco Angeli Editore. Kering, Financial Document. 2019, available at https://keringcorporate.dam. kering.com/m/5950e4d285ac1f9a/original/2019-Financial-Document.pdf. Accessed on 17 Jan 2020. Fionda, Antoinette M., and Christopher M. Moore. 2009. The anatomy of the luxury fashion brand. Journal of Brand Management 16 (5–6): 347–363. Jackson, Tim. 2004. A contemporary analysis of global luxury brands. In International Retail Marketing, edited by Bruce M., Moore C., & Birtwistle G., pp. 155–169. Oxford: Elsevier. Kapferer, Jean-Noël. 1997. Managing luxury brands. Journal of Brand Management 4 (4): 251–259. Kapferer, Jean-Noël. 2012. The new strategic brand management: Advanced insights and strategic thinking. London: Kogan Page.

30

A. Cabigiosu

Kering Integrated Report. 2019, available at https://keringcorporate.dam. kering.com/m/51136a84f2c9e1fa/original/2018-Integrated-Report.pdf. Accessed on Feb 2020. Lipovetsky, Gilles, and Elyette Roux. 2003. Le luxe éternel. De l’âge du sacré au temps des marques. Paris: Gallimard. Luna, Camilla P., and Denise F. Barros. 2019. Genderless fashion: A (still) binary market. Latin American Business Review 20 (3): 269–294. Madsen, Anders C. 2018. Is The Fashion Industry Really Committed to the Eradication of Gender-Specific Dressing?. Vogue, available at https://www. vogue.co.uk/article/genderless-fashion. Accessed on 4 Mar 2020. Mattia, Giovanni. 2013. Il neo-lusso. Milano: Franco Angeli S.r.l. Moore, Christopher M., and Grete Birtwistle. 2005. The Burberry business model: Creating an international luxury fashion brand. International Journal of Retail & Distribution Management 32 (8): 412–422. Nueno, Jose L., and John A. Quelch. 1998. The mass marketing of luxury. Business Horizons 41 (6): 61–69. Okonkwo, Uche. 2007. Luxury fashion branding. Hampshire: Palgrave Macmillan. Osservatorio Altagamma. 2019. Comunicato dell’Osservatorio Altagamma, available at https://altagamma.it/img/osservatorio-2019/1-Comunicato_O SSERVATORIO_ALTAGAMMA_2019.pdf. Accessed on 23 Jan 2020. PambiancoNews. 2018. Bizzarri: Finita l’era dell’esclusività. È l’ora del lusso inclusivo, available at https://www.pambianconews.com/2018/10/30/biz zarri-finita-lera-dellesclusivita-e-lora-del-lusso-inclusivo-246868/. Accessed on 3 Mar 2020. Phau, Ian, and Gerard Prendergast. 2000. Consuming luxury brands: The relevance of the rarity principle. Journal of Brand Management 8 (2): 122–138. Shamsher, Aliyah. 2011. When luxury brands go digital, available at http://sparksheet.com/can-engagement-and-exclusivity-go-hand-in-handwhen-luxury-brands-go-digital/. Accessed on 25 May 2017. Silverstein, Michael J., Neil Fiske, and John Butman. 2008. Trading up: Why consumers want new luxury goods—And how companies create them. New York: Penguin/Portfolio. Sombart, Werner. 1967. Luxury and capitalism. Ann Arbor, MI: University of Michigan Press. Sowray, Bibby. 2012. Valentino sold to Qatar royal family for £556 million, Fashion Telegraph, available at http://fashion.telegraph.co.uk/news-features/

2 An overview of the luxury fashion industry

31

TMG9397101/Valentino-sold-to-Qatar-royal-family-for-556-million.html. Accessed on 27 Jan 2020.

Websites Michael Kors buys Versace for e1.83 billion, available at https://www.eur onews.com/living/2018/09/25/michael-kors-buys-versace-for-1-83-billion. Accessed 27 Jan 2020.

3 The New Consumers of Luxury

3.1

The New Consumers: The Millennials

3.1.1 Millennial Generation When we talk about generations, we find ourselves faced with a term with different facets. The social sciences define a generation as an aggregate of individuals who have been exposed to the same events within the same time frame. Each generation manifests distinctive features and reflects the circumstances and history of its time (Ryder 1985). A generation, in fact, is not only a set of individuals born at a given historical moment but a group of individuals who were impacted, in the same phase of their life, by a technological, economic, social or cultural revolution and have accordingly changed their system of values compared to previous generations. Therefore, it is not only the age group of the subjects that is relevant but also the convictions and ideals that they have in common. In recent years, substantial research has been conducted to categorize the market from a generational perspective. Recently, marketing has made extensive use of the following segmentation and distinguishes between the following: (a) Baby Boomers, indicating those © The Author(s) 2020 A. Cabigiosu, Digitalization in the Luxury Fashion Industry, Palgrave Advances in Luxury, https://doi.org/10.1007/978-3-030-48810-9_3

33

34

A. Cabigiosu

born immediately after the Second World War, between 1945 and 1964; (b) Generation X, which corresponds to those born in the period of the collapse of births following the Baby Boomers, between the second half of the sixties and the early eighties; (c) Generation Y or Millennials, born between the eighties and 2000; (d) and Generation Z of those born at the beginning of 2000, called Centennials or Post Millennials. In this chapter, the focus will be on the so-called “Millennial generation” which is considered to comprise the primary customers of luxury products today to understand their characteristics and their buying behavior. These are undoubtedly important factors that luxury brands have to consider when designing their strategy.

3.1.2 The Main Traits of Millennials The Millennial generation, which has received multiple epithets by marketing research and sociology scholars, such as Generation Y, Echo Boomers, Digital Natives, Generation Why, Enfants du millénaire, E-generation and Trophy Generation, can still be identified as individuals who share numerous distinguishing features. From a demographic perspective, several studies have attempted to define an age range within which to locate Generation Y. The result, however, has not always been univocal or homogeneous. Different time intervals have been identified for Generation Y. For example, Crampton and Hodge (2009) indicate the years in between 1980 and 1999, Dimock (2018) proposes the years 1982–1996, Howe and Strauss (2000) the years 1982–2005, Kotler and Armstrong (2010) the years 1977–2000 and Sullivan and Heitmeyer (2008) the years 1977–1994. Deloitte’s research (Deloitte 2018) confirms this lack of a universal definition of the Millennial Age, pointing out that most studies include Generation Y individuals born between the eighties and 2000. However, in 2019, Deloitte suggested that new luxury shoppers, known as HENRYs, are aged 43 on an average, with an income of more than US$100,000 and investable assets of less than US$1 million. Particularly, the Millennial HENRYs are big spenders.

3 The New Consumers of Luxury

35

Overall, this brief review shows that there is no exact identification of the years to be taken as a reference and the broader time window that emerges spans from 1977 to 2005, thus including persons that might appear as being very different in terms of age and background. What do those born at the beginning of the eighties have in common with those who are twenty years younger as far as their buying behavior, needs and consuming preferences are concerned? A mere age analysis is not sufficient to outline the traits of this generation. According to Capeci (2017) it is not a question of simple demographic segmentation. The group of Millennials do share some distinctive ideas and values that are expected to be retained in the years to come as well. What identifies them today and in the future are the technological, cultural and social changes that they have experienced. The context in which they have grown has been completely different from that of the previous generation: immersed in the digital world, they have developed completely new expectations, behaviors and opinions. The technological shift to Web 2.0 was a real revolution that had repercussions on the society itself, on the way people relate to each other, communicate and work, having a decisive impact on the individual growth of those who, at that time, were beginning to form their own identity. For the first time, new technologies have provided people the possibility of continuous confrontation, research and exploration without limits. Furthermore, an unexpected expressive freedom has given rise to an open, informed and global generation. In the early 1980s, when the Millennials appeared on the scene, an era began in which various political and health reforms supported the development of a culture of children’s rights and led to greater attention and defense of children rights. These children were beloved to their parents, protected and continually appreciated (Howe and Strauss 2000). The socio-cultural context in which these children grew up certainly affected their collective personality and social and generational behavior. It is not surprising, therefore, that protected under this wing, they developed an idea of being special for themselves, for their parents and for the community. Time magazine in 2013 dedicated a cover to Generation Y, highlighting, with data in hand, its excessive egocentricity. This in-depth

36

A. Cabigiosu

analysis was entitled “The me me generation.” In the Millennial generation, the incidence of narcissistic personality disorder is three times higher than in the Baby Boomers as well as the search for trophies and awards; this underlies how the search for recognition is definitely relevant and higher for this generation (Stein 2013). The same concept was also taken up by writer Simon Sinek in an interview with the Inside Quest portal.1 In his opinion, the illusion of being considered extraordinary and of being able to get what you want without much effort comes from family education strategies that have proved to be unsuccessful. Taking up the picture outlined by Howe and Strauss (2000), one can identify traits that well define “The Millennial person.” The first attribute is the feeling of being special. Previous generations have instilled in the Millennials the feeling of being vital to society and designated to realize the desires and expectations of their parents. The second attribute is protection. The Millennials have found themselves at the center of great movements and initiatives for child safety ranging from the fight against child abuse to the introduction of child safety rules and devices as well as compulsory attendance at public schools. The third attribute is self-assurance. This generation is characterized by a high level of trust and optimism, often boasting the power and potential of their own generation. The fourth attribute is being team-oriented: the emphasis placed during the studies is on collective learning and the era of the philosophy of “sharing” developing a strong team spirit and bonds between peers. Finally, we find the realization attribute: with the achievement of ever higher school standards, more Millennials are well on their way to becoming well-educated adults. Interestingly, globalization, social media, the export of Western culture and the speed at which changes are taking place have given a global character to the phenomenon of Millennials. They are, therefore, much more similar to each other, even if they belong to different nations, as compared to previous generations. Even in a country such as China, culturally distant from the US, where the sense of family prevails over that of the individual, the Internet, urbanization and globalization have

1 Interview

available at https://www.youtube.com/watch?time_continue=7&v=5MC2X-LRbkE.

3 The New Consumers of Luxury

37

created a very confident and protagonist generation, as in the Western countries (Stein 2013). Some significant features of the Millennials also result from the digital context they have been immersed in since childhood. There is a significant difference between those who are digital natives and those who have had to learn how to use technology. It is not only a matter of familiarity but rather of different motivations and ways in which digital media are used. The ever-connected world in which they grew up has shaped their values, their perspectives and their outlook of the future. To understand these changes when comparing Millennials to previous generations, Capeci (2017) identified some significant behaviors representing the difference. First, Millennials are “always on” and connected every day and (almost) every moment. The study on the use of the Internet in the ten countries with the highest GDP shows that in Italy, 96% of Millennials are online every day using different devices. Percentages that exceed 90% have also been recorded in other countries such as the USA, Germany, France, Japan and the United Kingdom. Second, Millennials are large consumers of both online and offline content. In this context, the richness of the content becomes the goal of communication strategies as it reaches and reinforces the attention of the target. Third, the connection through smartphones influences the way in which the media are used and increases the possibility of performing multiple activities simultaneously, such as visiting a museum while also answering e-mails. Smartphones are increasingly fostering individual, ubiquitous, indoor and outdoor access to the Internet at different times. Fourth, Millennials have more sources of information when making choices, which are often based on the comparison of multiple pieces of information. Millennials have the ability to be informed, compare information and exchange opinions before each purchase. Their mindset has been consolidated through choices, opinions and evaluations expressed on blogs and social networks, where the points of view are numerous. They have thus developed a habit of constantly searching for information and of contradicting and verifying their own hypotheses. Fifth, Millennials live in the context and the moment: for the Millennial’s mindset, time does not flow in a linear way but is the result of

38

A. Cabigiosu

multiple snapshots that can reappear with the same speed with which they disappeared. Generation Y has grown, therefore, with a different conception of time. They are the generation of “here and now” and this has shaped their behaviors, their way of experiencing things and thinking about the future. Reflection on the different perceptions of the flow of time brings to mind an adjective often associated with the Millennials: “immediacy.” This generation has lived in a society marked by instant gratification, where everything one wants is easily accessible. The concept of waiting and its value, of the gratification achieved after dedication and effort, has disappeared. This describes a culture of haste that reflects the image of “liquid modernity” theorized by Bauman (2013); in this case, the perception of time is dotted, corresponding to a series of points thrown in all directions with no linear development: one point after another, where every single life is cut into slices or episodes. For example, shoe companies are chasing Generation Y and Z, who are sneaker aficionados, with an ever-faster pace of new releases. Manufacturers such as Nike, Adidas and Puma have accelerated sneaker releases as fickle young consumers demand more and more novelty, enjoy the rapid speed of things and do not wait. Kanye West’s Adidas Yeezy line, for example, released six versions in 2015, 12 in 2018 and 19 in July 2019 (Bloomberg 2019).

3.1.3 The Importance of Millennials for the Luxury Sector The luxury industry has, for a long time, focused its efforts on consumers belonging to generational classes with high-spending capabilities and similar expectations for luxury purchases, especially Baby Boomers and Generation X. Today, the industry itself is taking note of the shift in the market towards an ever-younger consumer. As mentioned in the previous chapter, the Millennials are the main engine of growth in the sector. Given the potential for long-term buying, luxury brands are focusing their attention on this generation. The Millennials make up about a quarter of the world’s population with about 1.7 billion people. In

3 The New Consumers of Luxury

39

America, they number 70 million, in Germany 14 million and in Italy, over 11 million (Capodaglio 2016). Another particularly significant study, which highlights the importance of Millennials in terms of numbers, is the analysis of the penetration of the various generations in the ten countries with the highest GDP at a global level (Capeci 2017). In the European countries (Germany, France, UK and Italy), the Millennials comprise, on average, 20% of the population, while in other countries, with the exception of Japan, the percentage is even higher, reaching 26% in India. Analyzing future prospects, the Luxury Market Monitor 2018 by Bain & Company and Altagamma highlighted a young luxury market composed of 30% of Millennials consumers in 2017; this figure in 2025 will be between 45 and 55%, and the purchases of personal luxury goods between 2018–2025 is expected to grow by about 130%, while a decrease of 30% is expected for previous generations. Despite the variety of strategic opportunities that may arise for different brands, it is likely that the generational shift that we are witnessing may call into question the traditional marketing methods of many luxury goods. The stakes for luxury brands are high: they need to rethink their business models to meet consumers with radically different buying behaviors compared to the previous generation. In an interview with industry expert and Bain consultant Claudia D’Arpizio, published by Forbes (Solomon 2017), the author attempts to explain this paradigm shift. Before the Millennial generation, the value system was characterized by independence and strong aspirations. The Baby Boomers, first of all, grew up in a context in which the stages, one can say, were already fixed: obtain a standard level of education that had to translate into a career appreciated and rewarded, establish a family and finally obtain greater wealth for one’s parents. This aspiration was also reflected in consumption patterns and purchases, which were a testimony to the transition to different conquests and phases of life. The brands therefore focused on quality and prestige to accompany the consumer in their social rise. Generation X, although surrounded by a different cultural and historical environment, did not deviate much from the consumption patterns of the previous generation. However, the sense of aspiration, belonging and escape is definitely present.

40

A. Cabigiosu

The great leap forward, at least in most developed countries, was the Millennial Bang. They are the first generation without the limits of time and space, of the here and now, of the exchange of opinions, of transparency and reality and of the “We”—the importance given to sharing and community. In addition, the way of living, constantly informed and hyperconnected, coupled with changing consumer behavior, has affected the relationship between brand and customer; it is no longer unidirectional but multidirectional and more equal. According to D’Arpizio, for Millennials, the purchase of products and particular brands does not simply mean the ownership of status symbols but rather represents a way for them to define themselves and affirm their identity. Another particularly important point, which creates a detachment from previous generations, is the value that Millennials give to experiences with respect to things. Hence, it is a challenge for luxury brands to encourage their enthusiasm for both online and in-store experiences. It is not sufficient, in fact, to reach the consumer only in the digital world. The customer experience must encompass all possible touch points: the act of buying must be an opportunity for entertainment and gratification and the brands that are the most successful are those that can make their brand live and that can create a bond with the customer at their stores (Capeci 2017). According to Kapferer (2017), the saturation of the Internet could lead to a trivialization of luxury. It is therefore necessary, in light of this trend to go online, that luxury recreates that sense of the elite in their stores reserved for their customers’ unique experiences. The “Millennial state of mind” is, therefore, transforming the luxury industry and the entire base of its customers; this is bound to affect other generations as well. According to Claudia D’Arpizio, the brands that are at the forefront of the conquest of the Millennials are moving away from the habits of the past: from the celebration of their history to the celebration of the consumer themselves, from the attention to the past and tradition to looking towards futuristic aesthetic visions, from the focus on not contaminating the essence of the brand to the opening up towards collaborations and overlaps. The comparison between the e-commerce generation, which is accustomed to having everything one click away, and the traditional world of

3 The New Consumers of Luxury

41

luxury characterized by a slower pace, where waiting and desire themselves generate value, emphasizes the distance between the two. The digital impatience of the Millennials threatens the time horizon of luxury brands and how they produce, sell, create and market their collections. Millennials are becoming the primary clients of traditional Maisons, who in turn are required to accommodate the needs of this generation. Some brands have already taken a step towards the habits of new consumers. During the New York Fashion Week, Givenchy’s 2016 Spring/Summer fashion show was opened to the public through online ticket sales for the event. Marc Jacobs, who organized the Fashion Show at the Ziegfeld theater, on the 54th street, also prepared a revolutionary fashion show involving passers-by who witnessed the arrival of the models on the red carpet, which stretched along the audience’s seating area. Alongside this paradigm shift in the role and actors of fashion shows, another customer-oriented approach that has made its way into the world of luxury is the use of the “See now, Buy Now” model. Among the promoters was Burberry, which studied a seasonless format with two shows a year instead of the usual four, combining the women’s and men’s collections and making outfits available in physical and online stores immediately after the event. Tom Ford also used the same strategy for the Autumn/Winter 2016 collection, bringing the collections to the market immediately (Sciola 2018). The traditional fashion show as a commercial event reserved for buyers and experts in the field has now given way to real show events that can be streamed on smartphones and tablets, with collections accessible in real time and open to an audience comprising bloggers and end-customers. This reshaping of the fashion business and of production represent the answer that fashion brands are giving to Millennials. This involves more accessibility and inclusivity, which also feeds social networks, and the images of new collections and luxury items rapidly spread on the web and are then bought and exhibited on Instagram or Facebook by clients. There is no wait before having and showing new purchases. This way, luxury items satisfy for a few the need of newness, gratification and (eventually) ostentation. Hence, Maisons are continuously asked to produce new items to satisfy their clients. The higher pace of the consumption and diffusion of new collections render them obsolete more

42

A. Cabigiosu

quickly. We also observe Moncler, which started producing eight collections a year; the proliferation of capsule collections and of mid-season collections is aimed at feeding this recursive loop of fast acquisition, sharing and consumption of luxury goods. Luxury is becoming fast.

3.1.4 The Behavior of the Millennial Consumer Companies seeking to succeed in the luxury market must first understand the behavior of their consumers. Millenials are already an influential and growing segment today. It is estimated that in the near future, they will become the most important target population. Considering this, big brands need to know the underlying motivations that inspire their purchases, their preferred distribution channels and factors that influence their decisions. Deloitte’s research (Deloitte 2018) examining the responses of more than 1000 individuals inclined to luxury shopping, belonging to major markets such as the US, UK, Italy and China, has highlighted some key points regarding this generation. First, the purchase of luxury goods by high-spending Millennials is primarily meant to be self-satisfactory. The most common reasons are summarized in the following sentences: “It makes me feel good,” “It makes me look good” and “I like to treat myself.” In addition, Millennials attach particular importance to the brand’s website and to the strong perception that the goods being purchased are of quality and long-lasting. Quality is the most cited attribute of luxury products, judged globally by 39.1% of consumers as the most significant factor that attracts them and pushes them to buy; it significantly surpasses the value of uniqueness (22.4%). This is followed, in order, by the relevance of heritage/reputation (10.4%), great advertising (5.6%) and “I can relate to it” (4.6%). The research also analyzes the purchasing decision process and highlights that Millennials prefer a multi-channel approach. Millennials make purchases and obtain information from different media such as magazines, websites, blogs and social media. This indicates that brands cannot focus on just one or two channels of communication and sales but must

3 The New Consumers of Luxury

43

work on multiple fronts, attempting to be as integrated, connected and coherent as possible. Another important challenge is the lack of regular and constant purchases. Millennial consumers, in fact, only make occasional and impulsive luxury purchases. The majority still prefer in-store shopping, especially in China, where two-thirds of respondents showed a clear preference. In-store purchases are dictated by the need not so much for customer service and support but the possibility of approaching the products, touching and feeling them, and experiencing luxury goods. Considering the Millennial consumer, Capeci (2017) identifies a real “S.T.I.L.E.” which originates from their “web-forma-mentis” and is translated from the digital world into every other situation of everyday life. This S.T.I.L.E. unites the five basic factors constituting the perspective and the way in which they experience the world. The first is Sociality: Millennials have grown up in the sphere of sharing and social networking interactions with the opportunity to communicate with anyone, whether they are known in real life or not, whether they are a friend or a brand. This makes them responsive to the communicative stimuli they receive. If Generation X bought an item on the basis of the brand’s reputation, advertising campaigns and in-store advice, Generation Y now also values the experiences and information shared on the web. The communication that should be addressed to this type of consumer should not only affect individual aspirations but should be designed to be shared by general word of mouth. It is therefore necessary to identify the channels that accompany the consumer throughout the purchasing process within their community. Interestingly, after the purchase, the luxury products are also somehow “consumed” within social networks when clients share their choices and feed and contribute to their community in this manner. This process is fast enough to leave the perception that new purchase can quickly become old, already seen. The second is Transparency: Millennials seek authentic and coherent language; it is the network itself that needs it as a fundamental requirement because at all times ideas, opinions and evaluations can be denied if not true. Therefore, online transparency obliges brands to develop an equal relationship with their consumers based on sharing and listening. The basis must be dialogue: talking about oneself by explaining one’s

44

A. Cabigiosu

objectives and strategic choices, admitting mistakes and seeking approval for continuous improvement. The third is Immediacy: as reported previously, the generation of Millennials is the generation of hic et nunc. Accustomed to a world that is always in motion and to a flow of daily information at a sustained rate, they have developed a “mindset of reactivity”: their brains are prepared to pick up elements in motion through a like or a click. They need maximum responsiveness to immediately grasp what is most interesting to them before it disappears after a “refresh.” Brands must be able to fit into this elusive context, being responsive, current and contextual. The fourth is Freedom: far from being an ethical value to aspire to, freedom for Millennials is the possibility of choice and expression. They grew up in a historical phase in which freedom, understood as a human right, was already acquired with protective and compliant families, with the possibility of being able to say, do and think without filters and choosing from among many possibilities. For brands, the answer to this characteristic is an open, simple and interconnected relationship with the consumer. This implies that brands do not adopt strategies of “one size fits all” that obliges the consumer to be loyal. On the contrary, they must attempt to provide products and services easily usable at all touch points and accessible to anyone, allowing the consumer to express themselves and create content in turn, thus recognizing their value in the relationship. Finally, Experience: the web has undoubtedly influenced Millennials to prefer experiences over possession, experiences that are to be shared and communicated within the community. In addition, the interactive use of digital content has contributed to the need to always achieve an active relationship with things, fostering a sense of participation and involvement. Brands should embrace this idea of sharing and desire for consumer experience by offering emotions, entertainment and personalized content, which allow the consumer to live the brand. The portrait of the Millennial consumer emphasizes the need for collaboration and sharing, their “hypersocial” soul, the search for authenticity, the need for simple and available technology and the desire to live experiences. Moreover, as a final consideration, we cannot underestimate the potential attractiveness that the Millennials have not only for

3 The New Consumers of Luxury

45

brands but also for the entire base of consumers belonging to different generations. Solomon (2017) calls them “powerful trendsetters” capable of influencing the behavior and expectations of those around them. Because of the now ultra-connected fashion, the new center of gravity is indeed shifting towards the consumer. The engagement with the customer before and after the sale is increasing. The acceleration of information and the multiplication of the processing capacity of new technologies has generated an industry in which design, production, distribution strategies and even inventory management are aligned, almost in zero time, with the market demand. This complexity requires firms to invest considerable effort in terms of human and financial resources. Not only has the reduced distance between brands and consumers multiplied the number of inputs and accelerated any transformations but it has also imposed an almost total visibility of the product and its characteristics and production process. Hence, the imperative of quality becomes an essential factor and eventually a commodity. Therefore, complexity arises downstream and is transferred upstream. These are structural and cultural changes that, until now, luxury brands have addressed diversely depending on their resources, strategy and heritage.

3.1.5 Sustainability In 2011, the Commission of the European Community defined Corporate Social Responsibility (CSR) as the responsibility that enterprises should take to integrate social, environmental, ethical and human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders.2 In particular, social and environmental sustainability are becoming key factors that fashion companies must possess to maintain a strategic advantage over their major competitors. Sustainability cannot merely be considered a cost; rather, it is a prerequisite for firms and a source of competitive advantage. This trend describes the fast fashion industry, accused of overproduction and polluting supply chains as well as luxury fashion, in which practices 2 http://www.europarl.europa.eu/meetdocs/2009_2014/documents/com/com_com(2011)0681_/

com_com(2011)0681_en.pdf.

46

A. Cabigiosu

such as burning unsold garments have hurt public opinion (Joy et al. 2012). Today, consumers, especially Millennials, are increasing attentive to the ethical and sustainable behavior of companies along the entire value chain. Furthermore, social media has become a powerful tool to interact with more “conscious” clients. Overall, empirical research is still scant and suggests that luxury fashion brands communicate less with consumers about their sustainability activities than mass fashion brands, even if consumers tend to like more posts or messages of luxury brands when they are focused on sustainability (Lee et al. 2018). Millennials are becoming genuinely concerned about the current state of the environment and are constantly connected to the web, expecting more information from brands. Therefore, attention should be paid to the value perceptions of luxury fashion brands with respect to their consumers’ sense of social responsibility and sustainability. Currently, fashion is one of the largest industries and is the second most polluting one after the oil sector (Remy et al. 2016). For this reason, in the last few years, the acceleration of the world as a whole and of the fashion industry in particular towards sustainability issues has been impressive. Like a flood of a river that has remained underground for too long, it seems to have invaded every corner of the supply chain in a very short time owing to the parallel social revolution, which makes the market’s judgment direct and immediate and therefore transforms sustainable positioning into a competitive opportunity. Luxury and sustainable development share a focus on quality, durability, conservation and long-term investment. However, these two concepts are not always in tune. Ostentation, waste and excess belong to luxury and represent its negative aspects. The primary challenge of fair luxury is that, first and foremost, it is perceived as luxury: sustainable luxury requires the combination of craftsmanship and what seems to be its opposite: technology that eases artisans’ work, allowing them to express their knowledge and manufacturing skills, reducing the environmental impact of manufacturing processes, such as 3D printing. A sustainable brand should therefore be an expression of the union of the values of tradition with those of modernity.

3 The New Consumers of Luxury

47

When assessing the degree of sustainability of a product, the entire life cycle of the good itself must be analyzed. The goal of sustainable companies is to ensure that every point along the entire value chain considers the environmental aspect. This is why ecological or green fashion has as a fundamental element the elimination of substances harmful to health and the environment at all the various stages of the supply chain. Today, the challenge for the sector consists of an ambitious project that concerns both the supply-production phase and the final consumption phase. The aim is to combat the waste of resources, the exploitation of the workforce, the negative impact on the territory as well as the excessive consumerism from which the increase in waste is derived. The challenge for luxury houses is demanding: transforming the entire value chain towards sustainable development requires costs and is therefore risk-taking. It is a question of revolutionizing production processes for high-quality materials that have been well established for decades. Therefore, often companies prefer to start gradually, launching sustainable lines or investing initially in a particular brand of the group and then triggering a transformation process that will lead them to achieve innovative ways of production. For example, Stella McCartney is an ecoand animal friendly brand that produces clothes using organic cotton and recycled polyester and plastic, while Burberry and Gucci have already moved to carbon-neutral runway shows. Furthermore, most significantly, in 2019, thirty-two fashion brands pledged to focus on sustainability and signed the “Fashion Pact” introduced by French president Emmanuel Macron (Lein 2020). Consumers are putting brands under pressure: in perspective, true luxury will only be true if it is sustainable. Sustainability will be a pillar of brand equity.

3.2

The Growing Importance of Social Media

In 2017, luxury brands invested approximately 42% of their communication budget on the social network, while in 2014, this percentage was 17% (Testoni 2018). At the early stages of the web evolution, it was considered a publishing platform characterized by unidirectional

48

A. Cabigiosu

communication flows from firms to their clients. Such one-way communication with no interaction with clients was useful for firms to share information and news to an extensive public by maintaining complete control over the content. Clients could only search and read information without a real dialogue with firms. Now, social media consumers have the opportunity to interact with each other and simultaneously with luxury brands. Firms can now have a dialogue with consumers and increase their understanding about clients’ needs and preferences while simultaneously influencing their perceptions as well as collecting their feedback. From the customer’s perspective, social media is a place to express opinions, leave reviews and advice and not merely places to find information about companies, brands and products. Social networks and apps have blurred the lines between sender and receiver by prompting the emergence of a mutual dialogue between firms and users. Furthermore, the continuous development of mobile technology guarantees an ever-easy and fast access to the Internet, encouraging players to produce extensive content and making them available everywhere at all times (Bruhn and Schnebelen 2017). According to the 22nd edition of the Fashion & Luxury Summit Pambianco-Deutsche Bank in 2017,3 smartphones connect 3.4 billion people in the world, and 90% of fashion brands are active on social networks, constantly producing content and creating connections with influencers. Social media is the channel through which firms communicate with customers, capture their attention and influence their buying behavior. Moreover, 40% of Generation Z and 35% of Millennials leave feedback on websites or on brand social pages. It is essential for brands to understand this need to share personal experiences integrated with shopping experiences. A total of 66% of these clients are looking for an emotional connection with the brand; once this is established, eight out of ten Millennials will become active promoters of the beloved brand. Furthermore, 60% of Generation Z states that it often impulsively buys something randomly seen online, and speed is essential: customers are

3 https://convegno.pambianconews.com.

3 The New Consumers of Luxury

49

redirected from the Facebook or Instagram page to the website or ecommerce store of the brand. Further, using a shipping service easily traceable, free and especially efficient during delivery is also vital. Facebook and Instagram help fashion companies’ online visibility. Advertisements, interesting content and integrated planning tools allow brands to communicate with an increasingly growing audience. During the 23rd Fashion & Luxury Summit Pambianco-Deutsche Bank in 2018, the region manager of Facebook Italy explained that luxury has been a fundamental sector for Instagram’s growth from a commercial perspective and this is at the moment the digital platform of reference for the actors of this industry. After having achieved this result, currently, there is another challenge—how companies that there are also alternative platforms that are good avenues through which to communicate, and Facebook is one of them. From a commercial perspective, there is already a sort of integration between Instagram and Facebook owing to connected tools for the planning of advertisements: the audience is already interpreted by the “machine” as a single set. According to the manager, the most relevant communication mode for the future is instant messaging via mobile communication (Zanzi 2018). Social networks define a virtual space that allows the user to build and exhibit a profile, making it accessible at least in part to all users of the platform. Among the most used and well-known are Facebook, MySpace, Twitter, Instagram and LinkedIn. Thus, the primary world players in luxury now have their own account. The continuous increase in the use of social networking is due to the characteristics of these platforms: they guarantee ease of access and management and an extraordinary ability to attract millions of users. Social networks offer people a sense of affiliation and belonging and are essentially mass tools and, therefore, are at the antipodes to what has historically represented luxury and its offer of exclusivity and uniqueness. However, there are also online networks whose value is due precisely to the fact that they maintain a certain exclusivity. An example is Small World, in which 90% of members have an average income of $330,000. Social networks are designed for those who want to communicate their identity and are looking for “places” where they can share their passions and interests. These individuals in turn help create mini

50

A. Cabigiosu

groups, micro communities, online clubs and other forms of community. Social networks create an almost automatic and affordable online user segmentation. The consumer, through social networks, verifies the credibility of the brand itself and the value perceived by other customers. Companies must connect directly with consumers to be in tune with their tastes and preferences and influence their choices by building and nurturing relationships through the use of online communities and social networks (Gautam and Sharma 2017). The challenge is to approach users in the right manner so that they become the promoters of their message. In addition, luxury companies should adopt an approach that penetrates the different communities to which traditional consumers of high symbolic value goods belong. This would help them identify the micro communities and interest groups, which might be relevant to understanding how they work and thus design an appropriate marketing approach. The challenge is to integrate content from different social platforms to communicate brand identity coherently using the specific strengths of each platform and doing so consistently across platforms, taking advantage of the greater coverage offered by social media. Multiple properties of social media marketing should be considered when planning a communication strategy across multiple platforms: their ability to entertain clients, the type and level of interaction with clients, the extent to which they allow customized communication strategies, trendiness as well as the extent of the word of mouth they generate. Results suggest that these attributes have positive effects (at least) on value equity, relationship equity and brand equity (Godey et al. 2016; Kim and Ko 2010, 2012). For example, Burberry was the first luxury fashion brand to heavily invest in multiple social media platforms such as Facebook and Twitter, and to benefit from their complementarities and synergies. It was also the first to broadcast its fashion shows live. It also staged a catwalk show where live models were mixed with holograms and immediately posted the vides on YouTube. The brand dedicates around 60% of its marketing budget to digital platforms on Facebook, Twitter, Pinterest, Tumblr, Instagram and YouTube. Instagram is becoming the leading social media

3 The New Consumers of Luxury

51

platform for fashion designers. For example, Gucci more than doubled its Instagram followers between 2016 and 2018. In the future, the biggest challenge for luxury brands will be to make optimum use of social media without compromising their brand values. The success of a social media strategy will be converting “likes” into an interactive and engaging experience for customers.

3.2.1 Storytelling The term storytelling refers to the art of narrating or telling a story using the principles of rhetoric and narratology. Narration refers to the action through which a story is told. The concept has its roots in the oldest traditions, was born in the field of literature and rhetoric and is also applicable to the business environment, giving rise to what is known as corporate storytelling. For companies, it can be very profitable to use the tools of storytelling, striking the right chords, acting on an emotional level and stimulating the interlocutor to perform an action that perhaps rationally would not have been done, as rationality would probably have led to avoiding an unreasonable expense to buy a bag or at least hindering it. People primarily think narratively rather than argumentatively. Narratives help create a symbolic, engaging bond that allows consumers to become attached to the brand, create a bond with other subjects and understand its distinctive features, ultimately arousing interest and provoking a reaction. If the consumer only considers extremely rational factors such as money earned, savings and long-term projects, they would probably delay the purchasing process at best. Usually these stories are born from the tradition of the product and the company and from distinctive values intended to be communicated to the outside world (Woodside et al. 2008). Products can enact story productions that reflect archetypal myths, i.e., traditional stories about heroes or supernatural beings that enrich brands and attribute new meanings to products, both consciously and unconsciously. For example, the communication of Chanel Allure and

52

A. Cabigiosu

Gucci Envy perfumes both recall the myth of the siren, which represents the power of attraction and the possibility of destruction. Nevertheless, not all messages are stories. A story is typically more structured and includes a chronology and causality. Action occurs over time and has a beginning and an end during which protagonists, such as actors, brands or products, establish relationships among themselves (Delgadillo and Escalas 2004). A story expresses how and why life changes. Escalas (1998) suggests that good storytelling has a protagonist engaging in actions to achieve goals and the story engages the audience by providing details on the protagonists’ desires, thinking and feelings, their personal evolution and change. Holt (2003) explains that brands become icons when they lead consumers to experience powerful myths via simple stories with compelling characters and resonant plots; thus, this helps consumers make sense of the brands. Brands and products, via storytelling, can enact archetypal stories and myths and be perceived as pivotal to achieving pleasure. As Bagozzi and Nataraajan explain (2000: 10), “people need help in finding what makes them happy, and this is where marketing comes in.” Storytelling can serve this purpose. Schank (1990) and Woodside and Uncles (2005) suggest that people mostly understand the world in terms of stories, and new events are understood by reference to previously understood experiences and stories, which also affects consumers’ preferences. Today, blogs and social media allow the telling of stories using words, pictures and videos while also incorporating brands and products. This way clients, more or less consciously, assign roles to brands in their stories and interact with archetypal myths. What is important to understand is what happens to the company’s narrative in the new communication scenario established through social media. With the spread of technology and the endless possibilities offered by the Internet, storytelling has found its greatest source of inspiration and a viral popularity in the digital world, making the campaigns true mass phenomena that can even affect the cultural and behavioral aspects of millions of people. Corporate storytelling activities must be supported by all corporate communication channels ranging from the most classic to the newer social networks. The latter have exponentially accelerated the possibility for brands to relate directly and transparently

3 The New Consumers of Luxury

53

to customers. Online platforms become containers of stories, the most suitable means of conveying micro-narratives, messages that have little to do with the commercial approach but rather focus on the emotional one. Furthermore, the web multiplies the opportunities for conversation between companies and customers such that the space for dialogue is expanded. The stories related to many products and services promise to help us cope with disorders, anxieties and fears. Many products are proposed as magical objects that help the hero in the search for experience and power. Moreover, narratives can support the view of purchasing as a means to have fun. They can also reinforce the promise to address Achilles heels: traumas or defects that every human being carries within. Furthermore, brands can support the view of products as means to have visibility and success at the social level. Storytelling has become a widely used mechanism in contemporary marketing, especially in the United States, which has moved from a single product orientation to a brand narrative orientation. Instead of the term marketing, there is a tendency to refer to concepts such as Brand Management, Storytelling Management, Digital Storytelling Management, Strategic Design or Content Marketing. All these terms actually have a common purpose—that of wanting to communicate the values of a brand or a company in the most sincere way possible so that they appear credible to the final buyer. Storytelling serves, in practice, to get in touch with the final consumer directly. González Romo et al. (2017) discuss how luxury fashion brands use story telling in digital media and provide the examples of Prada, Vuitton and Chanel. The authors show that that digital and mobile marketing are the tools most widely used by leading luxury brands to foster brand awareness and consumer interaction and to communicate the history of the brand through storytelling. Moreover, luxury brands’ relationship with the most popular influencers is another pillar of their digital marketing strategies aimed at having dialogues with Millennials. Leading Maisons are using influencers and bloggers to more effectively communicate with Millennials through social networks and mobile devices.

54

A. Cabigiosu

3.2.2 Blogs and Influencers Blogs rely on individuals’ own stories and experiences to communicate and present products. Today, many consumers report, via blogs and social networks, their experiences about the purchase and use of products. Such personal online pages are social in nature (Kluth 2006) and their success is linked to multiple factors. Telling stories allows authors to be the protagonists and to experience an archetype fulfillment by choosing the role to play, deepening the sense of meaning-making of the events in the story (Woodside et al. 2008). The social web and all the resulting platforms represent both an innovative means of communication and a multi-channel tool whose full potential is still being defined. Among the primary communication tools based on the social web, there is the blog: the term comes from web-log or diary on the net. Within blogs, most of the content is created and controlled by users who offer their independent and influential points of view on specific topics, through which they promote participation and an exchange of views between stakeholders. These users take a leading role and influence the behavior of other users: the English name “influencer” indicates their guiding function. The development of the blog is changing the traditional behavior of companies operating in luxury markets, which earlier influenced the tastes of customers using one-way communication. Today, customers have more power to express their opinions by influencing market trends. The relevance of blogs is now growing to such an extent that many companies regularly draw inspiration from them for their business strategies. Users seem to trust the seemingly disinterested opinions, such as online reviews, of people who do not belong to their inner circle of acquaintances. There are different categories of blogs. Some blogs use photos documenting all the latest trends in fashion, demonstrating photos of the most original looks. One of the most famous blogs in this category is The Sartorialist, created by a photographer named Scott Schuman, who offers style reports from around the world.4 Then, there are the music 4 https://www.thesartorialist.com/.

3 The New Consumers of Luxury

55

blogs, interactive online magazines that mainly discuss music, and video blogs that have the configuration of traditional blogs but are focused on videos and animations. Within these platforms, luxury brands hold and control real web channels that they use to broadcast their videos, interviews and communications. In addition to the three main categories of blogs, there are also some focused on luxury that have as their theme products or category of products, brands, services and lifestyles. They are extremely important for the industry. For example, PurseBlog is an online community that has brought together over 165,000 fans of luxury handbags.5 They comprise mostly young women who follow fashion and use the blog to keep up with the latest fashion trends and rely on the community to find information and advice on new models and the most popular brands. Readers of the blog are very concerned about the opinions of the bloggers they follow, considering them honest and reliable, and expect them to be transparent and loyal to them. Companies continue to wonder how they can relate to blogs. They should attempt to engage bloggers with the aim of getting them to express positive opinions, for example, through press conferences similar to those held with journalists. Recently, bloggers working with brands have begun to disclose whether their content is paid for or not. The most popular blogs or social accounts generate the persona of influencers. An influencer is a social media user with thousands (if not millions) of followers scattered across various social networks; they can be a YouTuber, an Instagrammer, a blogger or simply have a Facebook page where they share photos, videos and various content. So far, they are like any other user on the net, but unlike the others, an influencer is literally able to condition their followers. In the last ten years, Chiara Ferragni, with 16 million followers on Instagram, has become one of the most powerful opinion leaders in the lifestyle sector. Her extraordinary trajectory as a digital entrepreneur includes many successes such as being included by Business of Fashion among the 500 most influential figures in fashion, being included by 5 https://www.purseblog.com/.

56

A. Cabigiosu

Forbes 30 among the most influential under 30 in 2015 and being the first influencer to have a Harvard case study dedicated to her. The Ferragni case is further proof that influencer marketing is a widely respected and professional practice. For example, Ferragni, by sharing the story of her wedding via Instagram in 2017, immediately generated a huge increase in the social network popularity of the luxury brands involved in the wedding, including Dior and Prada. The 2019 Launchmetrics report6 shows that 80% of the 600 fashion, luxury and cosmetics firms interviewed worldwide had developed advertising campaigns with influencers mainly targeted to Millennials (77.5%). Moreover, 76% of respondents confirmed that they had better sales results owing to collaborations with influencers last year and that they had increased brand awareness. Interestingly, 83.4% of firms stated they only rely on social media metrics to measure and record the performance of influencer campaigns and that they are increasingly omnichannel. Properly measuring the ROI of campaigns has become the main concern of professionals (about 26% of respondents). Today, influencers and Maisons are so interlinked that luxury brands are promoted via influencers’ online platforms; an influencer might also be hosted on the Maison’s platform. An example of a successful campaign is that of Fendi named “F IS FOR… FENDI?” in 2017 to celebrate the Fendi brand DNA and its Roman heritage, creativity and craftsmanship. Fendi created a digital platform nurtured by influencers from very different fields, ranging from art to music to extreme sports, and from all over the world. Fendi collaborated with Jackson Wang, Nigel Sylvester and Astrid S and they engaged in the conversation through the world of Graffiti. F is For FENDI has been described as a platform made by Millennial influencers for Millennials to share content and experiences. Within the platform, accessible from the brand website, the F has different meanings corresponding to different sections and contents: favorites, features and flashbacks.

6 https://www.launchmetrics.com/it.

3 The New Consumers of Luxury

3.3

57

The Renewed Relevance of Culture and Arts: Capsules and Co-branding

In the past, luxury Maisons were often family businesses in which production was geographically localized in areas with a long-standing heritage of craftmanship and was closely linked to the core business. Examples of this include Gucci, owned by the Gucci family and located in the Florentine district where leather goods production was prevalent, or the Bulgari family, renowned for their jewelry. The artist was the craftsman who, with his skills, could make unique products, devoting all the necessary time to them, as in the case of a work of art. With the evolution of the luxury sector, we have gradually moved away from this context. Today, large international groups are emerging on the scene, focusing on sales, expanding the range of products and sometimes off-shoring the production. Luxury has become more of an industry than a craft, moving away from its original values and embracing the digital era of Millennials made of hic et nunc. For this reason and to retain their appeal and aura of unicity and exclusivity, some brands have attempted to counterbalance this detachment with advertising campaigns aimed at bringing the figure of the craftsman back into the consumers’ imagination. In 2009, Louis Vuitton launched the “Savoir faire” campaign which focuses on one of the essential values of luxury: the incredible richness of craftsmanship compared to mass industrialization. This communication has made it possible to tell the story that embraces the values of the brand and to support the Vuitton identity. Three different snapshots, inspired by the paintings of the Dutch school, timelessly capture the gestures of the craftsmen during the manufacture of the products, revealing refinement and elegance. In the following year, Gucci signed the “Forever Now” advertising campaign, presenting a series of black and white photographs from 1953 depicting Gucci’s artisans in Via delle Caldaie in Florence. The aim of these images is to evoke quality and tradition through a concrete and real mirror of their workshops. Maisons also attempt to nurture the artistic content of collections by highlighting the contribution of their designers and creative directors,

58

A. Cabigiosu

the true spearheads of the Maisons. It is the creative director who realizes their vision in the collections, in the setting up of the shops and in communication processes. Despite all the aforementioned efforts, the growth and globalization of luxury goods still clashes with one of the main characteristics of luxury itself: rarity. The charm of luxury brands, in fact, diminishes when there is a lack of exclusivity and sense of belonging to a privileged niche. Kapferer (2017) illustrates how major luxury brands face this challenge through the concept of “artification” or transforming into art what is not in reality. The association to art allows luxury to approach the perception of an element without time, characterized by cultural aspects. Luxury brands use art and culture to create a sort of elitism without the need for boundaries, the art itself being universal. This approach allows them to increase sales without discrediting the charm of luxury, thereby managing to make consumers perceive their products as objects of art rather than commercial goods. Artification is a concept that helps to explain the recurring demand for collaboration between Maisons and their creative directors and the most daring contemporary artists. The artist’s signature offers cultural significance to luxury products and their limited-edition collections as well as creates a sense of artificial rarity; this has a greater communicative force than campaigns that exploit celebrity images and are perhaps more suited to a purely commercial dimension. For example, each season, Vuitton dedicates a capsule of its monogram icons bags and accessories to an artist, such as Jeff Koons, Stephen Sprouse, Yayoi Kusama, and Grace Coddington. These products soon become sold-out worldwide and become part of exclusive collections. Another example is Genius, Moncler’s project inaugurated in Milan in 2018, in which eight designers are signed on and many collaborations are unveiled once during a year to keep the brand fresh and interesting. Inspiration from the world of art is evident in the collections, advertisements and in the fashion shows of big brands. Artistic references can be found in Yves Saint Laurent’s campaign for the launch of the fragrance “Manifesto,” which evokes the image of Yves Klein using the female body as a brush (Kapferer 2017). Inspiration was also taken from Phoebe Philo for Céline in the Spring-Summer 2017 collection. The fashion show featured the shapes and volumes of

3 The New Consumers of Luxury

59

the female body used by the French artist as well as the electric blue prints from the collection “Anthropometrie de l’époque bleue” of 1960. Balenciaga followed the trend for collaborations with contemporary artists, with the spectacular Spring/Summer 2019 LED show. The show, coedited by Jon Rafman and Demna Gvasalia, wanted to re-propose “the set of a digital film,” making it possible to mix art and the digital. The catwalk was reconstructed in a tunnel lit by 2000 square meters of curved LEDs, which incorporated spectators and models within images of volcanic flows, molten celluloid, waves and expanses of fire. However, in recent years, brands have also needed to consider collaborations for the development of common products not only to sustain the brand heritage and cultural content but also to develop new products closer to Millennials’ needs and habits. Co-branding and capsules are means to mix values belonging to allied brands and condense the same into a single new product that can be distinct from competitors in terms of the exclusive combination of values generated by this type of alliance between strong individual identities. A necessary condition for co-branding is in fact the recognition of brands by the consumer; this strategy works on the basis of the claims that the brands operate in synergy with the customer’s mind (Oeppen and Jamal 2014). Companies that use such a strategy mainly want to distinguish their offers from competitors in order to expand brand awareness, enter new market segments through new distribution channels and exploit economies of scale in terms of marketing and communication investments. Fashion and art can also change the appearance and perception of products from other sectors. An example is the 2017 collaboration between the fashion luxury brand Dolce & Gabbana and Smeg (a manufacturer of household appliances) for the redesign of Smeg products, or Gucci, which signed a special model of the Fiat 500 car. Moreover, cobranding becomes significantly more valuable when both partners belong to the fashion industry and also for luxury fashion brands. The success of capsule collections can be seen in the exclusivity of the production of a limited number of garments that encompass the essence of several brands. The union of excellence through multi-brand logic allows the creation of icons and trends, special projects and impactful, sometimes

60

A. Cabigiosu

atypical, combinations with unpredictable results that, owing to comarketing, can take root in the consumer’s mind. In the last few years, we have witnessed an overabundant recourse to collaborations in the world of fashion that have accelerated the expansion of the trends described above, cemented the link between luxury and streetwear and destabilized the fashion market, thus arriving at a new configuration of genres. The tendency of influential luxury brands to embrace and accept the world of streetwear/sportswear on the catwalks helps the rapprochement of two seemingly opposite cultures; this attitude especially appeals to the younger consumers. Many successful collaborations have taken place repeatedly in the last decade. For example, Gucci collaborated with Coco Capitàn, a photographer and artist, in 2017 to give a new dimension to the Italian brand for clear recovery. Capitàn’s work was part of Gucci’s “Art Wall” mural project in New York and Milan. Her distinctive handwriting was also turned into a capsule collection for the Autumn/Winter 2017 Gucci collection. Owing to the use of co-branding strategies, Gucci’s popularity has remained consistently in the minds of consumers, especially the younger ones, inspired by urban culture and especially the world of street art to which the luxury brand does not belong; the artist helps create a new underground facet to the brand. Gucci’s collaboration projects with artists have created an image of a more democratic luxury that is conditioning the fashion industry, perfectly mixing the style of sports/urbanism with that of high fashion (Ahmed 2017). Similarly, other companies have adopted co-branding strategies to involve an increasingly diverse audience along with collaboration till collaborating with the brands of the sportwear. Gucci itself worked with sportswear giants such as Nike, Vetements has collaborated with Champion and Fendi with Fila in 2018. The most extreme and emblematic collaboration, however, is represented by the union of Louis Vuitton and Supreme—the French luxury brand chose this New York brand associated with the world of skateboarding and hip-hop culture. The association of these two culturally opposed realities seemed extravagant and unattainable, proving effective and successful in the market. In the most important and revolutionary year for the fashion world, the union of Supreme and Louis Vuitton gave rise to one of the most striking collaborations in recent history and sanctioned the definitive arrival of

3 The New Consumers of Luxury

61

urban culture in the world of luxury fashion. The exclusivity of the items of this collaboration and the success achieved have led to the creation of a myriad of co-branded products of all kinds from this union, some of which are candidates for becoming a symbol of a new trend in the field. Because of the marked differences, the brands seemed to have more in common than what might have appeared from a first analysis. The collaboration left the fashion world unsettled and has been embraced with enthusiasm by many celebrities not only from the hip-hop sphere but also from the fashion and entertainment spheres. This positive feedback has helped the strategy of co-branding establish itself in a decisive manner and result in extraordinary outcomes for brands.

3.4

Conclusions

Millennials is the generation more likely to spend on luxury products as compared to previous generations: given their importance in providing business opportunities, understanding and attracting Millennials has become the focal point for many luxury firms. Millennials are considered as the most important segment for luxury market and they have specific and at times peculiar characteristics. They are the first high-tech and digitally connected generation and they embrace new media much more than previous generations. They desire boosting their self-image, to demonstrate their status more than their older counterparts and spend lavishly when they have money. Millennials beliefs and values are distinct from their previous generations and therefore, it becomes imperative to understand “millennial state of mind” and develop ad hoc strategies (Jain 2019). But in a digital world the number of contact point with Millennials and the number of influencers dramatically increase thus increasing the complexity of firm’s marketing strategy. Millennials are more concerned in online behavior like online shopping. Also, Millennials get information regarding fashion products from their peers, brands, social media, celebrities, blogs and influencers. Moreover, Millennials post their own item ratings, reviews and online experiences and can be highly impactful

62

A. Cabigiosu

in decision-making processes of other clients (Kapferer and ValetteFlorence 2019). Millennials use social media to contribute with their posts, to share experiences, to search information and to participate to a community. Luxury firms’ marketing strategy is increasingly complex because Millennials are both users and consumers of digital media, they manifest their preferences and they promote what they like. As the intensity of social media use increases, luxury brands try to increase clients’ engagement, the appeal of their products and affect clients’ decision-making process. However, Millennials tend to show low brand loyalty in that they are continuously searching brands that better match their values, personality, and lifestyles. Millennials “live the moment”, spend money rapidly, have an enormous quantity of information available, they are impatient and demanding. Fashion brands are catering to their new clients’ needs with the help of novel technologies available. Accessibility and inclusivity feed the web and social networks: new collections and luxury items rapidly spread on the web. They are bought and exhibited on Instagram or Facebook by clients, and there is no waiting time to see, buy and show items. Influencers show their daily lives and everything they show becomes automatically desired, viral and accessible on-line. Social media reinforce the pressure to conform to the norms of the reference group. Adapting to Millennials’ preferences has become a necessity and implies a shift in the use of marketing techniques: companies must start relying more on e-commerce, social media or influencers in order to create engagement and offer those products and services that are attractive to this generation. Digital communication is the link between brands and their communities, and its growth is momentous and necessarily rapid. Firms began to shift their marketing efforts from targeting everyone, everywhere, to focusing on the luxury customers of the future, Millennials. With the increasing purchases of luxury brands online, it is becoming highly necessary to understand factors underlying Millennials’ attitudes toward luxury fashion brands from a cross-cultural context. To date,

3 The New Consumers of Luxury

63

we still need research to explore factors driving attitudes toward luxury fashion brands across different countries and cultures. Also we need studies that help understanding how luxury firms cope with Millennials’ desire of rapid access to everything they desire and, at the same time, nurture and protect the luxury values of uniqueness and exclusivity. Maisons are continuously required to produce new items to satisfy their clients. The proliferation of capsule collections and mid-season collections feeds this recursive loop of the fast acquisition, sharing and consumption of luxury goods. Luxury is becoming fast. However, the higher pace of consumption and diffusion of new collections render them more quickly obsolete and raise questions regarding their value. In part, the tight relationship between art and fashion can preserve the value of luxury products even in a digital context. Artistic collaborations and thematic capsules emphasize the aesthetics and artisanal connotations of luxury products. Melting art and fashion, luxury brands can protect their reserved and exclusive image and maintain of uniqueness. The association to art allows luxury to approach the perception of an element without time, to create a sort of elitism. This approach allows them to increase sales, thereby managing to make consumers perceive their products as objects of art rather than commercial goods. Additionally, the choice of Millennials art directors and Millennials artists increase the Maisons ability to design collections near to Millennials’ taste and mindset. Finally, the Millennials’ attention toward sustainability is another growth stream that is rapidly boosting Maisons’ interest and investments. Also in this case fashion houses still have to understand how to cope with their clients’ request for more sustainable and environmentally friendly garments and, at the same time, preserve their production processes, especially those anchored to the tradition, often ancient, and in the usage of high-quality materials such as leather.

64

A. Cabigiosu

References Ahmed, Osman. 2017. Coco Capitán: Gucci’s young art star. The Business of Fashion, available at https://www.businessoffashion.com/articles/people/ coco-capitan-gucci-young-artstar. Accessed on 10 Feb 2020. Altagamma, and Bain & Co. 2018. Altagamma 2018 worldwide luxury market monitor, available at https://altagamma.it/media/source/WORLDWIDE% 20LUXURY%20MARKET%20MONITOR_BAIN.pdf. Accessed on 11 Feb 2020. Bagozzi, Richard P., and Rajan Nataraajan. 2000. The year 2000: Looking forward. Psychology & Marketing 17 (1): 1–11. Bain & Co. 2018. Luxury goods worldwide market study, 2018, available at https://www.bain.com/insights/luxury-goods-worldwide-market-study-fallwinter-2018/. Accessed on 10 Jan 2019. Bauman, Zygmunt. 2013. Liquid modernity. Cambridge: Wiley. Bloomberg, 2019. Gen Z’s sneakerheads have shoe sellers rolling out new kicks faster than ever. The Business of Fashion, available at https://www.bus inessoffashion.com/articles/news-analysis/gen-zs-sneakerheads-have-shoe-sel lers-rolling-out-new-kicks-faster-than-ever?utm_source=daily-digest-newsle tter&utm_campaign=1639751275085296&utm_term=11&utm_medium= email Accessed on 23 July 2019. Bruhn, Manfred, and Stefanie Schnebelen. 2017. Integrated marketing communication—From an instrumental to a customer-centric perspective. European Journal of Marketing 51 (3): 464–489. Capeci, Federico. 2017. Post millennial marketing. Marketing di nuova generazione. Milan: Franco Angeli. Capodaglio, Ombretta. 2016. I millennials nel mondo: non solo social. Nielsen insights, available at https://www.nielsen.com/it/it/insights/news/2016/themillennials-in-the-world-not-only-social.html. Accessed on 7 Jan 2019. Crampton, Suzanne M., and John W. Hodge. 2009. Generation Y: Unchartered territory. Journal of Business & Economics Research 7 (4): 1–6. Delgadillo, Yvonne, and Jennifer Edson Escalas. 2004. Narrative word-ofmouth communication: Exploring memory and attitude effects of consumer storytelling. ACR North American Advances, available at https://www.acr website.org/volumes/v31/acr_vol31_81.pdf. Accessed on 11 Feb 2020. Deloitte. 2018. Fashion luxury private equity and investors survey 2018, available at https://www2.deloitte.com/it/it/pages/finance/articles/fashion—lux ury-private-equity-and-investors-survey-2018—delo.html. Accessed on 18 June 2019.

3 The New Consumers of Luxury

65

Dimock, Michael. 2018. Defining generations: Where millennials end and post-millennials begin. Working Paper, Pew Research Center, 1. Escalas, Jennifer Edson. 1998. Advertising narratives: What are they and how do they work. In Representing consumers: Voices, views, and visions, 267–289. New York: Routledge. Gautam, Vikas, and Vikram Sharma. 2017. The mediating role of customer relationship on the social media marketing and purchase intention relationship with special reference to luxury fashion brands. Journal of Promotion Management 23 (6): 872–888. Godey, Bruno, Aikaterin Manthiou, Daniele Pederzoli, Joonas Rokka, Gaetano Aiello, Raffaele Donvito, and Rhaul Singh. 2016. Social media marketing efforts of luxury brands: Influence on brand equity and consumer behavior. Journal of Business Research 69 (12): 5833–5841. González, Zahaira Fabiola, Irene García-Medina Romo, and Noemí Plaza Romero. 2017. Storytelling and social networking as tools for digital and mobile marketing of luxury fashion brands. International Journal of Interactive Mobile Technologies 11 (6): 136–149. Holt, Douglas B. 2003. What becomes an icon most? Harvard Business Review 81 (3): 43–49. Howe, Neil, and William Strauss. 2000. Millennials rising: The next great generation. New York: Vintage Books. Jain, Sheetal. 2019. Exploring relationship between value perception and luxury purchase intention: A case of Indian millennials. Journal of Fashion Marketing and Management 23 (4): 414–439. Joy, Annamma, John F. Jr. Sherry, Alladi Venkatesh, Jeff Wang, and Ricky Chan. 2012. Fast fashion, sustainability, and the ethical appeal of luxury brands. Fashion Theory 16 (3): 273–295. Kapferer, Jean-Noël. 2017. Managing luxury brands. In Advances in luxury brand management, 235–249. Cham: Palgrave Macmillan. Kapferer, Jean-Noël, and Pierre Valette-Florence. 2019. How self-success drives luxury demand: An integrated model of luxury growth and country comparisons. Journal of Business Research 102: 273–287. Kim, Angella Jiyoung, and Eunju Ko. 2010. Impacts of luxury fashion brand’s social media marketing on customer relationship and purchase intention. Journal of Global Fashion Marketing 1 (3): 164–171. Kim, Angella Jiyoung, and Eunju Ko. 2012. Do social media marketing activities enhance customer equity? An empirical study of luxury fashion brand. Journal of Business Research 65 (10): 1480–1486.

66

A. Cabigiosu

Kluth, Andreas. 2006. Among the audience: A survey of new media. Economist Newspaper, April 22, 3–20. Kotler, Philip, and Gary Armstrong. 2010. Principles of marketing. Upper Saddle River, NJ: Pearson Education. Lee, Stacy Hyun-Nam, Yi Zhou, C.K. Chris K.Y. Lo, and Jung Ha-Brookshire. 2018. Luxury fashion brands versus mass fashion brands: data mining analysis of social media responses toward corporate sustainability. In Sustainability in luxury fashion business, 51–73. Singapore: Springer. Lein, Simonetta. 2020. Fashion sustainability in 2020: Trends, achievements and the road ahead. Forbes, available at https://www.forbes.com/sites/the yec/2020/01/28/fashion-sustainability-in-2020-trends-achievements-andthe-road-ahead/#63ea48054b93. Accessed on 7 Feb 2020. Oeppen, Jemma, and Ahmad Jamal. 2014. Collaborating for success: managerial perspectives on co-branding strategies in the fashion industry. Journal of Marketing Management 30 (9–10): 925–948. Remy, Nathalie, Speelman Eveline, and Swartz Ryder Steven. 2016. Style that’s sustainable: A new fast-fashion formula. McKinsey & Company, available at https://www.mckinsey.com/business-functions/sustainability/our-ins ights/style-thats-sustainable-a-new-fast-fashion-formula#. Accessed on 7 Feb 2020. Ryder, Norman B. 1985. The cohort as a concept in the study of social change. In Cohort analysis in social research, 9–44. New York: Springer. Schank, Roger C. 1990. Tell me a story: A new look at real and artificial memory. New York: Charles Scribner’s Sons. Sciola, Giulia. 2018. Tutti vogliono Balenciaga. Pambianconews, available at https://www.pambianconews.com/2018/04/03/tutti-vogliono-balenciaga233277/. Accessed on 15 Feb 2019. Solomon, Michael. 2017. How millennials will reshape the luxury market. Forbes, available at https://www.forbes.com/sites/msolomon/2017/06/20/ how-millennials-will-reshape-the-luxury-goods-market-bain-luxury-report2017/#5a09f7852f86. Accessed on 7 Jan 2019. Stein, Joel. 2013. Millennials: The me me generation. Time, available at http:// time.com/247/millennials-the-me-me-me-generation/. Accessed on 20 Jan 2019. Sullivan, Pauline, and Jeanne Heitmeyer. 2008. Looking at Gen Y shopping preferences and intentions: Exploring the role of experience and apparel involvement. International Journal of Consumer Studies 32 (3): 285–295. Testoni, Luca, 2018. Il consumatore al centro moltiplica i driver. Il lusso è già orientato ai nuovi canali. Pambianco Magazine, December, 19–23.

3 The New Consumers of Luxury

67

Woodside, Arch G., and Mark D. Uncles. 2005. How behavioral primacy interacts with short-term marketing tactics to influence subsequent long-term brand choice. Journal of Advertising Research 45 (2): 229–240. Woodside, Arch G., Suresh Sood, and Kenneth E. Miller. 2008. When consumers and brands talk: Storytelling theory and research in psychology and marketing. Psychology & Marketing 25 (2): 97–145. Zanzi, Caterina. 2018. La STRADA di Facebook per l’Italia vede un fashion integrato sui social. Il futuro? Sarà in chat. Pambianco Magazine, December, 42–43.

Websites https://www.youtube.com/watch?time_continue=7&v=5MC2X-LRbkE. http://www.europarl.europa.eu/meetdocs/2009_2014/documents/com/com_ com(2011)0681_/com_com(2011)0681_en.pdf. https://convegno.pambianconews.com. https://www.thesartorialist.com/. https://www.purseblog.com/. https://www.launchmetrics.com/it.

Part II Opportunities and Threats for the Luxury Fashion Industry

4 The Omnichannel Strategy in the Fashion Industry

4.1

The Omnichannel Strategy: A New Business Model

Innovation in information and communication technology has changed consumer behaviors such that customers nowadays require new shopping experiences and multiple channels to interact with firms and purchase their beloved products. The relevance of mobile devices in people’s lives has prompted the diffusion of electronic business transactions. Today mobile applications work as virtual stores that allow customers to make purchases and share information about products, promotions and other services provided using their personal devices. Mobile applications bring with them the complexity of new purchase experiences, supply chain integration and communication with clients and require tackling specific issues such as privacy and quick and safe payment systems. In addition to these functional factors, they are also required to include appealing images, videos and layouts which comply with the brand image transmitted through other online and offline channels. Moreover, with the goal to reinforce connections among different channels, mobile apps should provide a geolocation function, indicating the path to reach the brick and mortar store, and the link leading to the digital shop. © The Author(s) 2020 A. Cabigiosu, Digitalization in the Luxury Fashion Industry, Palgrave Advances in Luxury, https://doi.org/10.1007/978-3-030-48810-9_4

71

72

A. Cabigiosu

Mobile channels are one of the new channels belonging to an omnichannel strategy. A channel is defined as “a customer contact point or medium through which the company and the customer interact” (Mirsch et al. 2016). Channels can be either offline physical locations that firms use to meet final users, such as directly operated stores, multibrand and department stores and pick-up points, or online channels that rely on digital technologies to sell products and interact with clients such as e-commerce platforms, mobile applications and social networks. Nowadays, Millennials and the Generation Z are increasingly demanding multichannel shopping experiences that mix online and offline channels generating self-supporting and complementary channels, platforms and access points (Johansson and Kask 2017). In this context, firms cannot simply add new distribution channels, but they have to ensure that their functionalities, messages and brand strategies are coherent and self-supporting and thus must be designed and orchestrated as an integrated structure. To achieve this goal, firms have to move from a multichannel to an omnichannel strategy (Berman and Thelen 2018). In the multichannel retail model, firms sell products via many channels, but clients cannot benefit from interactions between channels and firms do not plan (nor control) channels synergies. In a multichannel, there is no coordination between channels which are considered completely independent and each attempts to meet the needs of specific consumer segments. The management of multiple parallel channels which do not interact among themselves entails some risks such as the channel cannibalization and the emergence of free riding, especially when channels compete against each other and their performance is measured in terms of sales growth and market shares. For example, clients can use the company website to gather information about products but then buy them in store or can try on clothes in store to then buy online from a more convenient retailer. Indeed, digitalization increases the risk of free riding and opportunistic behaviors in a multichannel strategy. We speak about showrooming when customers examine products in store and then buy online at lower prices. Physical stores are used as mere showrooms where clients evaluate products (Gensler et al. 2017). Another phenomenon is

4 The Omnichannel Strategy in the Fashion Industry

73

webrooming in which customers search online, compare different products and prices but after having decided which product to buy, they prefer the physical store for a final evaluation of the product and to more easily handle the transaction and eventual substitution of the product (Kang 2018, 2019). Building on the awareness of multichannel strategy’s drawbacks, the cross-channel model aims for a partial integration of online and offline channels and for creating synergies between them. For example, clients can order products in digital shop and pick them up in store without shipment costs. In this manner, clients can benefit from higher variety in products and availability typical of online channels, and find all products in stores idled online and then select them and return the undesired ones to the store. The omnichannel strategy advances a step further. The omnichannel strategy is defined as the synergetic management of the multiple available channels and customer touch points such that barriers between different channels disappear. Channels are managed not as silos but as a unit through integration and coordination so that consumers can easily switch from one channel to another at any stage of their journey without interrupting their transactions (Mosquera et al. 2017). For example, in an omnichannel paradigm, a consumer can start shopping on the firm’s website on a PC and add their preferred articles to the shopping basket. Suppose after this product selection, they are still uncertain about purchasing and prefer to wait. In this case, if they open the firm’s application on their smartphone after some days, they will still find the selected products in the basket and can finalize the transaction, deciding whether to pick up products from the store or get them delivered at home or any other location. Therefore, the primary objective of the omnichannel strategy is the optimization of customers’ purchasing process and perfect synchrony between multiple channels, which requires a complex integration between online and offline, front-end and backend activities (Cao 2019). The boundaries between online and offline are blurring, often transforming firms’ business models: purely online retailers such as Amazon are opening physical stores, and offline companies such as usually luxury brands are developing a digital marketing and retail strategy.

74

A. Cabigiosu

In this context, firms can opt for different degrees of integration according to their strategy, ranging from totally separated (multichannel) to completely integrated (omnichannel) structures. A high degree of integration characterizing an omnichannel strategy is the reflection of how business functions are closely coordinated. An efficient integration primarily concerns the downstream operations of the supply chain, including product sales and logistics and the support functions such as information technology and human resource management (Wiener et al. 2018; Rusanen 2019). In sales, firms are required to design online and offline sale activities according to coherent vision and processes to fulfil clients’ demands for a seamless shopping experience. Omnichannel organizations should develop and coordinate three main sales channels, namely physical stores, e-commerce and mobile apps. In luxury fashion, physical traditional stores are still the primary purchasing channel and also represent pick-up points where customers buy products after online recognition. Even when clients buy in physical stores, these still have to be coordinated with online resources and vice versa. For example, online websites have the store locator and stock visibility functions that enable clients to identify the nearest shop online with the desired articles available. In stores, personal digital assistants and mobile POS support sales personnel by keeping control over the entire brand assortment and availability and allow salespeople to suggest clients where and how to acquire out-of-stock articles both online and in other stores. Nowadays, new in-store hi-tech displays or digital walls and mirrors permit consumers to check items’ availability and review and share photos on social networks as well as allow home delivery of the preferred articles (Bettucci et al. 2015). Quick Response (QR) codes are codes that customers scan through their own smartphone to surf the web pages dedicated to that specific product. Furthermore, many other technologies mix online and offline buying experiences as discussed in the subsequent paragraphs. Nowadays, clients can buy almost any time and anywhere through different digital devices. Data clearly show that e-retail sales are rapidly growing (Nisar and Prabhakar 2017).

4 The Omnichannel Strategy in the Fashion Industry

75

From the firm perspective, e-commerce is an opportunity to increase the market share, but it also requires new and specific competences mainly at the operational level at which digital platforms are internally developed and warehouses of multiple sale channels are integrated. Furthermore, firms should deal with specific new topics such as online payment security and information/privacy policies. For example, online shopping becomes faster and easier using the new one-click payment formula (clients do not have to insert credit card information any time they conclude online purchases). Finally, e-commerce platforms should promote brand images consistent with those prompted in the physical store and vice in order to achieve the channel convergence needed to experience seamless shopping journeys. To increase customer engagement, company websites should combine functional and emotional elements such as videos, images and other interactive content which can realize the dual role of information source and emotion provider. For covering these significant functions, online channels should guarantee that consumers can shop through any mobile devices. Relevant information of the e-commerce platform should be adaptable and visible on smartphones and tablets that should also synchronize with each other and get updated in real time, integrating data related to previous online (and ideally offline) visits and client preferences and consumer behavior. In order to achieve these goals, websites and applications are currently co-developed using a modular and scalable approach (Cabigiosu 2020). Furthermore, to manage this increased complexity accrued by multiple entry points through which clients establish dialogue and interact with the firm, innovative e-commerce platforms are being used such as chatbots. These are a form of artificial intelligence combined with an automated software answering users’ questions, suggesting the best choices and providing sale services to online customers. Other elements of the marketing mix in the omnichannel model, such as product and price, need to be coherently and carefully managed to ensure a consistent firm strategy and smooth customer journey across multiple channels. According to the omnichannel perspective, the implementation of standardized product assortment, homogeneous pricing policy and coordinated promotional strategy enables organizations to

76

A. Cabigiosu

achieve front-end integration, which contributes to satisfy consumer expectations for consistent cross-channel shopping experiences. The omnichannel strategy generally requires more standardized catalogues with articles available both on offline and online shops. However, exceptions are allowed, and specific products are sold only via specific channels, often to attract more visits and increase the number of purchases. In addition, to increase customer involvement, companies sell limited editions exclusively to single channels. Moreover, firms might be prone to reduce the in-store items while keep offering the entire catalogue online. On the other hand, to limit the costs of generating a virtual presentation of each garment sold or to offer a more easily manageable product list, some organizations have decided to sell online only part of articles available in physical shops. Considering the price strategy, the omnichannel method promotes price alignment policies aiming at keeping homogeneous prices in each channel. However, tolerable discrepancies from this assumption could be legitimized because of differences in service levels and information quality/availability of different channels (Jiang et al. 2020). Examples of promotional convergence of both online and offline channels are commercial initiatives such as Black Friday and Cyber Monday, which were initially applied exclusively on the digital retailing but are have also been introduced in physical stores.

4.1.1 Managing Omnichannel Logistics Companies need to redesign their supply chain and their logistic structure to fulfil demands of customers from various channels and to get their orders delivered at their preferred time and location. Fulfilment and distribution are the two primary systems building a firm’s logistic. Specifically, fulfilment concerns warehouse management related to both the management of logistics infrastructure needed to store products and inventory holding and picking, whereas distribution includes the delivery process and order management according to different destinations. On the other hand, the distribution system involves both forward delivery of products to physical shops, pick-up stations and other customer preferred

4 The Omnichannel Strategy in the Fashion Industry

77

locations and backward shipment for the returning process (Hübner et al. 2016). In this context and focusing on supply chain optimization, omnichannel companies should achieve multiple objectives (Hübner et al. 2016). First, firms are expected to develop efficient delivery modes and reduce clients’ lead time. Second, real-time inventory visibility should be increased for providing customers with transparent information about product availability of both online and offline channels. The third is the need for optimizing distribution centers, in-store operations, Key Performance Indicator (KPIs) and service levels and the fourth entails increasing inventory integration through the development of consolidation procedures for inventories in a few bigger distribution centers (DC) to reduce warehouse and logistics costs (Kembro et al. 2018). Nowadays, order fulfilment involves three main different locations: the stores and the retailers’ and the suppliers’ DCs. Essentially, while direct customer orders could be fulfilled alternatively by only one of the aforementioned dispatching centers, store orders are generally managed by the DCs. Firms entering the omnichannel business usually start from in-store fulfilment. However, if stores assume the dual function of showrooms and logistic centers, they should renew their existing structure and establish processes which would help handle online orders efficiently. Indeed, as e-fulfilment volumes grow, in-store picking and packing requires dedicated space apart from that for the showroom (Hübner et al. 2016). In addition, in the period between order placement and order pickup, an in-store customer could buy the same items ordered by online users. Therefore, physical stores require real-time data access to monitor inventory and an integrated enterprise resource planning (ERP) system to counter an out-of-stock risk. For this reason, the omnichannel strategy now involves distribution centers. On the basis of both the degree of integration between online and offline distribution systems and the level of centralization within the firm’s network, two completely different retailer DC structures can be identified: decentralized-separate DCs and centralized-integrated DCs. While multichannel retailers or those who have recently entered

78

A. Cabigiosu

the omnichannel business rely on channel-specific fulfilment structures, advanced omnichannel organizations opt for integrated systems. Decentralized-separate DCs are fulfilment centers dedicated to online orders and provide precise information about stock inventory and product availability. Moreover, the distance to both stores and customers is usually shorter and transportation costs and lead time are reduced. Stores can ensure a short replenishment time and high delivery frequency. However, the most developed omnichannel retailers adopt integrated and centralized DCs by relying on a single dispatching location to fulfil offline and online orders. This approach ensures greater product availability at lower costs, quicker allocation of goods to specific channels as it implies a single inventory control and reduces the costs of inbound logistics. However, these advantages come at the cost of higher last-mile delivery costs, which are sustained to reach widely dispersed customer locations, and a higher complexity in warehouse management for heading the picking process related to both store and direct customer orders. Consequently, to enhance these operations, companies often invest in automated picking systems. Alternatively, third-party logistics service (TPLs) providers or four party logistic (FPLs) service providers can manage the warehouses and the delivery process and are accountable for store and customer order fulfilment via their own distribution centers. Generally, omnichannel retailers rely on this solution to ship products with specific storage requirements, which need to be directly delivered to customer or shops without midway waiting. Accordingly, even though this system results in lower inventory and processing costs, retailers incur longer lead time, higher transportation costs and greater impediment to gain real-time inventory information. Consequently, as these risks tend to negatively affect overall customer convenience, this strategy is used only in specific circumstances. Convenient, timely and precise delivery processes represent a competitive advantage for firms implementing an omnichannel strategy (Montreuil 2016). Omnichannel firms often offer multiple options to clients. Clients have the pick-at-store both when shopping in physical stores and when ordering online. In this case stores assume the additional role of logistics centers and are reorganized to include

4 The Omnichannel Strategy in the Fashion Industry

79

order fulfilment zones (Montreuil 2016). Second, clients have the pickat-drive option which enables them they collect their online purchases at a business facility that is called the “drive”: orders flow into a fulfilment center where the customer-specific order is put together and then transferred to a drive area. Finally clients collect their orders in the drive area. The third is the pick-at-locker alternative in which customer orders are shipped to a smart locker near the consumer’s location. Clients often select the ship-to-home option with or without delivery preferences. Finally, there is the ship-to-me option in which products reach clients wherever they are such as at the exit of a train or airplane. One of the most valuable determinants of customer experience is ensuring free product returns. Companies are expanding their return options: while the multichannel model relies only on the postal service or Courier/Express/Parcels (CEP), advanced omnichannel firms provide customers with the additional opportunity to handle their returns through the in-store channel. In this case, as returned articles become reusable after quality controls, they are reintegrated into sellable store inventory. This process becomes particularly convenient owing to easy and immediate returns and refunds.

4.1.2 Omnichannel and Big Data Usage and Protection In this context, information systems are fundamental in supporting the implementation of an omnichannel strategy. The growing tendency of making multiple interaction points available goes hand in hand with the accumulation of a significant amount of data, which flow from customers to organizations and vice versa. This bulk of information is referred to as Big Data which describes data arriving from many different sources such as point of sale, Global Positioning System (GPS), Radio Frequency Identification (RFID) tags, social media and so on characterized by high volumes, velocity and variety (Roberts and Hazen 2016). Big Data often includes an extremely large volume of data which cannot be processed by traditional software; it is transmitted at a higher pace and involves many different formats including emails, digital

80

A. Cabigiosu

images, videos and social media posts. As the heterogeneity of channels and business processes grow, organizations need to acquire new competences and resources to handle this kind of data and realize their competitive potential. Traditionally, in multichannel organizations, each channel is supported by its own information systems. Therefore resources tend to be disseminated throughout the company’s business units without cross-channel data analysis. In contrast to this silos structure, the omnichannel strategy encourages the adoption of a centralized system which integrates data originating from different sources. Focusing on downstream activities, coordinated information systems can increase sales by improving organizations knowledge of consumer needs and preferences. Consequently, companies benefit from the acquired knowledge which helps them provide increasingly consistent and personalized shopping experience to customers, thereby acquiring their trust and loyalty. In this scenario, Customer Relationship Management (CRM) comes out as a fundamental information management tool aimed at preserving firm relational heritage. Specifically, integrated CRM is a software which connects information from online and offline sources to generate, retain and customize long-term relationship with customers. In addition, omnichannel organizations rely on channel-integrated ERP systems which link information related to the most relevant business processes. This centralized data management structure facilitates cross-channel inventory management, article tracking and customer communication which supports the development of seamless customer experience (Hübner et al. 2016). However, as large amounts of data overwhelm organizations, the limits of traditional databases need to be overcome by adopting innovative information technologies related to Big Data management and analytics. These instruments are focused on handling information flows to support decision-making processes aiming to make firms proactive in revealing demand in advance and providing real-time feedbacks. Specifically, Big Data analytics is based on descriptive, predictive and prescriptive models which attempt to transform data into valuable insights contributing to the optimization of the decision process. Opportunities arise from big

4 The Omnichannel Strategy in the Fashion Industry

81

data in retailing, particularly along five dimensions: data pertaining to customers, products, time, (geo-spatial) location and channel (Bradlow et al. 2017). In this setting, an emerging issue related to customer data is privacy. Access to customers’ personal information is an opportunity for organizations to adjust content offering to target customer preferences but is also a threat to consumer privacy. Consequently, for example since 2018 in the European Union, the General Data Protection Regulation (GDPR) has been controlling the usage of personal information of European citizens and of updating the related regulation. Specific rules have been introduced to control personal data collection, processing and storage. For example, firms are required to explain the conditions governing data collection and data processing to the customers to obtain their conscious approval for the elaboration of their personal information and users have three main rights: data access, data oblivion and data transmission. Each organization should also have a Data Protection Officer (DPO) who is an internal resource accountable for guaranteeing the firm’s subscription to current norms.

4.1.3 Human Resource Management Human resource management supports omnichannel businesses with coherently shaping organizational structure, corporate culture, recruitment and training activities. Firms need expert profiles dedicated to the development of new sales channels and to the integration of the online and offline channels. For instance, several companies have integrated new ad hoc business units which are expected to implement innovative e-commerce platforms with hired platform managers. In fact, omnichannel organizations are more integrated than multichannel organizations, and teams are accountable for both e-commerce and in-store activities and developing collaborative relationships based on sharing of information and best practices. Scholars have discussed cross-departmental collaboration which requires significant transformation in the corporate culture (Von Briel 2018). As top management recognizes the innovative nature of market

82

A. Cabigiosu

demand, it has to encourage coordination among online and offline business units which have to be committed to reach the common objective of providing seamless customer experience. Managers should also define coherent incentive systems in which responsibilities and rewards for e-commerce and physical stores are interlinked (Berman and Thelen 2018). Moreover, firms need personnel with new competences and thus hire digital marketers and vendors who collaborate with the Chief Digital Officer (CDO) to lead a strategic penetration in the digital market. Particularly with respect to front-end processes, sales assistants in physical shops have to acquire skills and motivations for encouraging clients to live an omnichannel shopping experience and to use technological tools which will enable them to gain access to important information such as the omnichannel inventory, order status and customer data. Salespeople have to be very engaged and motivated even if physical stores are challenged by the emergence of the opportunistic customer behavior such as showrooming, i.e. consumers trying out products in the store but subsequently buying them online (Rapp et al. 2015; Kang 2019). Organizations should train sales assistant to adopt sales techniques such as approach strategies end cross-selling and consider showrooming as an opportunity to engage customers. Furthermore, store assistants can provide additional services about the sale of complementary items. Interestingly, recent researches show that customers using self-order technologies experience reduced waiting cost and increased demand and, although public opinion suggests that self-order technologies may lead to job cuts, instead many firms increase employment levels even if they have high labor costs. This scenario suggests that new technologies support firms’ growth and new ad hoc competences (Gao and Su 2018). Overall, strategic human resource management supports the omnichannel strategy by reshaping organizational behaviors and providing new competences. The digitalization of fashion has generated the fashion companies’ need of new experts with specific competences in the digital field. Examples of new professional profiles are the e-commerce manager, the trends searcher and the fashion event coordinator.

4 The Omnichannel Strategy in the Fashion Industry

4.2

83

Reinventing the In-Store Experience

During the 1990s, luxury fashion firms started increasing their level of vertical integration downstream opening directly operated, different kinds of mono-brand stores that allow a more effective and direct communication with customers by emphasizing brand values and providing a coherent buying experience (Capellari 2016). Flagship stores have the main objective of communicating brand value by providing a holistic customer experience within large facilities located in popular city spheres. The flagship store supplies only a single brand, it is owned by the luxury brand and offers the full assortment of its products. Clients go to the flagship store to purchase products but also to live new experiences correlated to the brand image (Arrigo 2015). For instance, Ralph Lauren has a flagship store in the Fifth Avenue in New York where clients can shop and eat at the internal restaurant. Concept stores also offer a stimulating atmosphere that leads the customer into the brand world by offering a unique shopping experience. The aim of a concept store is to create a customer experience of exploration and discovery through a plurality of suggestions, coming both from the variety of products on display and from the architecture of the environment itself. When Alessandro Michele arrived in Gucci, he soon opened his first concept store in Milan which combines multiple decorative elements, suggestions and meanings, thereby piquing the customers’ curiosity and interest. Visiting this shop is a journey that recalls the theme of travel, through the use of aesthetic codes of luggage, the trunk in particular, as decorative elements. Recently, Maisons have started opening and mixing new types of stores such as temporary stores with unspecific temporality of opening and closing, thereby encouraging customers to immediately proceed with their purchases. Similarly, pop-up stores placed in unexpected and hidden locations offer unique items at advantageous prices. Another innovation is the shop in shop which is a retailer shop dedicated to a specific brand, that is, a completely independent store situated inside another store. Some firms, controlling multiple brands, have decided to introduce multi-brand stores that are exclusively dedicated to their own brands. For instance, Tod’s has developed a network of shops called

84

A. Cabigiosu

“DEV” where customers can exclusively find the three main brands of the group: Tod’s, Hogan and Fay. Multi-brand stores can also support emerging brands with limited visibility and assortments (Taube and Warnaby 2017). However, the advent of the Internet and the proliferation of digital devices has boosted the rapid evolution of online platforms as sales channel. The activity of online sales relies on different distribution formats as well as on the offline channel. First, the online channel offers mono-brand virtual shops which can be managed by manufacturing firms through either direct or indirect control. On the one hand, firms owning the brand can provide an e-commerce service directly on their own website by retaining full control over the image and the distribution processes. On the other hand, the management of the mono-brand online shop can be outsourced to expert consultants. In addition, regardless of the type of control, the mono-brand virtual shop offers customers the opportunity of participating in virtual brand experiences by telling them the story of their brands through product assortments, videos and images. Online sales activity can also be implemented by relying on multi-brand virtual retailers such as Net-a-porter or Farfetch. In the last decade, the exponential growth of the online channel has prompted fashion companies to develop a mixed retailing model which includes both physical stores and virtual shops. Today, to provide a seamless shopping experience, an increasing portion of luxury fashion firms is developing the omnichannel, or Retail 4.0 strategy. The aim is to offer integrated and interchangeable distribution platforms for searching, ordering, purchasing, delivery and return of items (Kang 2018, 2019). The e-commerce website becomes the first point of contact with the consumer and a platform of services that also supports the store, encouraging visit to the physical store and the mobile experience there. When the customer is already inside the store, in addition to the irreplaceable direct experience of the product and the relationship with the shopper assistant, they can now enjoy direct digital interaction owing to smartphones, digital signage kiosks and other integrated digital technologies that can inform them in a timely manner about available products as well as their characteristics.

4 The Omnichannel Strategy in the Fashion Industry

85

Phygital concept is often referred to as omnichannel customer experience and emphasizes the combination of digital experience and physical environment. Phygital concept relies on the latest innovations in communication technologies which are both implemented in the physical environment of shops and on clients’ digital devices such as mobile phones (Moravcikova and Kliestikova 2017). It is the phygital (Physical + Digital) experience that allows the creation of a personalized shopping experience and in which marketing tools become more effective, such as the use of real-time promotions sent on the mobile when the client is inside or near the shop. The phygital system utilizes technology in an interactive and personalized manner, creating a unique interaction between digital and physical channels that significantly improves the brand’s reputation (Batat 2019). Clients can buy products sold in the store using their smartphones, choose where to receive the products and often the delivery time. The phenomena of the Phygital Experience and Webrooming are interconnected. Users search online to obtain detailed information at the point of sale and majority of them, once in the shop, continue using the smartphone to acquire further product information, compare the product price online and offline or search for the specific variant of the product they found on the site but which is not available at the store (Hwangbo et al. 2017). Once clients enter the physical shop, they can utilize several revolutionary technologies (Willems et al. 2017). The beacon technology allows Bluetooth devices to receive short messages which is used to send special coupons to mobile devices in real time. The RFID technology supports intelligent tags within stores that are automatically activated when a customer picks up or moves an object on display, showing information screens useful for the consumer in real time such as prices and available colors. Using an RFID tag, a customer can make an online purchase and immediately collect the product at the point of sale; this further contributes to satisfaction and involvement, encouraging customer loyalty. Clients can also use the wi-fi for guests: when customers connect to the wi-fi, retailers have access to data such as the number of customers in

86

A. Cabigiosu

the store and their movements This helps them detect their interests and track whether customers are new or regular within that specific store. A QR code is a two-dimensional barcode matrix composed of small black modules within a square pattern. It is used to store digital information (generally intended for smartphones which can scan the code with special reading programs);. luxury brands insert their logo or other elements in the QR code. Scanning the code directs users to company website, images, videos, promotions or events. Near Field Communication (NFC) is a technology that provides a two-way, short-range (10 cm) wireless connectivity. In stores, it finds its largest application in wireless payments via smartphones and tablets as well as in the exchange information between devices as it creates a peerto-peer network. Tablets can be installed in stores to allow independent payment which would be much quicker than a traditional checkout. Smart labels communicate with items via radio frequency signals with a write/read device at a fixed or mobile position within a distance of up to one meter. The system comprises three components: an antenna, a radar and a transponder (TAG). A smart label can store information useful to customers such as the date of manufacture and the barcode. Digital kiosks are “physical” corners that facilitate an effective use of digital technology for in-store purchase. Digital kiosks typically incorporate touch-enabled screens through which clients can obtain information or place orders reducing service time, minimizing errors in ordering, and living new engaging experiences. Kiosks allow customers to view the product catalogue, dedicated contents and videos. Digital kiosks can record clients’ presence at the point of sale, track their preferences and generate valuable information about clients’ needs. Another technology is the interactive dressing room which allows customers to view, through a touch screen, all the variants in which the product they are trying is available and is also equipped with a screen that allows customers to review all the products previously tested, thereby speeding up decision-making process and reducing the number of returns. Virtual fitting rooms are trial rooms equipped with Liquid Crystal Display (LCD) screens that let users virtually wear apparels and share their fitting with their friends for feedback. In fact, a further evolution of the interactive dressing rooms is the 2.0 dressing room which is

4 The Omnichannel Strategy in the Fashion Industry

87

equipped with a webcam that allows sharing of photos and videos of the trial to the main social networks through an app that can connect to the store mirror. Thus, customers can obtain a real-time feedback from friends. Body scanning is another interactive tool that allows one to try garments virtually. This is done through 3D scanning of the body and the reproduction of it on a screen in the form of a digital avatar. A virtual 3D model is created that can be saved and reused through a login when one goes to any store of the same brand in the world and allows one to virtually try on products of different sizes and colors. Hugo Boss uses this technology. Furthermore, a similar service called My Virtual Model can be used on the web; it follows the same principle of body scanning and requires customers’ measurements to create their digital avatar. Clienteling technologies are technologies that permit sales assistants to gain access to the CRM system in real time. By integrating personal information and shopping attitudes derived from a customer’s online and offline interactions, this platform enables shopping assistants to provide a fully personalized experience. Interactive showcase is a type of store display which offers interactions (visual, tactile or audio) to passers-by in the external environment. This showcase can be compared to a large touchscreen facing the street for the benefit of passers-by. The showcase is the first element with which the consumer comes into contact, thus positively contributing to the brand identity. Moreover, an interactive showcase can guarantee sales even during closing hours, transforming itself into a gigantic touch screen that allows the customer to buy and browse through the entire commercial range. The products in the store can be examined at any time and are therefore always available. In addition, this kind of window shopping allows one to customize the contents on the monitor visible from the outside. Accessing information on the brand, obtaining news on fashion shows, browsing through new catalogues and even buying during closing hours is no longer possible only through the digital channel but also in these unique and innovative physical stores. In this context, the technologies of virtual reality and augmented reality can further allow innovative functions which digitalize the customer shopping experience. The former immerses users in a

88

A. Cabigiosu

computer-generated environment, making them participate a simulated reality, whereas the latter layers virtual information over a live camera feed into a headset or through mobile device, giving consumers the opportunity to observe three-dimensional images. The fashion industry is introducing and mixing the aforementioned technologies in multiple forms. Luxury goods and services are now sought and purchased differently than in the past. Currently, it is essential for a company to have an efficient e-commerce structure in place, to be interactive and present on social media and to satisfy a consumer who is always updated and looking for experiential purchases. The digital sphere is thus leading changes in business models, distribution channels and the creation of new products. For example, LVMH has invested in innovative start-ups that have created digital mirrors for changing looks in virtual dressing rooms.

4.3

The Omnichannel Strategy in the Italian Luxury Fashion Industry

Although the implementation of seamless customer experience is extremely challenging due to the requirement of a high degree of integration across the entire organizational system, the state of the omnichannel strategy development worldwide is rapidly evolving. In this context, Italian firms are embracing the digital transformation and also approaching the omnichannel strategy, but this transformation is still slower than in many other countries. These innovative changes have been mainly developed by large Italian organizations, while small and medium-sized enterprises (SMEs) seem to be more reluctant. Specifically, this reticence is related to both economic and organizational reasons, including the uncertainty of returns, high costs, the lack of internal competences and knowledge about digital innovations. Despite the skepticism in embracing radical change, even after being aware of the centrality of digitalization in today’s market, Italian SMEs are slowly approaching the omnichannel (Di Fatta et al. 2018). Indeed, beside the launch of their own online channels, these companies have introduced some digital changes for supporting the customer

4 The Omnichannel Strategy in the Fashion Industry

89

purchasing process. According to a research by the Polytechnic University of Milan,1 in 2017, 92% of Italian SMEs have digitally innovated their stores by establishing advanced checkout systems such as mobile POS, leveraging on SMS or digital coupons as promotional system, activating online advertising, introducing sales force automation system to monitor and plan sales activities and distributing loyalty cards as a retention maneuver. In addition, according to the same research, 83% of small-size firms are aspiring toward innovating their back-end processes by activating online communication with suppliers, issuing electronic invoices and installing software for digitally managing demand and distribution activities. Overall, Italian companies are embarking on the omnichannel path by adding new channels to traditional ones and introducing innovations to digitally improve both primary and secondary activities. However, they still need to put effort into ensuring online and offline integration supporting a holistic customer experience. According to the study on the retail of Milan Polytechnic National Digital Observatory (2018), the fashion industry has become the leader in experimenting with digital innovations even if the enthusiasm toward digital innovation is primarily limited to large organizations as SMEs struggle to find financial sources and the appropriate competences. In addition, the fashion industry investments are increasingly becoming focused on the development of both innovative distribution formats and advanced strategies prompting the integration of the online and offline channels. From a front-end perspective, fashion companies seem to be developing appropriate social media policies in order to increase the opportunity of interaction with a large public. Indeed, social media are fundamentally important as they play a dual role in the fashion industry: on one hand, they support companies with promotion of brands; on the other hand, they enable firms to gain both customers’ insights and appreciation. Specifically, Instagram has turned out to be the leading social media platform with respect to fashion. Among the most active Italian fashion players on the social media, Dolce & Gabbana stands out by being the first company generating intense traffic in their socials since 1 www.osservatori.net.

90

A. Cabigiosu

2016. Because social media promotions are highly influential, fashion companies need to develop efficient content strategies. Furthermore, many brands invest in influencer marketing, establishing collaboration with bloggers, youtubers and other celebrities who can to communicate the brand values to their extensive social communities. Despite the increasingly influential role of online channels, physical stores continue to maintain their value as relevant sources of customer experience, especially in the fashion industry. In stores, technology contributes significantly to the creation of attractive atmosphere, making the in-store customer journey engaging and memorable. For instance, the Italian fashion brand Pinko introduced the Hybrid Shop, an innovative boutique which aims at revolutionizing the traditional purchasing logic by integrating both physical and virtual dimensions. In addition to the physical products, such a technological store is equipped with digital touchscreens through which customers can explore collections, create different outfits and proceed with a quick purchase of clothes and accessories that are not physically available. Then, the purchased products can be delivered directly at the customer’s home. From a back-end perspective, fashion companies are now committed to improving their logistics structure to ensure click-and-collect services for their users. Clients purchase online and then select a store or a facility where to collect their orders. Indeed, from the customer’s perspective, this operation is extremely advantageous because of the lack of shipping expenses, delivery mistakes and delays. Furthermore, to increase customer engagement, fashion companies are attempting to providing increasingly personalized experiences in both physical and virtual shops. However, the development of these customized services should be supported by specific technological devices which can integrate customer data from both online and the offline channels. Indeed, larger Italian fashion firms are investing in integrated CRM, a software that merges information about customer behavior online and offline, thus covering the complete scenario. According to a research conducted by Pambianco on luxury fashion (Testoni 2018), the online business of luxury Italian fashion firms is rapidly increasing and increased more than 200% from 2017 to 2018.

4 The Omnichannel Strategy in the Fashion Industry

91

These firms directly manage their online platforms. Firms that cooperate with established platforms such as vip.com, Farfetch and Mytheresa are performing better with a Compound Annual Growth Rate (CAGR) rate higher than 40% in between 2013 and 2017. Luxury firms are still opening their own shops but a lower growth rate than in the past. Interestingly, luxury firms are moving toward a retail model that is more mixed and balanced than in the last ten years with a growing relevance of online sales, wholesale and a blend of with the classical retail model. For example, Vente-privee (Zanzi 2018) allows brands to connect directly to their site and sell their products. This project, already active in France, is based on a system which links the stock of each store of a brand to their site. Basically, the customer buys on the Vente-privee portal but the shipment arrives directly from the store. Customers now also enjoy have multiple touch points with luxury firms: social channels, retail, official websites and multi-brand online platforms. Italian luxury fashion firms have increased their communication and investments in social networks such that the communication budget increased from 17% in 2014 to 42% in 2017.

4.4

The Omnichannel Strategy in Italian Small-Medium Enterprises: The Siloe Case

Siloe Srl is a leather goods production company located in Vicenza in North-East Italy. This is a start-up that produces luxury collections of leather bags and small leather items collaborating with national and international designers throughout the entire creative and manufacturing process. One of my Master student, Giulia Morini analyzed the Siloe case for her dissertation and made ad hoc interviews with the founder and the Marketing staff (2018). The founder is Gianni Piras who has a well-stablished career in the industry. Since he was eighteen years old, Gianni was engaged in styling, designing and prototyping leather bag collections in an Italian company.

92

A. Cabigiosu

By exhibiting his creation at Mipel, the Milan international bag show,2 the craftsman gained international appreciation particularly for his ability to combine tradition and innovation, combining conventional shapes with modern ones. Gianni was particularly attentive in considering feedback from customers about his new models to then appropriately update the next collection. In addition, Gianni’s creations were highly inspired by cultural insights and elements reflecting a specific culture. For example, he created a line inspired by the African culture and style, which included both bags colored with yellow, green and red and models of zebra leather. In 1987, Gianni opened his own company called Gianni Piras Pelletteria, which handled both the production and distribution processes of leather bags branded Gianni Piras. During the 1990s, the entrepreneur started collaborating with global brands, including Prada, Trussardi and Burberry as a contractor. In addition, aiming to fulfil the large orders placed by these organizations, Gianni Pira develop a welldefined network of external laboratories, exclusively dedicated to the production process. Therefore, while these external resources handled the production of the large volumes, Pira’s company focused on both the designing and prototyping phases (Morini 2018). This production model is typical of the Italian territory where small and microfirms operate in districts and form business networks spatially embedded and organized through cooperative production chains (Aege and Belussi 2008). When Burberry moved to another partner, the company started collaborating with other internationally recognized brands such as Barbara Bui, Jil Sander, Balenciaga and Chloé. During this period, the company had reached its peak with 70 employees. However, starting from 2010, the company started encountering difficulties related to the general economic crisis. Thus, in 2015, Gianni Pira founded a new venture, Siloe Srl. Today, the company has 36 employees and designs and produces bags and accessories for national and international brands. The company also manages the distribution of a limited portion of its clients’ brands. Aristo Pop, Labruyere, Loup Noir and Sara Battaglia have provided Siloe with the distributive license of their collections. 2 www.mipel.com.

4 The Omnichannel Strategy in the Fashion Industry

93

The website of Siloe (www.siloevicenza.com) well emphasizes the focus of the firm on craftmanship coupled with technology seeking high-quality and innovative products. Siloe then founded Jackie Srl that handles the distribution chain of licensing brands by relying on both offline and online channels. Jackie owns a showroom in Milan whose sales activity is exclusively addressed to wholesalers and stores (Business To Business), while from 2018, Jackie has been relying on an e-commerce platform called Saffi25 (www.saffi25. com) for Business To Consumer (BTC) relationships and sales. Focusing on the online channel, instead of following conventional multi-brand virtual stores selling commercial luxury brands, such as MyTheresa or Net-a-Porter, Saffi25 presents itself as a club offering more attainable luxury products. In addition, this virtual shop tends to communicate the company’s values, including product knowledge, high quality of raw materials and the Made in Italy branding. Even though Siloe is not mentioned directly, the platform has a close relationship with the producer which considers Made in Italy and high quality as essential elements contributing to their interpretation of luxury. To increase customer engagement, the platform has been designed as easy-to-use, friendly, simple, clear and quick. Moreover, the content strategy relies on a set of visual tools, which involve customer participation in this exclusive club by telling the story of each product. Besides these main variables, other elements contributing to the enhancement of customer experience include efficient customer service, quick delivery and tracking of the products and effective communication. Clients can subscribe to the newsletter containing promotional, product and fashion information. Furthermore, the platform is now connected to its dedicated Facebook and Instagram pages. Besides the visive contents arousing customers’ interest, these pages include both the address of the physical channel and the digital link to the online channel. Therefore, these connections encourage channel integration even though exclusively from a communicational perspective.

94

A. Cabigiosu

Siloe has a website page dedicated to the description of how they work.3 It receives design and sketches from the designers and then the product offices enter all the general features of the designed product in the company’s database. Then, Siloe purchases the materials and starts producing the first models. Once these models are approved, the planning office organizes the production process which can be outsourced to external laboratories or can be addressed by the internal factory. Then, prototypes coming from the production processes are shown to the stylist for approval. Once approved, the stylist proceeds by ordering samples for their sales campaign. As Siloe receives the orders, it produces and sells the samples to Jackie, which handles the distribution process and the sales campaign in Milan. Wholesalers and retailers belonging to European, American and Asian markets place their orders with Jackie which then communicates the exact quantities to be produced to Siloe. Once the required volume of bags has been manufactured, Siloe sells the products to Jackie. Waiting to be sent to several retailers through third distribution collaborators, such as DHL, the final products are warehoused in Jackie’s offline stock in Monte di Malo. Therefore, the overall production stock is stored in Jackie’s unique warehouse in Vicenza which includes both the offline and the online stocks. When final clients (BTC) place their orders through the virtual shop, the selected bags are picked up from the online stock and subjected to strict quality control checks as the organization aims guarantees topquality products. As the bill is arranged, the courier collects the orders and handles the last mile distribution by delivering the product to the customer. In addition, through the online platform, customers can monitor the status of the ordered bags until they are collected by DHL, which then provides its own the link for tracking the delivery. Furthermore, if the product does not meet the client’s expectation, they can return it for free relying on an easy to follow online procedure. Retailers and wholesalers order through the offline channel managed by Jackie’s ERP system which communicates with the program that manages BTC orders. In this manner, the ERP can manage data of 3 https://www.siloevicenza.it/how-we-work.html.

4 The Omnichannel Strategy in the Fashion Industry

95

both BTC and BTB and update Jackie’s available assortment as well as inventory data on the virtual shop in real time. Siloe also has a CRM system dedicated to customer data analysis such as personal data, orders and payments. In addition, to track online customer behaviors and acquire more detailed information, the company relies on instruments provided by Google, such as Google Analytics and cookies. For this reason, the company is developing a marketing automation system. From the human resource management perspective, in order to develop an efficient e-commerce platform, the company has created a dedicated team. One team member is exclusively dedicated the development the e-commerce platform. This individual controls the online inventory assortment, monitor the smooth functioning of the platform, defines commercial plans and strategies, manages data analysis and customer care, handles the creative design of the online platform by organizing photo shoots and creating contents. On the other hand, the IT manager will be responsible for the smooth functioning of the e-commerce platform from an informatics perspective, ensuring proper information exchange between the online software and the ERP. Furthermore, the web marketing operations are not handled internally but are outsourced to an external company which is engaged in a continuous dialogue with the internal division (Morini 2018). Today, the company’s primary goal is to enhance the online channel by enriching the product assortment with more and more exclusive articles including the bags collection of new emerging brands. In addition, since customers nowadays tend to be concentrated within the European boundaries, another significant goal is extending the online market to the USA and far east. Furthermore, considering the increasingly significant role of the final customer in the market, the organization involves customer into the offline experience by organizing special events in Jackie’s showroom. Besides the opportunity to directly purchase a limited part of the promoted collections, these events encourage customers to access the online channel where the entire assortment will be available. Therefore, these events drive channel integration: on the one hand, by receiving event invitation through online means such as mails and

96

A. Cabigiosu

newsletters, the customer flow is prompted to shift from the online to offline sphere; on the other hand, by participating in these special occasions, final users will be encouraged to enter Saffi25’s online community.

4.5

Conclusions

Future competition in the luxury fashion will be based on the phygital and omnichannel consumer experience, with the need of achieving a consistently high quality of interactions at all customer touchpoints, anyway and anytime, to create an engaging (virtual and physical) customer experience. New luxury customers are looking to interact with brands digitally using computers, tablets and smartphones before they even decide what to buy, where to buy it and how much they are willing to pay. Clients will increasingly require personalized experiences across all touchpoints, which will require firms to find technologies to identify consumers and to interact with them in real time. In this context, mobile devices, artificial intelligence and big data analytics are the technologies expected to dominate firms’ ability to effectively interact with clients. But firms will have to reinvent also stores using digital technologies such as augmented reality, beacons and digital displays that enable the identification of individual consumers, create personalized in-store shopping experiences, increase clients’ engagement and interaction. In the future, smartphones will be key in providing location-based information, identifying individual consumers in-store, speeding the checkout process, and empowering sales personnel. To date, scholars have empirically investigated the most diffused firms’ omnichannel strategies and the supporting technological solutions, but we still need studies that show how firms manage the integration of a high number of different touchpoints and that describe how these strategies change in time by adopting a processual view. Furthermore, successful omnichannel retail do not only require technologies but also competences and human resources to manage continuously changing functions, from logistics to sales activities. Integration of channels and clients requires firms to break down functional

4 The Omnichannel Strategy in the Fashion Industry

97

silos and augment the communication between them: inventories located in different touchpoints will be increasingly managed as a shared asset, and will facilitate integrated offers across channels and brands, thereby increasing firms’ efficiency and service levels. In this setting we need to understand how the management can lead this change by designing effective omnichannel strategies, identifying the required technologies and competences across multiple functions. Consequently, by shedding light on how and why omnichannel will influence business opportunities and operations, future studies can contribute to a deeper understanding of the process through which firms can approach an omnichannel strategy. In this respect, this chapter focused on Italy in which operate among the most popular luxury fashion firms and on how also small and medium firm can approach the omnichannel strategy. Despite the dominance of physical stores, omnichannel in Italy is rapidly increasing with firms developing their own online platforms and also engaging in multiple partnerships with specialized virtual stores selling commercial luxury brands. Results also suggest that innovative changes have been mainly developed by larger Italian organizations, while small and SMEs seem to be more reluctant. Despite the skepticism, the Siloe case well documents as also SMEs can slowly approach the omnichannel model. This is an incremental process which starts from the development of an online platform to sale products, communicate with clients and increase customer engagement. The platform is also integrated with the main social networks. In this setting ERP and CRM systems play a crucial role to increase functional integration and information sharing and also dedicated human resources are required.

98

A. Cabigiosu

References Aage, Tine, and Fiorenza Belussi. 2008. From fashion to design: Creative networks in industrial districts. Industry and Innovation 15 (5): 475–491. Arrigo, Elisa. 2015. The role of the flagship store location in luxury branding: An international exploratory study. International Journal of Retail & Distribution Management 43 (6): 518–537. Batat, Wided. 2019. Experiential setting design. In The new luxury experience, 113–139. Cham: Springer. Berman, Barry, and Shawn Thelen. 2018. Planning and implementing an effective omnichannel marketing program. International Journal of Retail & Distribution Management 46 (7): 598–614. Bettucci, Marco, Iolanda D’Amato, Angela Perego, and Elisa Pozzoli. 2015. Omnichannel Customer Management: Come integrare i processi fisici e digitali. SDA Bocconi School of Management, 1–54, available at https://www.soprasteria.it/docs/librariesprovider32/default-document-lib rary/reportimcm.pdf?sfvrsn=0. Accessed on 29 Aug 2019. Bradlow, Eric T., Gangwar Manish, Kopalle Praveen, and Voleti Sudhir. 2017. The role of big data and predictive analytics in retailing. Journal of Retailing 93 (1): 79–95. Cabigiosu, Anna. 2020. Innovation in knowledge intensive business services: The digital era. Abingdon, Oxon: Routledge Studies in the Economics of Innovation. Cao, Lanlan. 2019. Implementation of omnichannel strategy in the US retail: Evolutionary approach. In Exploring omnichannel retailing, 47–69. Cham: Springer. Cappellari, Romano. 2016. Marketing della moda e dei prodotti lifestyle. Carocci. Di Fatta, Davide, Dean Patton, and Giampaolo Viglia. 2018. The determinants of conversion rates in SME e-commerce websites. Journal of Retailing and Consumer Services 41 (2018): 161–168. Gao, Fei, and Xuanming Su. 2018. Omnichannel service operations with online and offline self-order technologies. Management Science 64 (8): 3595–3608. Gensler, Sonja, Scott A. Neslin, and Peter C. Verhoef. 2017. The showrooming phenomenon: It’s more than just about price. Journal of Interactive Marketing 38: 29–43.

4 The Omnichannel Strategy in the Fashion Industry

99

Hübner, Alexander, Heinrich Kuhn, and Johannes Wollenburg. 2016. Last mile fulfilment and distribution in omni-channel grocery retailing: A strategic planning framework. International Journal of Retail & Distribution Management 44 (3): 228–247. Hwangbo, Hyunwoo, Yang Sok Kim, and Kyung Jin Cha. 2017. Use of the smart store for persuasive marketing and immersive customer experiences: A case study of Korean apparel enterprise. Mobile Information Systems Article ID 4738340: 1–17. Jiang, Yuqing, Liping Liu, and Andrew Lim. 2020. Optimal pricing decisions for an omni-channel supply chain with retail service. International Transactions in Operational Research 27: 2927–2948. Johansson, Tobias, and Johan Kask. 2017. Configurations of business strategy and marketing channels for e-commerce and traditional retail formats: A qualitative comparison analysis (QCA) in sporting goods retailing. Journal of Retailing and Consumer Services 34: 326–333. Kang, Ju-Young M. 2018. Showrooming, webrooming, and user-generated content creation in the omnichannel era. Journal of Internet Commerce 17 (2): 145–169. Kang, Ju-Young M. 2019. What drives omnichannel shopping behaviors? Journal of Fashion Marketing and Management: An International Journal 23 (2): 224–238. Kembro, Joakim Hans, Andreas Norrman, and Ebba Eriksson. 2018. Adapting warehouse operations and design to omni-channel logistics. International Journal of Physical Distribution & Logistics Management 48 (9): 890–912. Mirsch, Tobias, Christiane Lehrer, and Reinhard Jung. 2016. Channel integration towards omnichannel management: A literature review. 2016, 20th Pacific Asia Conference on Information Systems (PACIS), June 27–July 1 2016, Chiayi, Taiwan. Montreuil, Benoit. 2016. Omnichannel business-to-consumer logistics and supply chains: Towards hyperconnected networks and facilities, 14th IMHRC Proceedings, 12–16 June 2016, Karlsruhe, Germany. Moravcikova, Dominika, and Jana Kliestikova. 2017. Brand building with using phygital marketing communication. Journal of Economics, Business and Management 5 (3): 148–153. Morini, Francesca. 2018. The development of omnichannel strategy in Italian SMEs: The case of fashion industry. BS thesis, Università Ca’Foscari Venezia.

100

A. Cabigiosu

Mosquera, Ana, Cristina Olarte Pascual, and Emma Juaneda Ayensa. 2017. Understanding the customer experience in the age of omni-channel shopping. Journal Icono 14/15 (2): 166–188. National Digital Observatory. 2018. Le innovazioni digitali nel back-end e nel front-end tra i medio-piccoli retailer italiani: adozione e investimento. Report available at https://www.osservatori.net/it_it/pubblicazioni/inn ovazioni-digitali-medio-piccoli-retailer-italiani-adozione-e-investimento. Accessed on 28 Aug 2019. Nisar, Tahir M., and Guru Prabhakar. 2017. What factors determine esatisfaction and consumer spending in e-commerce retailing? Journal of Retailing and Consumer Services 39: 135–144. Rapp, Adam, et al. 2015. Perceived customer showrooming behavior and the effect on retail salesperson self-efficacy and performance. Journal of Retailing 91 (2): 358–369. Roberts, Matthew, and Benjamin Hazen. 2016. Big data for omni-channel supply chain management: The need for greater focus on people and process. International Journal of Automation and Logistics 2 (4): 271–278. Rusanen, Olli. 2019. Crafting an omnichannel strategy: Identifying sources of competitive advantage and implementation barriers. In Exploring omnichannel retailing, 11–46. Cham: Springer. Taube, Julia, and Gary Warnaby. 2017. How brand interaction in pop-up shops influences consumers’ perceptions of luxury fashion retailers. Journal of Fashion Marketing and Management: An International Journal 21 (3): 385–399. Testoni, Luca, 2018. Il consumatore al centro moltiplica i DRIVER. Il lusso è già orientato ai nuovi canali e ai millennial. Pambianco Magazine, dicembre, pp. 19–23. Von Briel, Frederik. 2018. The future of omnichannel retail: A four-stage Delphi study. Technological Forecasting and Social Change 132: 217–229. Wiener, Martin, Nadja Hoßbach, and Carol Saunders. 2018. Omnichannel businesses in the publishing and retailing industries: Synergies and tensions between coexisting online and offline business models. Decision Support Systems 109: 15–26. Willems, Kim, Annelien Smolders, Malaika Brengman, Kris Luyten, and Johannes Schöning. 2017. The path-to-purchase is paved with digital

4 The Omnichannel Strategy in the Fashion Industry

101

opportunities: An inventory of shopper-oriented retail technologies. Technological Forecasting and Social Change 124: 228–242. Zanzi, Caterina, 2018. Vente-privee vuole l’ITALIA ai livelli europei. Sul web, ma nel segno Omnichannel. Pambianco Magazine, dicembre, pp. 32–33.

5 “See Now Buy Now”

5.1

The “See Now Buy Now” Business Model

The term “See now, buy now” (SNBN) refers to the opportunity to buy garments and accessories presented only a few hours after a fashion show. The items seen on the catwalks of the fashion week are immediately available online, in boutiques or in select stores (Takamitsu and Junior 2017). As discussed in this chapter, SNBN can be considered a business model in that it implies a new value proposition, new resources and assets to satisfy the urgency of Millennials’ need for newness. Furthermore, as a new way of satisfying clients, it also poses many challenges. In this respect, firms are implementing the SNBN model diversely by applying the new model to the entire collection or only to a part of the collection (usually a few items) made available for purchase immediately after the show. In both cases, the traditional timing of collections’ development is significantly affected: while traditionally, collections reach boutiques after six months after their presentation and after receiving clients’ orders, with SNBN, firms have to complete the entire production process six months in advance and on the basis of a forecasted demand. Among the Maisons that have experimented this model are © The Author(s) 2020 A. Cabigiosu, Digitalization in the Luxury Fashion Industry, Palgrave Advances in Luxury, https://doi.org/10.1007/978-3-030-48810-9_5

103

104

A. Cabigiosu

Louis Vuitton, Gucci, Chanel, Yves Saint Laurent, Max Mara, Tods and many others. American and English brands such as Alexander Wang and Diane Von Furstenberg traditionally attribute great significance to the market and the demand trends and are among the greatest supporters of SNBN. On the contrary, the Italians and the French tend to protect quality and craftsmanship more and seem to be more skeptical about SNBN. We mainly observe Maisons introducing single capsules available with the SNBN formula such as Ferretti and Moschino. The rationale for this new trend is rooted in the development of the “fast fashion” sector and the “digital consumer” that have led the industry to rethink the current fashion system. Low-cost chains have acquired the ability to quickly translate emerging trends seen on the catwalks into collections readily available in their stores. Fast fashion retailers have acquired the ability to industrialize in a very short period of time (a few weeks) a fashion product inspired by trends introduced by the luxury players in the sector at a lower price (and quality). Luxury brands are hence forced to react and protect the original content of their designs from copycats by becoming as fast as their cheaper competitors in producing their items. In addition, today’s lead consumers that is Millennials are more closely connected to luxury firms owing to new technologies and ask for a more involvement in fashion shows. Furthermore, once they have identified a desired item, they are not willing to wait. Social media platforms implement direct purchasing tools thus easing purchase and access to luxury goods as well as give a provide significant visibility of new products that become obsolete more quickly, thus generating a loop of an ever-increasing demand of newness. Millennials, constantly looking for novelty and immediate satisfaction buy and “wear” their garments on social media and get bored easily such that they do not find themselves in tune with the rhythms that have traditionally ruled luxury fashion products’ presentation, production and distribution (Cachon and Swinney 2011; Amatulli et al. 2016). The SNBN hence offers the opportunity to reduce the distance between Millennials and Maisons to satisfy the former’s search for newness. SNBN is attracting the curiosity of the insiders in the fashion

5 “See Now Buy Now”

105

industry and is increasing the attention toward and visibility of fashion shows (Corbellini 2016; Mendes 2017). Fashion shows are traditionally commercial events aimed at presenting new collections to buyers and the press from which they collect feedback on the creations and receive orders from buyers. Each fashion week presents the collections that will be on sale the following year. In September, for example, the garments for the spring/summer of the following year are shown which will be made available in stores about six months later. This is the time taken for the presentation, production and distribution of a ready-to-wear collection. However, nowadays, fashion shows are conceived as real shows and marketing events involving many celebrities, testimonials and influencers who increase the visibility of the events on the media and induce the public to desire and buy the new collection. Therefore, interest in the collection is captured during the fashion week. In September 2016, the day after the New York fashion show was the Tom Ford’s best sales day of the year. In this case, the fact that the collection was available immediately after the show along with the visual and emotional impact of watching the entire collection on the catwalk impressed customers, motivating in them an urgency of purchase. The same result in the same month was obtained by Burberry at the London Fashion Week. The new collection resulted in “instant sales increase” for the brand and the web sale of some garments were been sold out (Abnett 2016). Eventually, Rebecca Minkoff had better results, and the weekend after the New York fashion show saw a double-digit surge in sales, both online and in boutiques, some of which had hosted livestreaming events during the show. For brands that had no increase in sales, there was an increase in customer interest. Some online sites showed a leap in the search for these brands. On the day of the show, Lyst.com recorded a 400% increase in Burberry research compared to the previous week’s average (Uomini e Business 2016). Even if consumers do not buy immediately, they often take note of the items to buy later. It is crucial that brands keep track of customer interest in each product in a collection after its launch by monitoring how many times an image has been viewed and downloaded from the

106

A. Cabigiosu

brand’s digital showroom, tracking the number of samples requested by journalists and influencers and taking note of all quotations in social media and the press. Alexander Wang launched his collection co-branded with Adidas, using SNBN and the limited-edition formula and had a huge success. A limited availability is essential to create a feeling of need and exclusivity. The SNBN movement is directly linked to the Millennials’ desire to see a trend and to immediately make it their own. Hence, the SNBN is an approach in line with the Maison need to nurture Millennials and media interest in their collections; it protects the original content of their design and is also an approach that can increase the number of items sold at full price and can impact profit margins. In fact, the SNBN model increases the shelf life of products at full price in that they arrive in stores long before the initial sales. Moreover, products are available when they have peak attention from media, ensuring that the customer finds what they want at the right time immediately after the show. Furthermore, with this strategy, luxury firms keep the perception of novelty alive in relation to the article, allowing a traditionally weighted sale to turn into an impulse sale owing to the idea that there might be many sales following the success of the show and therefore the desired garments could be out of stock. The fact that the number of pieces per garment is sometimes limited also reinforces this idea. Finally, if clothes are immediately available in luxury stores, fast fashion firms no more have opportunity to duplicate new styles from catwalks and immediately sell them in stores for a first mover/creative competitive advantage.

5.2

The Fast Fashion Luxury: Multiple Managerial Threats

The adoption of the SNBN, however, raises some problems that span from damages to creativity to the pressure on the supply chain (Bassan 2018; Brun et al. 2016).

5 “See Now Buy Now”

107

5.2.1 Creativity Under Pressure Fast fashion is constantly offering new garments, thus fueling the consumer’s desire for novelty. This has led to luxury brands introducing new smaller collections, such as pre-fall or cruise, to consistently offer new products. SNBN further increases the pressure on designers who get less time to develop an ever-increasing number of items. Moreover, with SNBN, designers and creative directors are judged on revenues immediately after the show and the stress on them can lead to depletion of creativity and a consequent adaptation to the customer and his demand. To avoid the risk of failure, designers could rely on an imitative strategy and be aligned with what is required by the market: firms might either follow competitors that are perceived as having superior information about future market trajectories or might imitate others to maintain competitive parity (Lieberman and Asaba 2006). However, while brands need to be in close contact with consumers, they cannot be too consumer-oriented at the expense of their originality, creativity and capability to push innovations to the market. Fashion needs both speed and originality and designers should both understand clients’ needs and create new needs and trends (Sherman 2016). The numerous resignations by designers between 2015 and 2016 were due to the increasing speed of the market and the difficulty in satisfying its requests, the exposure on the web and the historical clash between market logic and creativity. When Raf Simons resigned as the creative director for Dior in 2015, he stated, “This world is getting faster and faster. Every season I see so many factors evolve at such a speed that I think some creatives, including myself, are no longer willing to undergo this. I don’t want to” (Choundry 2016). The designer also said, “The problem is that with just one design team and six collections, there’s no time to think and I don’t want to make collections without thinking” (Wingfield 2016). Managing Director Alber Elbaz was dismissed after 14 years in Lavin. The designer said “We designers started out as ‘couturiers’ with dreams, intuitions and feelings. […] Then we became creative directors, so we had to create but also direct. Now we’ve become image creators and we also have to make sure that a dress looks good in photos. The main rule is

108

A. Cabigiosu

that the screen must scream: the real novelty is the noise […] I prefer to whisper. I think the whisper goes deep and lasts longer” (Matzeu 2015). On July 31, 2015, Balenciaga announced that it would not confirm Alexander Wang for the following seasons both because he wanted to devote his full time to his brand and also because he had not managed to achieve the results expected by the fashion house within the set time frame. In 2015, many other creative directors were substituted from Burberry, Gucci, Yves Saint, Celine and so on. The New York Times defines this series of layoffs as an “insidious and potentially destructive” trend in which designers are “rented” and abandoned after the first negative signs, sanctioning cold contractual agreements that have a negative impact on creativity and on the companies themselves (Friedman 2015). Considering the relationship between speed and quality in particular, many actors of the fashion industry claim that a lead time shorter than the traditional 6/8 months would inevitably compromise the creativity and quality of production. More time is required to produce a more complex product and the differences between a basic product and a more sophisticated one can be considerable in terms of the number of operations (phases in which the production is divided) and, consequently, longer production time. However, the actual production time does not count for more than 20/25% of the lead time (Baldinelli et al. 2013). It is the coordination of the various phases that takes the most time. The textile chain is made up of a significantly high number of suppliers each of whom specialize in separate phases. The more numerous and distant the links in the chain, the more the coordination problems. Nowadays, the longest waiting time for a fashion company is not the real time of production and not even the creative process but the speed of response of the upstream suppliers. In this respect, industrial clusters have traditionally compensated for these problems: geographical proximity between firms specialized in different production phases within the same industry increases the entire value chain responsiveness, for instance, in the Florentine district of leather or in the Riviera del Brenta district of shoes. Proximity enables firms to significantly reduce lead times and costs (Brun et al. 2008).

5 “See Now Buy Now”

109

Nevertheless, in clothing, much of the production of yarns and fabrics has migrated to Asian countries that offer lower production costs. This has allowed considerable savings but has also affected response times. This relocation took place between the 1990s and 2000 when fashion events were still based on two collections per year. To understand the extent of this phenomenon, it is sufficient to remember that if between the launch on the catwalks and the sales in store we need seven months on average, the supply of fabrics can take up to two months. Consequently, in order to reduce delivery time, the selection of partners and the management of the supply chain that concerns fabrics and semifinished products is crucial. In this respect, fast fashion industry docet. For example, Zara relies on Spanish suppliers for the production of most fashionable items that have a shorter life cycle and should be renewed most often, while it has Asian suppliers for the basic and continuous collections that can be produced forecasting the demand in bigger quantities and shipped by sea. The coordination time between the elements of the chain could also be improved if the brands were to adopt a more active practice toward their suppliers, establishing a customer-supplier relationship in which information and strategies are shared to improve the entire coordination process. Some companies have already started doing so and the results are visible (Hilletofth and Hilmola 2008). Reshoring, i.e. return to local production after years of relocation, in contrast with offshoring, is also a recent trend. Values such as made-to-measure products, high quality and immediate delivery which require “in-house” processing with extreme flexibility and minimal lots become values that the consumer (increasingly a consumer who interacts with production) is not willing to give up. For example, Burberry has realigned its business toward a customer-centric model and has restored its corporate heritage and core brand values. These changes triggered the need to realign the supply chain strategy as well by bringing back manufacturing activities in the UK to support brand repositioning on heritage products. Proximity and increased control over the supply chain both guaranteed higher quality and responsiveness that allowed Burberry to pioneer new SNBN business model (Robinson and Hsieh 2016).

110

A. Cabigiosu

SNBN requires greater coordination of suppliers, particularly those at the top of the chain which is made possible by geographical proximity, higher levels of vertical integration and coordination, the use of advanced information systems and finally, owing to ad hoc competences, commitment of creative directors. Changing the timing and offering fewer products but more frequently could help make the production more linear and reduce the downtime. If the company has a less cyclical production model, it can direct the resources that were previously earmarked to compensate for the downtime (for example, having to pay its employees for periods of inactivity) for innovations within the company itself.

5.2.2 Order and Supply Chain Management The new logic of SNBN, on the one hand, meets the needs of an increasingly impatient consumer driven by the emotional component in the purchasing process while also representing a response to the competitive pressures of fast fashion retailers. However, on the other hand, this new logic is based on an important aspect: the complete reinvention of the current supply chain and the development model of the collections. Traditionally, high-end brands have followed the so-called make to order model which involves the creation of a sample collection presented at a fashion week and in showrooms, following which orders are collected from customers (department stores, retailers, etc.) along with feedback from the media and retailers to proceed to the subsequent large-scale production of the garments that have been more successful. Products with less approval will be eliminated or produced in smaller quantities and distributed in single-brand stores. The merchandiser planner bases orders for continuous garments on historical sales data and for trending garments according to the outcome of the show. Often, companies choose to produce some lines, that is the “best sellers”, in advance. This logic allows the reduction of risk owing to the production ‘on sale’ but requires a particularly long time, up to nine months, to market

5 “See Now Buy Now”

111

because the garments need time to be made given the considerable knowhow and craftmanship required. Design activities on average begin 9– 12 months before the product is available for the consumer and the first production launch takes place 7–8 months before the product is available for sale (Brun et al. 2008). In this scenario, the SNBN drastically changes the aforementioned phases and timing. Making a collection available the day after the show requires that the concept definition of the collection along with its design and prototyping are not started six months before the presentation but several months before. In addition, the photo shoot also needs to take place about three months before the show (and not at the same time) to allow the sales campaign to begin about two months before the fashion week (instead of after) followed by the production of the collection one month in advance of the presentation event (instead of in the following months). In this way, the collection becomes available at the point of sale the day after the show: therefore, it becomes crucial to perfectly synchronize the entire supply chain between production, communication and marketing. When Burberry presented its first SNBN collection, it was already on the pages of Vogue magazine. The SNBN could be optimal for brands that own factories and have control over every stage of the supply chain process. However, on the other hand, smaller brands with limited supply chain control might encounter difficulties with organizing their development. Furthermore, SNBN can lead to financial and stock problems which can be more easily managed by bigger and established brands with more financial resources and which can dispose of any excess inventory in single-brand direct stores and outlets. On the contrary, smaller and emerging brands which base their production and sales on wholesale orders risk an unsustainable overstocking because they cannot relocate products to proprietary stores. Moreover, for younger brands, it is more difficult to predict the demand for a new collection. For this reason, we expect and observe that the SNBN will be hardly adopted for entire collections while it is reasonable to expect a “hybrid model” that combines the traditional make-to-order approach model with the new SNBN focused only on some capsules, iconic products or mini-collections.

112

A. Cabigiosu

5.2.3 Desire Apart from supply chain issues, some argue that SNBN is questionable in that the traditional delay between show and shop is fundamental for long-term commercial gains as it nurtures desire (Belk et al. 2003). SNBN is in line with theories suggesting that enjoyment and wanting typically decline as one repeatedly consumes the same thing and here we find the contribution of SNBN that increases the availability of new garments that feed the desire for substituting older clothes. The concept of satiation characterizes many fields, including economics (diminishing marginal utility), advertising (wear out), psychology (adaptation, habituation) and well-being (hedonic treadmill) (Sevilla et al. 2019). Hence, repeated exposure to the same offering soon reduces products’ desirability, and this is why Maisons increase the number of collections readily available in stores. However, the theory that if one has already used or seen a product several times they get bored is counterbalanced by a part of marketing psychology suggesting that messages are more effective when repeated and that recurring exposure to a stimulus over time brings greater pleasure. The term “effective frequency” describes the number of times a consumer must be exposed to a message before obtaining the desired response (purchase of the product) and states that there must be a certain concentration of stimuli to achieve this result (Broussard 2000). In fashion, the stimulus indeed comes from visual and social signals. These could come from social media, the press or approval by members of the social group. While theories of satiation mainly concern the use or possession of a product, the communication theories involve the upfront nurturing of that desire, such as the Apple launches of new products that are first presented, instilling desire and are finally available in stores. In this context SNBN eliminates the role of waiting that nurtures desire. Overall, we still lack studies aiming at understanding whether time in between fashion shows and product availability negatively affects the desirability of luxury products due to satiation effects deriving from fast fashion copycats and media consumption or whether a positive effect is generated by longer and frequent exposure to product promotion.

5 “See Now Buy Now”

5.3

113

Comparing the “See Now Buy Now” in Burberry, Ralph Lauren and Tom Ford

The following sections analyze the Burberry, Ralph Lauren and Tom Ford cases; these brands are among the first which adopted the SNBN model and the only Maisons that experimented with the model for their entire collection. After a general overview of the Maisons considered, the subsequent paragraphs will analyze how they implemented the SNBN, the primary results obtained and recent evolutions. Information about the collections was obtained by systematically monitoring official websites and major fashion magazines such as Business of Fashion, Vogue, Fashion Network, Pambianconews, Fashionista, MarketLine and Stylesage from 2015 to 2019.

5.3.1 Burberry Burberry Group PLC is a British fashion company engaged in the design and marketing of luxury clothing and accessories for men, women and children. The brand was founded in 1856 by Thomas Burberry near London. The brand became famous in 1879 for inventing the gabardine, a durable, waterproof, breathable and comfortable fabric. During the First World War, Burberry created the trench coat for soldiers that later became famous among civilians as well. The company was definitively consecrated in the fashion scene with the introduction, during the 20’s, of the camel, white, red and black check pattern that distinguishes the lining of the coats of the brand and that became the representative motif of the English fashion house. In the 1970s and 1980s, the company grew significantly in terms of turnover and profits. Rose Marie Bravo was appointed CEO in 1977 and led the brand to an ever-increasing success. In 2002, the company was listed on the London Stock Exchange. In 2006, there was a turning point due to the difficulties of Burberry brand. The Maison passed into the hands of Angela Ahrendts who became the new managing director and raised the brand. Today, the director and president is Marco Gobetti. In

114

A. Cabigiosu

2018, Riccardo Tisci arrived from Givenchy and was appointed as Chief Creative Officer.1 The brand’s modus operandi involves constant control over the production process of the garments from the creation of the idea to the distribution. The production takes place in the two facilities owned in the United Kingdom or is entrusted to an external network of suppliers based primarily in Europe. The use of latter has been increasingly reduced to increase the control over the supply chain. Burberry owns single-brand boutiques and other types of outlets. The brand is also present online where items can be purchased on the “burberry.com” or through other online retailers such as Myteresa or Neta-Porter. Burberry is one of the most popular luxury brands on social media owing to the fact that it has brand presence in all social platforms. Burberry is hence investing to improve clients’ omnichannel experience. For example, on the Burberry app, customers can communicate directly with sales associates. This channel of communication is also used to offer early access to new products (Straker and Wrigley 2016). Finally, the company has invested in a cutting-edge approach in the field of artificial intelligence in digital platforms. For 2018/2019 fiscal year, Burberry had a revenue of £2.7 billion showing an increase of 2% at constant exchange rates, excluding beauty wholesale and operating profit for £437 million showing an increase of 7%.2

5.3.2 SNBN in Burberry In February 2016, Burberry unveiled its plans for the SNBN format: from the September 2016 fashion week, products from the collections would be made available for purchase immediately after the show. Burberry’s shows feature products from all four seasons; they are designed for the global audience and embrace a format that sees men’s and women’s collections showcasing together. The new model adopted by the 1 https://www.burberryplc.com/en/company/history.html. 2 Burberry

(2018/2019) FY annual report available at https://www.burberryplc.com/en/investors/ results-reports.html.

5 “See Now Buy Now”

115

brand involves a reduction in the number of annual fashion shows from four (two for men and two for women) to two that are called “February” and “September” instead of spring/summer and fall/winter, which also involve non-western markets with different climate characteristics. The exclusively male appointments for January and June have been cancelled. The new SNBN format was used on 16 September 2016, 17 February 2017 and September 2017. During the September 2016 fashion show in London, Burberry presented 83 men’s and women’s looks for a total of over 250 different garments which were available instantly, as soon as the show ended, in Burberry stores or online with shipments for over one hundred countries around the world. The Burberry fashion show was broadcasted live for the first time as well as on Facebook Live (Degli Innocenti 2016). To reach this goal, Burberry anticipated its internal processes by several months (including design, development and production) to accommodate the new format in which the collections will be “seasonless” and the shows will be described simply as “September” and “February”. Burberry would start the design of the Spring/Summer collection in May to be presented on the catwalk in September. However, in 2016, the design team started working in January to have the collections ready to buy in September. During the design of the collection, Burberry communicated production deadlines and delivery times with its supply chain partners. Bailey, Burberry’s Chief Creative Officer and then CEO explained that traditionally the show is projected, the collections are subsequently shown on the catwalk and then the supply chain starts working on the basis of the orders collected. With the SNBN model, the design of collections, the show as well as the relationships with suppliers are activated and managed in parallel (Hoang 2016). Samples and prototypes of each model to be presented to buyers and the trade press need to be ready three months before the show, in June and July, so that they can be used in advertising campaigns and buyers and the press can plan which items will sell and be advertised. Generally, buyers and the press wait until the show to see the new collection and then visit the showrooms to place orders and request samples for photo shoots. However, for this show, Burberry established a limited showroom at its London office for major international wholesale and buyers so they could view the collection

116

A. Cabigiosu

in July. The top looks in the collection were designed on mannequins which were then displayed on a rotating carousel. Accessories were also presented as well as inspirational cards with images, photographs and fabric samples to convey collection’s themes in the clearest possible sense. The previews were made with the utmost confidentiality, following the signing of a non-disclosure agreement. Once the wholesale buyers had placed orders, Burberry’s production teams worked to fulfil orders for department stores and other retailers as well as for their own single-brand stores and e-commerce site. Orders were then shipped worldwide so that they could be ready in distribution warehouses immediately after the show. Burberry released videos and campaign images before the show on social networks including Facebook, Twitter and Instagram. The entire campaign was officially launched after the show. The advertising images had also appeared in the issues of the prominent magazines in the world. The company announced in a statement that it would broadcast its show via Facebook Live for fans to watch it live. Live customer service was also available on Facebook Messenger for those who wanted to buy from the collection. In addition, the company partnered with Snapchat, WeChat and Kakao. The new collection was available for purchase immediately after the show ended at the company’s flagship stores, on its website and at wholesale partners including Barneys New York, Colette and DFS Group. The design process for the February show began immediately afterwards. Burberry reported that the Runway Bridle bag was its third best-selling style worldwide after its introduction in the 2016 September Buy Now collection. The bag became very popular among celebrities and “fashionistas” and had sold out at the price of $1295. However, of the 99 Fall 2016 fashion items launched on the Burberry website, only 23 items were sold out all at full price. In addition, this number significantly decreased in spring 2017 when 148 items were launched but only one item was sold out at full price (Martins 2017). In the SNBN model, inventory levels are higher than the industry average. Analyzing the September 2016 interim balance, it is evident that inventory levels increased by 9.8% over the same period in 2015. Similarly, after the spring/summer 2017 collection, Thomson Reuters’

5 “See Now Buy Now”

117

estimates suggested that inventory levels would increase again by 7.6% compared to a year earlier and warned about the performance achieved with respect to the operating margins which fell below the industry average in between 2016 and 2017 (Martins 2017; Burberry annual report 2018). When Riccardo Tisci arrived in 2018, in a few months, he not only changed the look and logo of Burberry but also reviewed the SNBN strategy. In 2018, Tisci continued with SNBN only for a capsule edition of the men’s and women’s collection seen on the catwalk which was put on sale a few minutes after the show ended both in the Burberry store on Regent Street and online on Instagram. In 2019, instead of making a capsule available instantly after the show, the designer preferred to keep customers waiting, selling only one item per month. The new Title bag, for example, a black shoulder bag with a triple snap closure, could be purchased via Instagram for 24 hours and then will be launched in summer in a range of colors and styles. Available on social platforms such as Instagram, the monthly drop of limited-edition products have proved to be extremely popular and has attracted new and younger customers to the brand. Furthermore, customers can buy products directly from the Burberry Instagram shop for a more seamless shopping experience.

5.3.2.1 Ralph Lauren Ralph Lauren Corporation is a US company active in the design, marketing and distribution of clothing, home furnishings, accessories and perfumes. It is a holding company founded in 1967 by American designer Ralph Lauren and is based in New York. The first products he made were wide and colorful ties and owing to the initial earnings, he began to create other products, such as his famous polo shirts that have contributed significantly to his fame in the world. In 1977, the Ralph Lauren Corporation was listed on the stock exchange.3 Today Ralph Lauren is still controlled by the Lauren family which owns the brands Ralph Lauren, Polo Ralph Lauren, Lauren Ralph Lauren, Chaps, and 3 https://www.ralphlauren.com/rl-50-about-ralph-feat?webcat=world-of-rl&orignalCatID=world-

of-rl&altrurlID=world-of-rl.

118

A. Cabigiosu

Club Monaco among others and has more than 10,000 employees. In the 2019 fiscal year, the company reported a revenue of $6.31 billion.4 Ralph Lauren has three distribution channels: retail, wholesale and licensing. The company launched its website and online store in 2000. In addition to physical stores, Ralph Lauren sells products online in North America and Europe through proprietary e-commerce sites. In Asia they rely on e-commerce sites of various third-party digital partners. E-commerce operations are part of a wider plan of investment in the integrated omnichannel strategy used to operate the overall retail business in which e-commerce operations are interdependent with proprietary physical stores. Ralph Lauren is also one of the leading brands in innovation and the digital field. The company is engaged in responding to ever-changing consumer demands and shopping preferences, including the increasing shift to digital brand engagement, social media communication and online shopping. Technology is applied to both garments and stores. In 2015, Lauren launched the Polo Tech jersey which is equipped with sensors, interfaces directly with a phone app and monitors the user’s state of health and stress in real time. Certain proprietary shops have intelligent dressing rooms equipped with RFID technology, and highly interactive, supporting the consumer’s choice of clothes. The windows are also interactive and help consumers interact with the brand even outside the store. A connected mobile app also allows users to purchase products directly from their mobile device. Ralph Lauren has opted for the decentralization of the production/supply chain and, to reduce delivery times, has invested in the technology necessary to connect with the supply chain in real time. The omnichannel strategy orders are satisfied from both stores and warehouses.

4 http://investor.ralphlauren.com/phoenix.zhtml?c=65933&p=irol-earningsnews&nyo=0.

Accessed 12.06.2019.

5 “See Now Buy Now”

119

5.3.3 SNBN in Ralph Lauren Ralph Lauren launched the SNBN model in 2016. The autumn/winter 2016 SNBN collection had 45 looks and was unveiled in two fashion shows to 200 people including press, buyers and customers at the flagship store at 888 Madison Avenue closed to traffic for the occasion. The collection was immediately available at the Madison Avenue store in New York and at other flagship stores around the world. Ralph Lauren’s second SNBN show at New York Fashion Week was held in their uptown store in February 2017: the show presented sober but glamorous clothes that would accompany Lauren’s clients from vacation to work. Guests Allison Williams, Emmy Rossum, Jessica Biel, Camilla Belle and Bella Heathcote all sat in the front row with dresses in shades of black and ivory. The new supermodels on the runway were Bella Hadid, Kendall Jenner and Taylor Hill. The final look of Hadid, a sporty apricot satin poncho, was one of the most shared moments of the show on Instagram. Ralph Lauren’s third SNBN show was held in Bedford, New York, on Tuesday, September 12, 2017. Only 300 guests, including Jessica Chastain, Armie Hammer, Katie Holmes and Diane Keaton, were invited to the event which took place in Lauren’s vintage car garage. Everyone was asked to wear formal black and white clothing for a private dinner after the event. For those who were not invited, and in line with the company’s new focus on attracting Millennials, the brand established a comprehensive content implementation plan for the social media that preceded the event. Male and female models (Lauren combined the two genres for the first time) including big names like Bella and Anwar Hadid and Kendall Jenner, paraded around a small selection of rare cars on a catwalk. Anyone who wanted could buy right away on Ralphlauren.com, in global single-brand stores and through retail partners including Saks Fifth Avenue, Moda Operandi, Neiman Marcus and Bergdorf Goodman.5 Ralph Lauren reported that the SNBN model is performing well. However, the numbers seem more dubious. In 2016, 70 fashion items were launched on Ralph Lauren’s website, 11 of which were sold at full 5 https://fashionista.com/2017/09/ralph-lauren-september-2017-collection.

Accessed 12.06.2019.

120

A. Cabigiosu

price. In spring 2017, the number dropped considerably when of 77 items launched, only one item was sold out at full price (Martins 2017). Therefore, at least from what these results show, the model seems to have primarily increased sales for the days following the shows but not the overall sales at full price. In June 2016, Ralph Lauren announced his Way Forward plan to obtain inventory improvements and increase margins. The new strategy is to reduce delays and shorten lead times at all levels of the supply chain, improve sourcing and implement a multi-channel development strategy. After a decrease in total revenue from 2015 (7.62 billion$) to 2018 (8.18 billion$), the 2019 ($6.31 billion) signs the first 2% of growth and suggests the beginning of a new trend.6 In 2019, Ralph Lauren was the unique brand that still relied on the SNBN model for the entire collection. The company seems to be aware that luxury fashion has historically been subject to rapidly changing fashion trends and consumer preferences, and success essentially depends on the ability to anticipate and define fashion products and trends and quickly react to changing consumer demands. Consumers’ preferences cannot be predicted with certainty and are subject to rapid change. This issue is accrued by the increasing use of digital and social media and the speed at which information, products and opinions are shared across the globe. Any failure to anticipate fashion trends could generate unsold inventory or missed opportunities. Conversely, if luxury brands underestimate consumer demand or if manufacturers fail to meet their deadlines, they might experience inventory shortages. Any of these outcomes could have adverse effects on the brands’ business and performance. In this context, SNBN allows Ralph Lauren to be responsive to clients’ needs but to perform effectively overall, implementation of ad hoc initiatives is required to optimize inventory levels and improve the efficiency and responsiveness of the supply chain. Particularly, this company has thus invested in shortened lead times for the design, sourcing and production of certain of product lines.7 6 https://www.statista.com/statistics/263880/polo-ralph-laurens-revenue-worldwide/.

Accessed 12.06.2019. 7 http://www.annualreports.com/HostedData/AnnualReportArchive/p/NYSE_RL_2017.pdf. Accessed 12.06.2019.

5 “See Now Buy Now”

121

5.3.4 Tom Ford The Tom Ford brand belongs to the eponymous American designer who became popular as the creative director of Gucci. He is the majority shareholder of Tom Ford International, holding 63.75% of the shares. He is engaged in the development and production of men’s and women’s clothing, perfumes, eyewear, footwear, cosmetics and beauty products, accessories and jewelry. The Tom Ford brand concept began in 2004 with the launch of a cosmetics line followed by a collection of eyewear. However, it was only in 2006 that Ford, in collaboration with Ermenegildo Zegna, launched a line of luxury menswear that included clothes, accessories and shoes. The brand’s success was such that a year later, the brand opened a flagship store inspired by its London counterpart on Madison Avenue in New York.8 The brand closed 2017 with retail revenues of about $2 billion even if it is a figure that considers all the branches of business.9 In 2019, Tom Ford was appointed as chairman of the Council of Fashion Designers of America and reduced the length of the New York Fashion Week from seven to five days to ensure higher presence of fashion insiders. Regarding experience in the digital field, Tom Ford recently opened its first independent stores with several and innovative technologies. There is a digital scenting table where customers can try out the fragrances. Inside the store, customers can take advantage of the augmented reality technology through which they can virtually try out different shades of lipstick. Digital makeup mirrors instantly record makeup tutorials, with large LED screens and bright halos illuminate the space. The space has a size of 130 square meters and also has dedicated rooms designed specifically for extra services such as grooming, makeup and tutorials.

8 https://www.tomford.com/about. 9 https://www.pambianconews.com/2017/09/06/tom-ford-verso-i-2-mld-di-nel-2017-220415/.

122

A. Cabigiosu

5.3.5 SNBN in Tom Ford Tom Ford cancelled the appointment with the catwalks in February 2016, postponing the presentation of the autumn/winter 2016 collection to September and presenting the men’s and women’s garments together, subsequently bringing them directly to the market. Tom Ford claimed that the fashion show calendars and the entire fashion system to which we are accustomed is now anachronistic because they pique the interest of insiders and media too early before the arrival of the collection in the store. Fashion shows should be closer to the products’ distribution to have the most significant effects on sales. Joshua Schulman, president of Bergdorf Goodman and Neiman Marcus Group International stores, emphasized that they had their best day of the year with Tom Ford immediately after the show in New York. Typically, these sales would have been spread over several weeks as deliveries arrived in a piecemeal manner. The immediacy of being able to buy right after the show combined with the impact of seeing the entire collection at once gave customers the urgency to buy right away (Abnett 2016). However, after the initial successes of adopting SNBN, the designer took a step back10 from it. This strategy seemed to challenge the distribution of garments in the stores. Tom Ford explained that SNBN does not yet allow optimization of the timing of collections availability and distribution. In fact, products are ready in July/August while collections are presented during the fashion weeks of September, thus leading to the loss of precious weeks of in-store distribution and increasing inventory costs. He stated that while instant fashion is likely the way of the future, it does not seem to work currently because “The industry isn’t ready from a basic scheduling standpoint” (Foley 2017). Tom Ford discovered that many of his store distributors, although initially excited by the SNBN perspective, were frustrated that the clothes needed to be kept in stock until September. Further confirmation came after the unified show (men and women) in fall 2017. The brand decided to 10 https://www.pambianconews.com/2017/03/17/tom-ford-addio-see-now-buy-now-211046/.

5 “See Now Buy Now”

123

return to the traditional formula starting with the spring/summer 2018 collection scheduled during the next New York women’s fashion week in September. In addition, to evaluate Ford’s decision, we must consider the fact that the brand does not have a direct production line. The collections are made entirely by third-party companies similar to most of the distribution that takes place through high-level multi-brand stores. Hence, company has less resources and tools to coordinate and control the supply chain. Furthermore, difficulties are encountered in managing the timing of the garments’ sale from a financial perspective. Thomson Reuters and Style Sage examined the autumn/winter collection of Ford 2016 launched online at Net-A-Porter, MyTheresa and Mr. Porter. These data include clothing, bags, shoes and accessories. Of the 36 fashion items that were launched on MyTheresa, only 11 were sold out, three of which were sold at full price. His fashion collection was most successful on Net-A-Porter where out of 23 items launched, 21 were sold out; however, only two items sold out at full price and only one on Mr. Porter where of nine items launched, eight were sold out. For example, the maxi velvet skirt that first appeared on Net-A-Porter in September 2016 for $6450 was sold out in February 2017 at 60% of the original price ($2580) (Martins 2017).

5.4

Comparison of the Analyzed Cases

According to the analysis the Burberry case and comparing the two main SNBN fashion shows of the Maison in autumn/winter 2016 and in spring/summer 2017, the first performed better perhaps because of the novelty of the concept. Approximately one fourth of the items were sold out before the discounts were applied. In the collection launched in spring 2017, however, only one item was sold out of the 148 launched on the site. We also observed that the brand increased its level of stock, resulting in increased costs at the expense of the profits. As far as Ralph Lauren is concerned, we observed a similar pattern. The sale of September 2016 was successful with 11 types of articles out

124

A. Cabigiosu

of 77 sold at full price. However, the next collection launched in 2017 was much less successful with only one type of article sold at full price. For Tom Ford’s spring/summer 2016 collection, three online retailers, Net-A-Porter, My Theresa and Mr. Porter were compared. The collection was most successful on Net-A-Porter where more than 90% of the types of items were sold out albeit only three at full price. Ultimately, the brand decided to not continue with the model because it did not believe that such rhythms were suitable for the luxury aspect, creating relevant organizational and distribution difficulties. It must be considered that Tom Ford has a size and a number of proprietary shops not comparable with that of the other brands analyzed. In fact, proprietary shops, within a make to stock model, allow overproduction. Furthermore, Burberry has a tight and direct control over the entire supply chain so it is easier for this brand to modify, for example, production volumes per item on the basis of real orders and to speed up its operations. Therefore, according to the analyzed cases, SNBN per se does not generated an immediate incentive to buy as in most cases, large discounts were required to sell goods. It should be considered, however, that the analysis concerns the digital channels, which on the one hand is preferred by Millennial consumers and sees ever-increasing sales, on the other hand, it is not the sole channel through which consumers can approach SNBN fashion items. Hence SNBN performance might have been better than that observed. Only Ralph Lauren still continues to rely on SNBN model for the entire collection. Burberry has launched specific products under this model while Tom Ford has returned to the traditional model. SNBN requires large investments to modify firms’ operations schedule, organization and responsiveness. Also, ICT competences and investments are relevant both to coordinate the whole value chain and to manage instant sales. All these changes require managerial competences and financial resources. Ralph Lauren have both, but many smaller fashion brands do not. When considering the many family businesses that still operate in the luxury industry, such as Alberta Ferretti

5 “See Now Buy Now”

125

or Ferragamo, they are small realities compared to Burberry or Ralph Lauren. Burberry and Ralph Lauren continue to use the SNBN model, attempting to adapt it to their brand and to their audience of customers and potential customers. If managing an entire collection with the SNBN model is very complex, focusing only on a few capsules could be a more competent strategy and within the reach of smaller Maisons. With the exception of the American Ralph Lauren and Tommy Hilfiger, the first round of fashion shows in 2019 saw no défilé completely dedicated to direct sales. The SNBN has been evolving toward capsules or projects with monthly releases designed in cobranding, which allow brands to meet the demands of the final consumers in terms of freshness and continuous reassortment and are easier to develop for smaller firms as well. For example, Alberta Ferretti in 2017 launched a special edition of colored pullovers one for each weekday.11 Similarly, in 2019, Valentino launched the bag Rockstud Spike Fluo under the SNBN model.12 In 2020, the emerging Italian luxury brand The Attico announced that they will use only the SNBN formula but will do away with the fashion shows: they will take their time to develop new collections and these will be made available in the shops immediately.13 Many have tried and many have failed because the speed is high. Moschino launched some SNBN capsules but in September 2018, its fashion show seemed inclined exactly in this direction. Between nonstop deliveries, pre-collections and capsules, today’s fashion has rigorous times. Jeremy Scott launched the idea of an unfinished collection for Moschino. The collection looks like a “work in progress” that comes directly from the atelier and based on the concept of the sketch and the unfinished. In the first part of the show, the design seems to come to life 11 https://www.fashionmagazine.it/trend/in-passerella-Anche-Alberta-Ferretti-entra-nellera-del-see-

now-buy-now-76552. Accessed on 23.12.2018. 12 https://www.pambianconews.com/2019/09/30/valentino-esordisce-nel-see-now-buy-now-274

021/. 13 https://www.pambianconews.com/2020/02/12/the-attico-sperimenta-il-see-now-buy-now-285

911/. Accessed on 13.02.2020.

126

A. Cabigiosu

on the clothes, with the colored markers of outlined designed as prints on the dresses. Even the animal and chain prints seem unfinished and interrupted and scissors become the maxi decor of a black long dress. Off course, the collection was still in progress and Moschino did not use the see now buy now formula for this show.14

5.5

Conclusions

The SNBN is an approach in line with the Maisons need to nurture Millennials and media interest in their collections. This model has a number of strengths: it protects the original content of their design, makes products available when they have peak attention from media, increases impulse sale owing to the idea that there might be many sales following the success of the show and therefore the desired garments could be out of stock, can increase the number of items sold at full price and can impact profit margins. Nevertheless, the SNBN business model also presents multiple threats and challenges. Supply chain management difficulties in terms of coordination and extreme compression of collections’ development are crucial issues that primarily explain the above analyzed cases and that require ad hoc competences and relevant resources. Burberry, for example, has anticipated all operations and organizes meetings with the various employees and buyers to coordinate each step. In reality, reducing lead time does not exclusively mean dedicating less time for production, which takes about one fourth of the total time, but requires better coordination of the entire supply chain, particularly upstream suppliers, and better integration of the chain and elimination of downtime owing to new technologies. All these changes require managerial competences and financial resources that often lack in SMEs.

14 https://it.fashionnetwork.com/news/La-gag-di-moschino-la-collezione-non-e-finita-,1016252. html. Accessed on 29.08.2019.

5 “See Now Buy Now”

127

In this setting also ICT competences and technology are crucial for the implementation of the model: it is essential for brands to be hyperconnected on all channels and to establish a robust integrated network of them. Fashion shows should be in real time on socials and should eventually be promoted via the official website or other partners, with projections in the main points of sale and photos of the collections in advance to arouse interest. SNBN is not simply a marketing stunt which will result in an immediate increment in sales after the show and generate high brands visibility. It is part of a deeper and more integrated process that seeks to involve the consumer, making them live experiences and even leading them to identify with the brand values. In fact, as discussed extensively in this chapter, the SNBN model contrasts with the traditional production model that follows a make to order sequence: collections’ creation, presentation, sale to distributors, production and delivery to distributors. The SNBN is a make to stock model in which firms produce before receiving orders but still have to respect the deadlines of fashion shows and hence must compress their cycle times and face the risk of sales uncertainty. While SNBN reduces the distance between the moment in which items are created and sold and the uncertainty related to trends’ volatility (i.e. demand uncertainty), it increases uncertainty about order volumes (i.e. sales uncertainty). Demand uncertainty is accrued by the fact that the fashion product itself is characterized by short life cycles, high volatility, low predictability and highly impulsive purchases. These characteristics are in contrast with the production lead time which tends to be long. In this context, it is essential for companies to attempt to reduce the lead time, shortening the time to market, the time between when the company grasps customers’ needs and trends and the moment when products are in store, time to serve, i.e. the time between the retailer’s order and delivery and finally time to react, that is the time to change the products offered based on market feedback. Fashion firms are investing to increase the responsiveness of their operations and supply chains by implementing effective digitalization to achieve greater speed and reactivity in dealing with new business models.

128

A. Cabigiosu

The SNBN was born as a strategy to compete in a fast-paced and everchanging scenario of today in which images and news run at the speed of light and so does the desire to get what one wants; the concept has literally divided the judgments between those who find it a good idea and those who find it cannot fit the rhythms that have always guided the luxury industry—creativity, quality and craftsmanship take time. On the one hand we have seen the positive aspects of the SNBN model, on the other hand there is the concern about the effects of SNBN pressure on creativity. Leading designers are required to constantly align with market demands at the expense of innovation. Creativity takes time while SNBN compresses time. For years, luxury has followed the make to order model, producing the garments actually requested by buyers after the show. Nowadays, with the SNBN, firms must reschedule the entire supply chain, anticipating operations by months while also taking on the risk of production not conforming to actual demand. While the more established brands that have control over the entire supply chain find it easier to organize themselves with respect to SNBN, smaller or emerging brands with less financial resources will certainly have more problems organizing themselves in this direction. Furthermore, the sell-in after the presentation of the collections highlighted some problems related to the distribution sphere as well as the impossibility of communicating information about the products in an appropriate manner. The SNBN phenomenon, created by the Americans has had a significant impact on the fashion industry especially capturing the interest of media. However, after an initial success, there has been an adjustment with regard to this strategy; it can only work for brands that own stores in the territory and have high supply chain control and sufficient financial resources. Moreover, often, the consumer needs time to understand the news and new sales models so the statement that the ability to buy something as soon as one sees leads the consumer to actually immediately want the goods might not be true. It is therefore important to create a mix of strategies to attract more Millennials as they are considered the ideal target of an “all and immediately” strategy. The same is also essential for other profiles of consumers; strategies should be adopted both in store and online to involve them. In luxury, even if the digital channel

5 “See Now Buy Now”

129

has grown significantly in the recent years, it is not yet the first channel used by consumers who still prefer to see, touch and experience luxury products. Overall, the SNBN model is coherent with Millennials’ mindset and additional studies are needed to understand which luxury firms can effectively introduce this model and how. Bigger firms have the resources to rely more extensively on this model, while smaller firms can use the SNBN either to produce, present and sell whenever they want, outside the fashion shows schedule, or for capsules, to increase their offering to clients. Furthermore, we need additional studies to understand the impact of SNBN over the design and production process of a collection along the whole value chain, and studies to assess the overall strategic convenience and profitability of the model.

References Abnett, Kate. 2016. Are see now buy now driving sales? Business of Fashion. https://www.businessoffashion.com/articles/intelligence/are-seenow-buy-now-shows-driving-sales. Accessed on 10 June 2019. Amatulli, Cesare, Antonio Mileti, V. Vincenzo Speciale, and Gianluigi Guido. 2016. The relationship between fast fashion and luxury brands: An exploratory study in the UK market. In Global marketing strategies for the promotion of luxury goods, 244–265. Hershey, PA: IGI Global. Bandinelli, Romeo, Renzo Rinaldi, Monica Rossi, and Sergio Terzi. 2013. New product development in the fashion industry: An empirical investigation of Italian firms. International Journal of Engineering Business Management 5 (Godište 2013): 5–31. Bassan, Valeria. 2018. Il “See now, buy now” come innovazione e cambiamento per l’industria della moda dell’era digitale. Bachelor’s Thesis, Università Ca’Foscari Venezia. Belk, Russell W., Güliz Ger, and Søren Askegaard. 2003. The fire of desire: A multisited inquiry into consumer passion. Journal of Consumer Research 30 (3): 326–351. Broussard, Gerard. 2000. How advertising frequency can work to build online advertising effectiveness. International Journal of Market Research 42 (4): 1– 13.

130

A. Cabigiosu

Brun, Alessandro, Cecilia Castelli, and Hakan Karaosman. 2016. See now buy now: a revolution for luxury supply chain management. In Workshop on business models and ICT technologies for the fashion supply chain, 33–46. Cham: Springer. Brun, Alessandro, Federico Caniato, Maria Caridi, Cecilia Castelli, Giovanni Miragliotta, Stefano Ronchi, Andrea Sianesi, and Gianluca Spina. 2008. Logistics and supply chain management in luxury fashion retail: Empirical investigation of Italian firms. International Journal of Production Economics 114 (2): 554–570. Burberry. 2018. Burberry annual report 2018. Available at https://www.burber ryplc.com/en/investors/results-reports.category1.year2018.html. Accessed on 3 Feb 2019. Cachon, Gérard P., and Robert Swinney. 2011. The value of fast fashion: Quick response, enhanced design, and strategic consumer behavior. Management Science 57 (4): 778–795. Choundry, Talib. 2016. Raf Simons on how the relentless pace of fashion is killing creativity and the joy of his fabric design sideline. The Telegraph. Available at https://www.telegraph.co.uk/luxury/design/raf-simons-on-howthe-relentless-pace-of-fashion-is-killing-crea/. Accessed on 5 Jan 2018. Erica, Corbellini. 2016. Il See now buy now. Verso una moda fast? Economia & Management 4: 27–31. Degli Innocenti, Nicol. 2016. Burberry apre l’era del “see now buy now” con collezioni eclettiche per la P-E 2017. Il Sole24ore. Available at https://www. ilsole24ore.com/art/moda/2016-09-20/burberry-apre-era-see-now-buynow-collezioni-eclettiche-la-p-e-2017-092259.shtml?uuid=ADmaPnNB& refresh_ce=1. Accessed on 11 June 2019. Foley, Bridget 2017. The designer plans to show spring 2018 in New York this fall—And relocate his primary residence and women’s studio to Los Angeles. Available at https://wwd.com/fashion-news/fashion-features/tom-ford-bidsfarewell-to-see-now-buy-now-10845637/. Accessed on 12 Jan 2018. Friedman, Vanessa. 2015. Alber Elbaz Leaving Lanvin as Fashion’s Slippery Slope Claims Another Designer. The New York Times. Available at https://www.nytimes.com/2015/10/29/fashion/fashion-creates-a-slipperyslope-of-designer-departures.html. Accessed on 11 Mar 2011. Hilletofth, Per, and Olli-Pekka Hilmola. 2008. Supply chain management in fashion and textile industry. International Journal of Services Sciences 1 (2): 127–147.

5 “See Now Buy Now”

131

Hoang, Limei. 2016. How Burberry is operationalising ‘see now, buy now’. Business of Fashion. Available at https://www.businessoffashion.com/articles/ intelligence/how-burberry-is-operationalising-see-now-buy-now. Accessed on 11 June 2019. Lieberman, Marvin B., and Shigeru Asaba. 2006. Why do firms imitate each other? Academy of Management Review 31 (2): 366–385. Martins, Jharonne. 2017. In global retailing, does the ‘see-now, buy-now’ model really work? Thomson Reuters. Available at https://lipperalpha.refini tiv.com/2017/05/in-global-retailing-does-the-see-now-buy-now-model-rea lly-work/. Accessed on 12 Jan 2018. Matzeu, Enrico. 2015. Come funzionano le settimane della moda. Il post. Available at https://www.ilpost.it/2015/07/14/sfilate-settimana-della-moda/. Accessed on 15 Oct 2017. Mendes, Silvano. 2017. See now, buy now: The position of the press in fashion new consumer model. International Journal of Fashion Studies 4 (2): 285– 292. Robinson, Pamela K., and Linda Hsieh. 2016. Reshoring: A strategic renewal of luxury clothing supply chains. Operations Management Research 9 (3–4): 89–101. Sherman, Lauren. 2016. How ‘see now, buy now’ is rewiring creativity. Business of Fashion. Available at https://www.businessoffashion.com/articles/intell igence/how-see-now-buy-now-is-rewiring-creativity. Accessed on 11 June 2019. Sevilla, Julio, Lu Joy, and Barbara E. Kahn. 2019. Variety seeking, satiation, and maximizing enjoyment over time. Journal of Consumer Psychology 29 (1): 89–103. Straker, Karla, and Cara Wrigley. 2016. Emotionally engaging customers in the digital age: the case study of ‘Burberry love’. Journal of Fashion Marketing and Management 20 (3): 276–299. Takamitsu, Helen Tatiana, and José Alcides Gobbo Junior. 2017. New approaches (insights) to NPD on the fashion segment: The power of social networks and the system see now buy now. Business Models and ICT Technologies for the Fashion Supply Chain, 3–14. Cham: Springer. Uomini e Business. 2016. See now, buy now, primi successi. Available at https://www.uominiebusiness.it/default.aspx?c=640&a=24629&tag=. Accessed on 10 June 2019.

132

A. Cabigiosu

Wingfield, Jonathan. 2016. There’s something wrong about this idea of big brands, Miuccia Prada and Raf Simons in conversation. System Magazine. Available at http://system-magazine.com/issue8/miuccia-prada-raf-simons/. Accessed on 12 May 2018.

6 Additive Manufacturing and Smart Textiles

6.1

The Potentials of Additive Manufacturing in the Fashion Industry

In April 2012, the weekly magazine “The Economist” dedicated its cover to the theme of the third industrial revolution. The key to understanding it was explicit: an industrial revolution was underway, capable of freeing production processes from the limits of repetitiveness that until then had characterized mass production, reconciling manufacturing and the environment. The innovations that destroy common consumption and production models, laying the foundations for the digital revolution, according to the weekly, are increasingly intelligent software, increasingly innovative materials, the wide variety of services accessible at increasingly low costs and, essentially, new production techniques of digital manufacturing of which 3D printers are the most disruptive example. 3D printing is an additive manufacturing technique for fabricating products from three-dimensional model data by depositing material into successive layers until it is completed. This process is also known as rapid manufacturing or prototyping (Huang et al. 2013). There are different types of 3D printers that are distinguished by the different © The Author(s) 2020 A. Cabigiosu, Digitalization in the Luxury Fashion Industry, Palgrave Advances in Luxury, https://doi.org/10.1007/978-3-030-48810-9_6

133

134

A. Cabigiosu

deposit of material: Fused Deposition Modeling (FDM), Selective Laser Sintering (SLS), stereolithography (SLA) and Digital Light Processing (DLP). 3D printing was introduced with the process of stereolithography and patented in 1986 by Charles W. Hall, co-founder of 3D Systems. Digital 3D Computer-Aided Design (CAD) software is used to create the design sketch which is then virtually sliced into the appropriate number of horizontal layers needed to complete the product. Only the necessary quantity of materials is used to create each layer. Therefore, 3D printing is the opposite of traditional (subtractive) manufacturing which cuts away unnecessary material from the final product; thus with 3D printing, less waste is created (Ngo et al. 2018). In this respect, 3D printing has great potential in sustainability optimization. Additive manufacturing allows the creation of highly complex products eventually tailored to individual applications or users. 3D printing technology requires specific competences to use 3D CAD modeling, rendering and simulation programs that are drastically different from what traditional designers are familiar with and emphasizes the relevance of know-what as compared to know-how. Traditionally designers rely on tacit knowledge, on hands-on practices and intuitive decision-making. However, computational design relies on explicit knowledge and computer language. Moreover, 3D printing requires the exploration of new materials and their unique properties. With 3D printing, designers can produce breathable, fabric-like materials made of interlocked structures, yielding lightweight and flexible products (see also Sect. 6.4). Furthermore, 3D CAD modeling is often supported by the use of 3D scanning technology which creates a “virtual dress form” for wearable product design and eliminates the need of various fitting sessions using live models. 3D scanning can also be utilized in a reverse engineering approach in which prototypes are rapidly created by scanning real objects. Such versatility also stimulates customized design feature or tailored fit (Menato et al. 2014). Thus, the impact of 3D printing in the fashion industry would result in higher prototyping efficiency and (mass) customization. In the future, 3D printing will mean that clothes will fit better, and according to body scans, it will also allow complete product customization and eventual

6 Additive Manufacturing and Smart Textiles

135

production of complicated items from one’s own home (Vanderploeg et al. 2017). 3D printing is thus likely to provide a better solution for meeting the costumer’s growing demands for personalization and fashion trends. 3D printing reduces the number of necessary steps within a supply chain, allowing more distributed and decentralized production (e.g. at the point of sale), and lowers the need for warehousing, packaging and transportation (Ben-Ner and Siemsen 2017). 3D printers allow the production of low-volume and tailor-made products on-site, thereby reducing material-supply risks, supply chain network complexity and inventory costs (Laplume et al. 2016a, b). Furthermore, large warehouses to store traditional machinery and products are no more required and fixed capital costs are reduced. Simultaneously, transportation costs would reduce as products would be produced on-site. 3D printing might also shorten lead times making products available via on-site manufacturing and eliminating (or reducing) product assembly processes (Attaran 2017). Therefore, on-site production, shorter supply chain, reduced lead time and inventories could incentivize manufacturers to relocate the production of high-quality fashion products to Europe and the United States. Experts believe that 3D technology will reshape the global fashion supply chain: as the labor input in 3D printing is modest, Asian countries will lose their competitive advantage based on wage differentials (Laplume et al. 2016a, b). Finally, this production method ensures minimal wastes and has high recycling potential. Interestingly, 3D printing manufacturing can use an extensive array of recycled materials and overall reduce energy consumption by 50% compared to the traditional subtractive manufacturing approach (Sun and Zhao 2017). 3D printing could be a pivotal component of the retail industry’s future and this phenomenon reflects the increasing demand in product personalization, exclusivity and desirability. Currently, there are four ways for consumers to obtain 3D products. First, consumers can buy 3D-printed fashion products (e.g., Under Armour Architech footwear). Second, clients can participate in the design process and ask customizations via online website or mobile apps (e.g., Feetz). Third, consumers

136

A. Cabigiosu

can make 3D products using commercial 3D printers directly at home. This also reflects the increasingly influential maker’s movement in which you can ‘do it yourself ’ (Arribas and Alfaro 2018; Lipson and Kurman 2013). Fourth, online print shops offer print on-demand such as Shapeways.com which is a marketplace for art, jewelry, toys and mechanical parts among other things. Consequently, all these distribution models can nurture in the future a new 3D-integrated Omnichannel retail model. However, this technology has some limits: the use of non-standard materials leads to extra cost and often additive manufacturing has expensive post-processing requirements due to poor dimensional accuracy compared to some conventional processes and rough surface finishing. Finally, this technology presents unfavorable process economics at medium-to-high production volumes (Baumers and Holweg 2019). Nowadays, 3D printers are still used seldom for mass-customized products with the exception of medical and dental parts, replacement parts for electronics and appliances, architectural models and sports equipment. 3D printing is also used in the luxury fashion industry. For example, Ying Gao is a conceptual fashion designer, a professional who creates provocative clothes for the fashion world starting from a mixture of design, art and aesthetics. For the creation of her collections, Gao starts from an inspiration that she often finds in a film or a book. From here, the idea acquires a form, a structure and finally passes to prototyping which we could define as the most complex moment of all, the moment in which the idea, after endless tests, becomes reality. A recent example of Gao’s work is the project (No)Where (Now)here, inspired by the book by French philosopher Paul Virilio “Esthétique de la disparition” (1979) which deals with the theme of absence and visual disappearance from a philosophical perspective with a hint at the notions of light and moving images.1 Hence, Gao’s got the idea of working on a series of clothes capable of appearing and disappearing from the viewers’ point of view. The idea was to give the dress a lightness and a movement that simulated those of a jellyfish. The work lasted two years and the packaging of 1 https://www.dezeen.com/2013/06/24/nowhere-nowhere-two-gaze-activated-glow-in-the-dark-

dresses-eye-tracking-ying-gao/.

6 Additive Manufacturing and Smart Textiles

137

the garments was possible only owing to 3D printing, with which they printed the components not available on the market, and the photoluminescent thread and embedded eye tracking technology activated by spectators’ gaze. This made the project extremely original and unique. Iris Van Herpen was the major fashion figure to use the 3D technology on the runway in 2013. Van Herpen also worked with MIT professor Neri Oxman. They created a skirt and cape that were 3D printed allowing a variety of material properties to be printed in a single build. This allowed both hard and soft materials to be incorporated within the design and to completely eliminate the seams and cuts.2 Factories of the past forced us to accept a certain degree of standardization, but today, the leading aspect of digital manufacturing is customization, producing products for a one-person market. The overcoming of the limits linked to the repetitiveness of mass production granted by digital transformation has allowed access to a certain degree of customization of products as mentioned previously. Many designers and retailers believe that the purpose of 3D printing is to improve product design by offering unique and personalized products. Nowadays, many brands experiment with the technology. Nike created the Vapor Laser Talon, a prototype football cleat that uses SLS technology to create a lighter, stronger baseplate.3 Victoria’s Secret commissioned a 3D-printed ‘Snowflake’ costume for its runway show (Brooke 2013). In 2019, 3D printing was the protagonist of the Met Gala, the fundraising event for the Metropolitan Museum of Art in New York. That year, five outfits flaunted massive 3D-printed components, all created by designer Zac Posen in collaboration with GE Additive and Protolabs. Each of the women wearing the 3D-printed outfits was scanned in advance to ensure that the pieces could be modeled to perfectly fit the body. The pieces were primarily created using stereolithography (SLA). This method of 3D printing uses an ultraviolet laser to slowly cure a pool of resin. One layer at a time, the laser fires into the resin in a pattern 2 https://www.irisvanherpen.com/about. 3 https://news.nike.com/news/nike-debuts-first-ever-football-cleat-built-using-3d-printing-techno

logy.

138

A. Cabigiosu

dictated by a computer in which the 3D model has been loaded. The result is a hardened, smooth sculpture that is then painted or polished. The dress worn by Jourdan Dunn, took more than 1100 hours to create. For Claire Danes’s dress, Posen also used hundreds of fiber optic lights interwoven into organza to create a glowing dress. Therefore, Posen’s work does show a greater shift toward increased use of 3D printing by high-level fashion designers and for fashion’s biggest events (Winick 2019). The real revolution dictated by digital transformation, however, does not comprise all the existing technologies nor, in fact, everything that can be designed on the computer today can substantially be realized. Change becomes a revolution when technology is widespread and available in virtually every laboratory and firm. In this regard, it is useful to retrace the statistics of the report on the spread of digital manufacturing technologies in different industries. Data show that 3D printers are used by the 19% of firms in industrial/business machines, by 18% of the aerospace firms, by 15% of the motor vehicles, by 13% of the consumer products/electronics and by 11% of the medical/dental professionals (Kapetaniou et al. 2018). 3D printing is mainly used in the fashion industry to develop prototypes, works of haute couture and customized products. For example, with 3D printing, Nike was able to shorten the time of prototyping and final production from two/three years to six months (Vanderploeg et al. 2017).

6.2

The Application of 3D Printing for the Design and Production of Luxury Shoes

6.2.1 The Artisan and Industrial Production of Shoes In the sixteenth century, in France, appeared the first women’s highheeled shoes, owing to Catherine de’ Medici who did not have a high stature and to feel more confident at her wedding with the Duke of

6 Additive Manufacturing and Smart Textiles

139

Orleans, she wore high-heeled shoes to look taller. The French nation was amazed by the shoes worn by Catherine and it was since then that heels were recognized as elegant and privileged shoes. In the twentieth century, footwear became a fundamental piece of an outfit. For instance, the farmer who used simple wooden clogs for work on the land but on Sundays wore shoes, signifying a civilization that was evolving. After the Second World War, it was the Italian style that carried on the fashion in footwear, thus generating the “Made in Italy” brand. In these years, eminent designers emerged who still hold a relevant position in the luxury market such as Armani and Ferragamo (Riello and McNeil 2006). Currently, the shoe can take different shapes and different models, but the evolution in this sector is ongoing not only in the models but in the realization in the shoes sector where technology has made its entrance. Currently, there is an increasing expenditure on R&D, especially in the field of sports footwear that in recent years has developed smart shoes which incorporate chips and software for an increasingly sophisticated use and create a connection between the user and the shoe itself. In fact, we talk about “smart shoes” such as those launched by XiaoMi, a Chinese company that has been having success in the hi-tech market recently. In March 2017, XiaoMi introduced its smart shoe model to the shoe market. Aesthetically, they appear to be regular sports shoes, but inside there is an “Intel Curie” chip that allows communication with ones’ smartphone. Once worn, it is possible for the smartphone to associate with the dedicated app which monitors the walking or running activity that the chip can distinguish. In addition, the app can inform about the number of calories burned, the kilometers covered and the speed during the journey.4 Nowadays, footwear can not only have different shapes and patterns but also different methods of production. The highest quality shoes are those made entirely by hand by the shoemaker, a real craftsman who retains the craft of the shoemakers of the past in the shoemaker’s workshop. The shoemaker, therefore, carries on the knowledge and tradition of the trade. 4 https://xiaomi-mi.com/news-and-actions/xiaomi-introduced-smart-shoes/.

140

A. Cabigiosu

The craftsman makes the shoes manually using certain tools such as the sewing machine, hammer, nails and awl. Hermès has a completely artisan production. The shoes, bags and accessories of this famous brand are entirely handmade by artisans and it is not a small business but a company that has made the small shop of the past an “empire” of luxury (Lewis and Haas 2014). Currently, alongside artisan production, a new type of craftsmanship is gradually developing, characterized by the use of new tools different from those used by the shoemaker, but still characterized by know-how and the creation of a custom-made shoe for each individual customer. This is the figure of the digital craftsman or rather of the “digital shoemaker” (see next section). Moreover, today many shoe factories combine artisanal production with industrial production. The fundamental phase that distinguishes the shoemaker from the industrial production is the customer analysis: the artisanal production designs and produces unique models customized for each client, while the shoe factory targets an entire segment of clients. Once the craftsman has complete knowledge of the customer, production begins. Every craftsman has their own production process. There are those who, for example, make the shape themselves, those who instead buy it from external suppliers and the same goes for the sole. Production begins with taking measurements of the customer’s foot. Each foot shape is and there must be optimal fit in a handmade shoe. The shapes are often sent to a modeler for the shoe lasts to be made which will therefore be different for each individual customer. Once the shape arrives, a rubberized paper is applied on it and the design of the shoe is drawn by hand. When the design has been completed, the paper is removed from the shape to be placed on the skin and through a special knife, pieces of leather necessary are cut for the realization of top part of the shoe called the upper. Thereafter, they must be joined, and the lining must be applied. This phase is called hemming and requires many hours of work and a lot of precision. Once the upper is built, it is reinforced at the heel and at the sides with special reinforcements. When the upper is ready, it is possible to move on to the next phase of the pre-assembly, i.e. mounting the upper on the shape. The pre-assembly is done by means of iron pegs that will then be removed to separate the shape from the upper

6 Additive Manufacturing and Smart Textiles

141

and apply the sole, the lower part of the shoe, with a special glue. The sole is purchased from external suppliers or made completely by hand. Subsequently, the soles are cut from a roll of leather with a special pair of scissors and then smoothed with a milling machine. Once the sole is finished and glued to the upper, a wax is applied to polish the shoes which are then boxed and delivered to the customer. Shoe factories often commission the production of the pieces necessary for the realization of the shoe to other smaller companies: heel factories (production of heels), soil factories (production of soles) and ants (production of shapes) (Boschma and Ter Wal 2007). The industrial production process, typical of shoe factories, begins with the design of the shoe, generally manual, on a sheet of paper or with Computer-Aided Designed (CAD) and Computer-Aided Manufacturing (CAM) in the modeling department by a creative. The design is then transformed into a sample or prototype for subsequent series production by a patternmaker. Although we refer to an industrial production that involves mass production and does not emphasize craftsmanship, the figure of the modeler still belongs to the artisan world. In fact, the modeler has an eye for grasping the creative proposal of the designer and a hand to evaluate the materials to be used to construct the shoe (Micelli 2011). Subsequently, once the drawing is complete, the production office compiles a bill of materials containing all the technical and descriptive characteristics of the shoe to be produced, and the same is then delivered to the production department. The production phase begins with the cut, which is carried out by means of a diecutting press, which is generally automatic and regulated by numerical and/or electronic control. Once the leather has been cut, it must be made uniform with a machine called a “splitting machine” with which the thickness of the upper is established. The upper is then prepared and strengthened through various intermediate phases using special machinery. The next phase consists of the assembly or the laying of the upper on the shape that reproduces the physical structure of the human foot and is necessary as a support in the production of the footwear. Thereafter, the bottom is fixed to the upper by means of a machine that allows the fixing through special glue. Once the production is finished,

142

A. Cabigiosu

the shoe is taken to the finishing department where it is polished and canned and then delivered to the customer. 3D printing is now reshaping both the craft and industrial production of shoes. The following section describes how 3D printing and scanning can be used to produce customized shoes within a traditional workshop and moves to the description of how new technologies are reshaping the industrial production of shoes.

6.2.2 The Digital Craftsman The digital craftsman is a union between the figure of the maker and the classic craftsman. The makers are real craftsmen who work manually for the realization of the design of the product but, unlike the classic craftsman, they produce it with the help of tools with advanced technology impact and sustainability (Stacey 2014). The new or digital craftsmen are still rich in knowledge of the shoe trade but combine this knowledge with highly technological and innovative tools such as the 3D scanner and the 3D printer. The production process of the new shoemaker starts with the realization of the different models of footwear on computer programs such as CAD and CAM (Orazi and Reggiani 2020). Subsequently, through an Internet site, the models are posted online so that the customer can select and modify specific attributes, for example the color of the upper and/or the sole according to their personal taste. Once the customization is complete, accordingly, the shoe must fit perfectly and this is done by means of apps that can be easily downloaded on smartphones or through special corners located in stores having a 3D scanner. The solution of the app is becoming increasingly popular as it is more convenient and easier to use. The app does the same job as the scanner, the biometric scanning, by means of devices such as the camera. Subsequently, as soon as the company receives the images of the scan, it can start the production which would involve the 3D printer (Marconi et al. 2019).

6 Additive Manufacturing and Smart Textiles

143

An example of digital craftsmanship is Feetz,5 a US company founded by Lucy Barba. The website has three models for men and six models for women designed by artisan stylists. Clients select the model and decide whether to customize it; they then enter the size of the foot that is taken through the app “Feetz”. The process continues by sending the order to the company that proceeds to print it with the 3D printer, choosing special filaments for footwear that should not be too hard and rigid. Once the printing is finished, the shoes must be cleaned of any residual material and a soft insole must be applied inside to provide an excellent fit. This last finishing step is performed by an operator (Kim et al. 2019). Another example is the Italian company “Iovado”6 founded in Vicenza. Iovado produces calfskin moccasins made entirely by hand by shoemakers and sold only online, thus reducing costs. The moccasin is personalized and made to measure. The customization takes place not only by means of the choice of color but, and most importantly, by having one’s initials engraved on the upper by a shoemaker. To obtain the “tailor-made” shoes Iovado uses the biometric scan of the foot made by the smartphone. The scan, once complete, is sent to the company that through an algorithm creates a computer 3D model of the specific shape of the customer’s foot and then prints it with a 3D printer. The latter is then delivered to the craftsman who produces the finished product tailored and customized for the individual customer. Finally, the shoes are shipped to the customer. Owing to the use of the 3D scanner, the shoemaker 2.0 can make shoes perfectly tailored to each individual customer with a process called “reverse engineering” that involves obtaining a digital file from a tangible object. The 3D scanner, or rather 3D laser scanner technology can measure the position of thousands of points that define the area of the objects being scanned at a very high speed. The result from the acquisition of points is known as a “point cloud”. Once all the points have been obtained, the camera that acquires the images of the space or object detected is started. Dedicated software then combines the images and the

5 https://feetz.com. 6 https://iovado.com.

144

A. Cabigiosu

point cloud so that to yield a three-dimensional image of the scanned object on the user’s computer (Marconi et al. 2019). In the footwear sector, it is possible to use any type of 3D laser scanner as well as the smartphone. Nowadays, many companies, to avoid the return of shoes purchased by customers through e-commerce, rely on apps that allow the customer to scan the foot through the phone camera of the phone, and owing to a software integrated in the app, the 3D model can be obtained which shows the exact size and shape of the foot. The scan is then sent by the customer to the company that designs the shoe on the basis of the characteristics of the foot. The shoe is then produced (Kobayashi et al. 2018). Volumental7 is a Swedish company that has launched software and 3D scanners to scan the foot in 5 seconds. The scanners are located in various stores around the world and allow the customer to scan the foot and then receive the scan by email or the images are sent directly to the footwear company, as is the case of New Balance, a well-known brand of shoes. In fact, in 2016, New Balance collaborated with Volumental to include 3D scanners in its stores to provide the customer not only with better quality products but also a better in-store experience. Once the foot has been scanned, New Balance customers receive an email with the exact size and shape of the foot which they can then use in all New Balance stores around the world. A case of great interest and with a mission similar to that of Volumental is represented by the Fitstation8 platform designed by HewlettPackard (Hp), a well-known US multinational company that operates in the field of computer science offering software and hardware products (printers and computers). Hp’s Fitstation platform is already present in some shops in the United States as well as in Europe in Vienna. First, a 3D scanner is used that allows the user to scan the foot. The user must place the foot in the scanner and remain in the position as a pulsed light scans the foot. A software processes the data from the scan and generates a three-dimensional model of the foot. The platform is also equipped with a precision plate which allows the instrument to analyze 7 https://www.volumental.com. 8 https://www.fitstation.com/.

6 Additive Manufacturing and Smart Textiles

145

the movement of the foot as the user walks and the pressure exerted by it, thus verifying the gait of the walk. These technologies and tools allow a complete overview of the user’s feet and owing to a data analysis software, Fitstation can give advice and recommendations to the customer about the insole that best fits their foot or the customization of the shoe by choosing between different models. The customer can request the insole according to their foot shape that is printed at that moment and in a short time by means of a 3D printer, the MultiJet Fusion by Hp. The printer uses polyurethane as the material, a rubbery material that gives the product its comfort, flexibility, lightness and strength. With Fitstation, one goes beyond customization and reaches individualization, in fact each one has its own shoe made according to his own characteristics.

6.2.3 The Intelligent Shoe Factory In the footwear sector, the 3D printer has become an element of the production chain. Increasingly, shoe manufacturers are using this tool for the production of samples or prototypes not only for some parts of the footwear such as the sole but also for the production of an entire shoe. An example of a company that uses the printer in the production of a part of the shoe is Adidas, which has launched a project called “Futurecraft” for the production of innovative shoes.9 The first model of footwear related to the project that was presented to the market in 2015 is “Adidas Futurecraft 3D”, a running shoe that has as its peculiarity the midsole which is printed in 3D and reproduced according to the characteristics of the foot of each customer. The midsole is a fundamental part of the footwear for running shoes as it contains the cushioning systems and must be flexible. Therefore, the midsole in 3D was made in a style with holes connected to each other. Adidas collaborated with Materialise, a leader in the field of software for three-dimensional printing, to create this model. The midsole is printed with a Materialise SLS printer and the material used is TPU, a modified thermoplastic polyurethane which allows breathability and flexibility. Adidas’s project continued with 9 https://www.adidas.com/us/futurecraft.

146

A. Cabigiosu

the release of the “Futurecraft 4D” model in March 2018. For this model, Adidas collaborated with Carbon, a company that develops threedimensional molding software and hardware. The Carbon printer used by Adidas has a new technology, the Digital Light Synthesis (DLS) designed by Carbon itself. With the DLS process, it is possible to combine liquid resin with the pulsation of the rays, similar to a normal SLA but the innovation lies in the introduction of oxygen that allows one to obtain the product much faster than other printing techniques. The resin used also increases product flexibility. Many other firms, such as New Balance and Nike, are continuously investing in 3D printing especially for soles, and there are also cases of shoes printed entirely through this technique. The 3D printer allows not only the production of parts of shoes or finished shoes, but also and above all, the realization of the prototype, that is the first sample from which, after the appropriate modifications, mass production is launched. For the realization of samples, different types of printers exist. If the sample has to be functional and used to test shoe performance, particular filaments or resins are required. For example, Adidas often creates functional samples of the midsoles to check whether they actually fit and to test the function of cushioning during sporting activity. Other types of prototypes are the aesthetic samples, i.e. the samples made only and exclusively to be shown to customers and which are generally used in trade fairs or fashion shows. It is also possible to use the 3D printer for industrial production. So far, however, it is still rare to observe mass produced shoes completely realized with the 3D printer because this technology is still quite expensive for high production volumes, and firms often do not have the required competences and skills to switch to this technology. Furthermore, the production lead time via 3D printing is still longer than that of an assembly line so the use of the 3D printers as the only tool in production would decrease the firms’ productivity and increase the unit cost of production. The new challenge is therefore to incorporate the 3D printer into competition with the assembly line. Finally, shoes and especially leather-like shoes printed entirely in 3D may be less comfortable and researchers are developing filaments incorporating the leather so as to increase comfort during the fit (Vanderploeg et al. 2017).

6 Additive Manufacturing and Smart Textiles

147

Carbon, the company that worked with Adidas on the Futurecraft project, is attempting to counter the challenge. The company has designed a new printing technology which is much faster than the previous ones and which prints the midsoles of Futurecraft 4D. Therefore, the Carbon printer could be a breakthrough in mass production. HP too aims to revolutionize industrial production so it has introduced in its product range the “MultiJet Fusion 4200” printer, a large printer suitable for mass printing of products of different size, detail and color specifications. These fast printing technologies which enable the production of thousands of parts per day can now be seen as going beyond the Ford assembly line. It can therefore be concluded that today, the 3D printer can be adopted, in addition to prototyping, even for production in small batches. However, it is not always easy for a company to determine whether the 3D printer is economically feasible compared to traditional manufacturing. Convenience depends on product complexity, customization and production volume. Furthermore, the cost of the machinery should be considered, consisting not only of the purchase cost that the company has to bear initially but also the cost of the auxiliary equipment and the depreciation period. Finally, the labor cost should also be considered. The 3D printer requires an operator to set up and then to enter all the settings necessary for proper printing and for any supervision and finishing of the piece from which any waste material such as media must be removed. On the basis of an estimate of the printing speed and the volume of the parts to be produced, it is possible to estimate the production cost and compare this cost with that of traditional manufacturing. Generally, it is more convenient to use the 3D printer for small quantities of production. In addition, the printer does not require extra production steps depending on the complexity of the product. Therefore, if the complexity of the product is very high, it is better to use the 3D printer (Zanardini et al. 2015). Today, in the footwear sector, additive manufacturing remains an efficient and effective solution compared to traditional manufacturing primarily for production in low volumes or of parts of footwear such as the sole. Moreover, real leather cannot be printed.

148

A. Cabigiosu

The new frontier, however, is represented by the intelligent factory that, in contrast with the conventional factory, is significantly more efficient, especially in a sector such as footwear in which demands are constantly changing. In the intelligent factory, the entire production chain is digitized and computerized (Wang et al. 2016) and production processes are driven by automated tools that are connected with everything involved in the business processes and the surrounding environment. The intelligent factory combines all the emerging technologies of the fourth industrial revolution identified as “enabling technologies”: Big Data and Cloud Computing, useful for managing and processing data, the 3D printer for the creation of prototypes and the production of small batches and robots, i.e. mechanical arms that autonomously execute what was previously performed by human beings such as the movement of parts from one machine to another. In the footwear sector, the intelligent factory defines an intelligent shoe factory which can currently be considered as the last stage of evolution and in which the entire supply chain becomes digital. Upstream, owing to Big Data, it is possible to enter considerable volumes of data on customers and their purchasing preferences. Customers can configure and customize their shoes on the company’s website on the basis of pre-set models and add accessories. The data entered by customers are archived and managed by archiving systems such as Cloud Computing, which are useful to retain and integrate customer data. Subsequently, Artificial Intelligence (AI) transforms data into information based on which firms can offer products to clients that are in line with their previous purchases and forecasted tastes. Once the customer has configured the product and orders, this information is sent in real time to the robots that start the production. Adidas opened the “Adidas Speedfactory” a factory where shoes are produced exclusively by robots, in Germany in 2016 and in Atlanta in 2017. The CEO of Adidas stated that the primary objective of this new production line is to provide a customized product in a very short time. With the intelligent factory, not only the production but the distribution of the product and the service offered to the customer also changes completely. The consumer from home only has to access the Adidas website and personalize the product through a special application. Once

6 Additive Manufacturing and Smart Textiles

149

the customer has finished customizing and the order is processed, the robots produce the single pair of shoes requested by the customer which are shipped directly to the customer.10 In addition to the worldwide case of Adidas, a company under “Made in Italy” has also entered the revolution and is transforming its shoe factory with industrial production into an intelligent shoe factory. The company in question is “La Manuelita” which produces women’s shoes. It was founded in 1973 and in 2007 introduced new technologies and new machinery into the production process, such as the 3D printer for prototyping. Today, this Italian company is a pioneer in robotization; it has in fact embarked on a project to become a “smart shoe factory”. It is a pioneering company because automation in the production process was so far unknown in women’s heels providing different heights and therefore involving movements that are difficult for robots to perform. To date, inside the factory, it is already possible to find two automated cells in which the robotic arm moves the shoe along the special machinery to perform the processing steps previously performed by hand by an operator.11 The smart factory makes it possible to optimize the entire production chain (Weller et al. 2015). The first step in the footwear production process is product design in which the model maker draws a draft of the shoe and then creates a sample. The sample in the intelligent shoe factory is made by means of a 3D printer that allows the optimization of costs by lowering them significantly compared to the traditional method or craftsmanship. The reduction in costs is found first in the use of plastic material or resin costs significantly less than leather. Moreover, prototyping by means of a 3D printer considerably reduces the time to prototype and therefore also the time to market, i.e. the interval of time from the conception of the product to its marketing, allowing the company a competitive advantage in the market. Moreover, it is not necessary to operate the assembly line as the printer produces the entire product independently, the upper, sole and any heels.

10 https://www.adidas.com/us/speedfactory. 11 https://manuelitaitaly.com/en/.

150

A. Cabigiosu

The shapes on which the figure of the shoe is created are also significant. These are generally purchased from external suppliers that nowadays make them with plastic material with the method “injection” which requires a very expensive steel mold. Furthermore, in the intelligent shoe factory, the production process is automated for most of the production phases. There are also “cobots” so named because they collaborate with operators in close contact. Phases such as finishing or assembly can be fully automated (Amza et al. 2019). Furthermore, the cycle time, i.e. the interval of time from the beginning of production to the moment of delivery of the finished product to the customer is much shorter than that of traditional manufacturing as the robots continue to work without interruption producing larger quantities in shorter times. Another benefit of automation is precision. The robot can perform the same identical action an infinite number of times with the same perfection, guaranteeing a product with high precision. Other benefits that come from automation and therefore from the use of robots concern the optimization of the use of raw materials, allowing a reduction in waste and greater safety for personnel who are no longer exposed to dangerous processes. Finally, in the intelligent shoe factory, RFID tags serve to track and monitor each operating process along the supply chain (Kokuryo et al. 2016). Overall, new technologies allow shoe factories and stores to increase their competitiveness on at least three fronts: customization, optimization of the production processes and sustainability, and, hence they can meet Millennials’ need of unique and environment-friendly products.

6.3

3D Printing: Opportunities and Threats

Designers today find it challenging to develop digital design skills and adapt traditional training knowledge into the virtual design environments. Traditional prototyping and production processes require the designer to understand real material properties and dimensions of the body form. Consequently, the designer’s foremost challenges in this transition might be essentially embedded in transferring traditional

6 Additive Manufacturing and Smart Textiles

151

knowledge into the 3D CAD environment, in learning new material properties and recycling capability as well as 3D printer capabilities. The tacit knowledge from traditional training will need to be converted to information applicable in the virtual design world in which new digital tools will apply. In this setting, individuals who work in the fashion industry will be required to speak the language and understand the foundational concepts from both traditional designer’s and maker’s worlds (Bonesso et al. 2020). In this respect, 3D printing might threaten small and medium firms that are among the main actors populating the value chain that generate the most desired shoes worldwide. Especially in the North East of Italy and within the district of the Riviera del Brenta in the province of Venice, there are still numerous small and medium independent firms, not yet acquired by foreign groups, involved in the production of shoes for beloved brands which will have to make relevant capital and knowledge investments. In this respect, the long-standing tradition of the territory regarding production and education can support these firms during the transition process. For example, the Politecnico Calzaturiero school, an organization representing footwear companies in the Veneto region, started its own project of “factory of the future” or a FabLab for the footwear sector. The mission of the FabLab is to promote the use of emerging technologies in this sector, support companies, to keep them updated on new production techniques and help them reduce time to market with the use of the 3D printer. 3D technology could also change the fashion industry’s focus from the traditional labor-intensive to knowledge-intensive and capital-intensive. One critical question is what will happen to millions of unskilled or lowskilled workers currently employed in manufacturing-intensive countries that currently hold the (unique) advantage in cheap labor. On the other hand, if manufacturing is re-shored to advanced countries, the question becomes how it will be integrated in the fashion industry (Turinetto et al. 2019). Moreover, other challenges in 3D still exist including a relatively low printing speed, limited product size in the printer, product parts assembly management, material availability and property limitation. In some 3D printing processes, quality might also pose a challenge. All these

152

A. Cabigiosu

variables will increase the complexity of manufacturing and sourcing decisions beyond simply chasing low-cost labor and, instead, evaluating total factor performance across material efficiencies, transportation cost, storage cost, capital and trade policy. 3D printing will also impact the way products are distributed, promoted in a retail environment and interact with consumers through personalization services. One major advantage is the “local for local” production model that involves customization for a specific consumer. However, localized manufacturing cannot survive without adequate support services, and it is more likely to complement, rather than replace, mass production. Additionally, the issue of intellectual property protection and ethics will become another concern when product design involves members from both business and consumer parties; 3D printers and scanners allow replication of objects, and open innovation in 3D modeling is widespread. Finally, consumers’ perceptions toward 3D printed products and new materials is very limited. There are still relevant open questions such as can branded items be 3D printed and be accepted as a luxury product? Can branded items be customized by the customer? Iovado is a commendable example of how technology and heritage can be combined. In this setting, it is crucial for the fashion industry to develop a new strategy and ad hoc initiatives to support training and education for designers, manufacturers, retailers and consumers. As far as the luxury fashion industry is concerned, 3D printing is still limited to prototypes and the production of specific components. Both 3D printing and smart textiles are still primarily entering luxury when they become art. Once again, luxury fashion displays its extraordinary capacity to establish a dialogue with heritage, tradition and arts in all their facets.

6 Additive Manufacturing and Smart Textiles

6.4

153

The Opportunity of Smart Textiles: Technologies and Performance, Applications and Diffusion

The textile industry is a manufacturing sector that deals with the preparation of natural and synthetic fibers, the production of yarns (spinning phase) and their subsequent transformation into fabrics (weaving phase). From a production perspective, the supply chain starts from the supply of resources and the processing of raw materials, moves on to the production and transformation phase and ends with distribution and sales (Ozturk et al. 2016). In many countries, the textile manufacturing industry represents a fundamental sector for the creation of added value and employment. The global textile industry was estimated to be around 920 billion dollars in 2018, and it is projected to growth of about 4.4% a year till 2024. China is the world’s leading producer (it is almost worth 25% of the global textile industry) and exporter of both raw textiles and garments. The United States is the leading producer and exporter of raw cotton. India is the third-largest textile manufacturing industry followed by European producers such as Germany, Spain, France, Italy, and Portugal (Mordor Intelligence 2019). Today, in this context, smart textiles are growing of about 30% a year and will become, within a few years, an essential aspect of our daily lives (Grand View Research 2019). More specifically, we are referring to the techno-textile revolution: the convergence between fabric and technology. Smart textiles are textiles that can sense and respond to changes in the environment and are divided into passive and active textiles. Passive smart textiles change when externally stimulated, for instance, hydrophobic textiles. Active smart textiles have various sensors to monitor the external environment and decide how and when to react and can be connected wirelessly to other devices (Koncar 2016). Global demand for smart textile is mainly driven by increasing penetration of sensor-based devices to the internet through mobile phones. Smart textiles can be used to communicate information of the wearer, such as heart rate or blood pressure to healthcare and fitness applications.

154

A. Cabigiosu

Also fashion and entertainment industry are expected to propel this market growth in coming years. In fact, industry is increasingly focusing on reducing form factors to facilitate integration, to make sensors compatible with multiple fabric and ensure optimum wearability (Grand View Research 2019). Active smart textiles can combine fabrics with computing and the result are fabrics that can transform, collect and transfer data and store and conduct energy. All these features can be incorporated in a sinuous, light, soft and flexible object as opposed to the classic rigid, heavy and cumbersome computers. Experiments in this field began in the mid-1990s when a team of MIT researchers led by Maggie Orth and Rehmi Post began exploring how they could introduce digital electronics into clothing by incorporating them into the fibers. Their work decreed the birth of e-textiles and sowed the seed that would later start the techno-textile revolution (Starner 2001). Fabrics are our second skin. We all have a close connection with them since birth. We expect every day the fabric we wear to keep us dry and warm, to be soft to the touch and durable, to facilitate our movements or provide support in some parts of the body and so on. Furthermore, we want it to satisfy all these performance needs while maintaining its shape and color and to be easy to clean and preserve over time. We use fabrics in our environment to build and furnish it. We use them in manufacturing, and we continue to expect them to be sustainable or renewable such that they waste little energy. Fabrics are part of our daily lives in such a dense and comprehensive manner and so many are the functions performed and the fields of application that we hardly pay attention to them anymore. Making these common interwoven fibers “intelligent” means allowing them to perform unique functions and have the ability to do things such as communicate, transform, conduct energy and grow. Active smart textiles become a device for communication with our body and the external environment surrounding it. Smart garments can interact with all our senses: they can be seen, touched, smelled, felt and even tasted. The logic of smart textiles, therefore, rides on the precondition that the fabric is closely connected with the stimuli that our body normally receives and releases through the senses. The key concept is to exploit this phenomenon to one’s advantage, making the fabrics capable of reacting intelligently to stimuli. In

6 Additive Manufacturing and Smart Textiles

155

this way, the fabric can learn valuable information and become a tool that knows our temperature, humidity level, the pressure, the light to which we are subjected, etc. The ability to react to stimuli, to capture changes and transform information into data, to “learn” from our body or simply to do things that a simple fabric could not, gives this category of highly innovative products the nickname “smart”. In addition to the distinction between active and passive smart textiles, we can also distinguish between their extrinsic and intrinsic functions (Castano and Flatau 2014). When we talk about fabrics with “extrinsic” functions, we are referring to a particular category of intelligent fabrics that cause reactions and transformations in the external environment which are therefore experienced exclusively by the wearer of the technology. An example of this category of products are garments capable of reacting to the stimuli of the body by lighting up, changing color or shape, generating sounds or diffusing aromas. In this case, it is obvious that the fabric can interact not only with the wearer but also with an external audience to stimulate the five senses in various ways. The category includes all fabrics whose wefts include technological devices, microprocessors and nanotechnologies that allow the fabric to be, to all intents and purposes, a true digital technological device. The more the technology is merged with the fiber, that is, invisible to the eye such that the garment appears normal, the more sophisticated and innovative the e-textile. In the “intrinsic” reactions, on the contrary, the fabric reacts to the stimuli of the body and might not necessarily involve change that is physical or visible in the environment surrounding the wearer; the reaction is personal and experienced only by the wearer of the fabric. An example is sportswear that has long been designed to provide athletes with comfort, temperature control or humidity. The growth in popularity of sophisticated gadgets and garments with advanced technological functions that can intelligently adapt and react to the surrounding environment has driven demand and this, along with the reduction of manufacturing costs and the miniaturization of electronics, will lead to the entry of these products into the mass market in the next few years.

156

A. Cabigiosu

In terms of applications, the sectors most involved in technology are protection and military defense which have invested the most in the production of high-tech garments and accessories to improve performance and safety. The medical sector of healthcare also maintains a good and constant growth along with the sector destined to become more mainstream, that is, the sports and fitness sector. Today, smart textiles are also used in the fashion industry. However, in the convergence of fabric and technology, we expect something more than the aesthetic pleasantness: the performance.

6.4.1 Performance in Smart Textiles As mentioned previously, smart textiles diverge from traditional tissues in their performance. Fabrics with particular performance are not a new phenomenon. Natural fibers, for example, have always been considered for their intrinsic ability to comfort and regulate body temperature. Wool is a unique fabric with ability to keep a body warm and dry. Wool reacts well to organic solvents and industrial stain removers, making its cleaning and preservation easy over time and is, finally, exceptionally elastic, managing to regain its shape perfectly after stretching and crushing. The molecular science of natural fibers such as wool is a useful field of study for scientists and designers involved in the creation of engineering fibers. These professionals study the properties of natural fibers and then try to replicate them in synthetic fibers to simulate their yield. Or, they study existing fibers to artificially increase their performance. Among the smart textiles with increased performance there are fabrics that increase mobility, are thermoregulators or are concerned with aerodynamics (Shi et al. 2019). The fibers that increase the mobility of the wearer are those with stretching capacity and can reach 4–8 times their initial length12 such as polyurethane fibers, synthetic or natural rubber, nylon spandex and so on. The most common use of these fibers is in conjunction with others,

12 http://www.technica.net/NF/Caratteristiche_&_Prestazioni/elastomeriche.htm.

6 Additive Manufacturing and Smart Textiles

157

mixing yarns to create stretch fabrics. Elastomeric fibers have revolutionized sportswear and today have applications in almost every garment today. Interestingly many researches are trying to increase the elasticity also of active textiles, the integration of nanomaterials with high conductivity into stretchable polymer fibers as well as the efficiency of their mass production (Seyedin et al. 2020). Stretchable fiber conductors are appealing due to their potential to be woven into fabrics leading to active smart textiles (Zhao et al. 2019). Temperature-controlled garments bring positive outcomes in athletes’ performance and others who perform activities or work in particularly hot environments; the human body works more efficiently if kept at a constant temperature. It was initially for NASA space jumpsuits that such fabrics were first created, giving life to the Outlast® technology. Today, these materials are incorporated into the fabrics to create temperature control systems to keep us warm when we are cold and cool when we are hot, reducing the outgoing energy spent by the body in both operations (Krishen 2011). Outlast® is not the only fabric temperature control technology, “Return energy to the body” is the motto of Schoeller, a highly innovative Swiss company specializing in smart textiles that has patented EnergearTM technology, an energy recovery system for fabrics. The philosophy behind Schoeller’s study is based on far infrared rays and their beneficial properties that reflect the energy radiated by the human body, promote blood circulation and increase blood oxygen levels (McCann 2013). The push toward the search for fabrics and clothing that promote aerodynamics comes from the world of sports and every athlete’s need to improve the flow of air/water around the body allowing it to “slip” through and gain speed. An example of an intelligent fabric with aerodynamic performance in the swimwear sector is the LZR Racer suit by Speedo. Designed in 2008 in collaboration with NASA, it was banned in 2009 when it was discovered that 94% of Olympic-winning swimmers wore it during the competition. However, the LZR was so successful that the International Swimming Federation was forced to change the rules of swimwear in 2010. The functioning is as follows: the fabric is based on compression

158

A. Cabigiosu

to reduce skin vibrations and muscle oscillations; it also has a reinforced corset incorporated at the height of the torso to give greater stability to the swimmer; the athlete’s posture tends to change with fatigue, with hips falling and legs dragging. The support given by the corset ensures a constant posture throughout the competition, improving performance (Moria et al. 2010). Rubber, waterproof materials and neoprene for fabric coverings have also demonstrated, in the experiments, their ability to facilitate the sliding of water on the fabric and therefore to be suitable as aerodynamic garments. The latest innovation at Speedo is based on these fabrics and is the FastSkin 3 Racing System, a complete equipment for swimmers made of a suit, a cap and goggles that, as the name suggests, adhere to the athlete as a second skin ensuring aerodynamics to the body and faster performance in the race. The three accessories work together, and none of them makes sense if not combined with the others (Martin 2015). Aerodynamics is a theme that is also very important to all land-based athletes and, in this area, Nike is the king of innovation. In 2008, the company introduced a bodysuit for field and track athletes for the first time with a surface texture inspired by the dimples on golf balls; the Nike designers thought of applying the same logic of reducing the aerodynamic drag of the balls to the suits of athletes and gave birth to the AeroSwift Technology. The innovation was immediately applied to the Nike Pro TurboSpeed suit using a combination of special designs on the surface of the fabric, positioned at strategic points of the body, to increase performance on the track. The technology is not limited only to the fabric but also resides in the skillful construction of the athlete’s entire clothing to reduce body vibration and mass through the placement of a smooth strap, flat or glued sewing techniques and elastics and finished edges on the outside of the garment. In over 1000 hours of testing in ventilated tunnels with some of the world’s best track athletes, it was estimated that the Nike Pro TurboSpeed recovered 0.023 seconds on the 100 m track compared to the previous uniform.13 As Alam et al. (2019) in their review show, sports textile is paramount for achieving high performance in speed 13 https://news.nike.com/news/track-field-nike-pro-turbospeed-uniforms-and-nike-zoom-spikes.

6 Additive Manufacturing and Smart Textiles

159

sports. In these sports appropriate selection of textile fabrics based on athlete’s speed regime is important as knitted and woven fabrics behave aerodynamically differently due to their surface morphology. Body moisture management is one of the key performance criteria in assessing the comfort of a fabric and can be defined as a fabric’s ability to control the movement of liquids and body vapor during respiration of the skin through the garment that comes into contact with it. To be comfortable, a fabric must ensure that the body maintains a constant temperature during various activities and in a wide range of environmental conditions. Unlike the thermoregulation performance addressed previously, humidity management has the sole purpose of ensuring, with extreme ease, the passage of body sweat through the fabric and therefore strictly adheres to the breathing capacity of the head. The first moisture-controlled garments were created 50 years ago by the pioneers Gore-Tex® ,14 and since then, they have continued to undergo innovations over time to the present day. Today, a new breed of fabrics with nano-scale finishes has led to high levels of performance in controlling body moisture through garments that are breathable but simultaneously waterproof and windproof. Each Gore-Tex® garment is made up of a particular membrane which is the beating heart of the entire technology (Govindan 2018). The structure of the membrane is like that of a hedge; the wind literally gets trapped in the branching, unable to get to the body which makes the garment windproof. Finally, since the pores of the membrane are 700 times larger than a molecule of water vapor, the membrane allows sweat to escape, making the garment breathable. A similar technology is embodied in Geox shoes and apparel, fashion garments studied by the well-known brand to ensure comfort and breathable products (Gugliuzza and Drioli 2013). Govindan (2018) offers a review of the main technologies supporting the development of waterproof and breathable sportswear. This paper emphasizes how fabrics have been more recently improved by operating at a microscopic level using new coating technologies (stimuli-responsive polymers, phase change materials, shape Memory polymers, and so on) in the form of smart technology that facilitates active comfort to the 14 https://www.gore-workwear.co.uk/.

160

A. Cabigiosu

wearer especially in sportswear. To meet the functional requirements of sportswear, in addition to smart coating, new materials continuously appear, for which new applications are still being developed. With the tremendous variety of conventional textile fabrics and novel coating substances, there has never been a better time to innovate in the area of smart coatings for the improvement of comfort in apparel. One of the most important functions that fabrics can perform and, consequently, the clothing we buy, is to protect our body and keep it safe during any potentially dangerous activity. Durability over time is the key to user protection, which means extension of the life of the fabric, making it strong, resistant to friction, tearing and stretching, fireproof, resistant to chemicals and radiation and so on depending on the use. The fabrics and fibers that are used to protect against extreme environmental conditions have been cleverly engineered to adapt and counteract these hostilities. In 2013, the Swiss company Schoeller launched pyroshellTM, a permanent flame protection for polyamide and polyester fabrics applicable to stretch fabrics. Today also e-textiles are expected to maintain their functionalities also when they are subjected to adverse environmental conditions (Bogan et al. 2018). From body armor to fabrics that shield against unwanted radio frequencies and electronic spies, protective fabrics are now becoming increasingly common in our everyday lives and certainly deserve a place in the smart textile category. In a world now based on data transfer and wireless communications, shielding fabrics are designed to protect us from the invisible radio waves that surround us every day. The real health effects of prolonged exposure to these waves are still unknown, so protecting ourselves from them is becoming significant to prevent unpleasant consequences (Sahmelikoglu et al. 2019). Swiss Shield is a Swiss company engaged in the production of yarns for fabrics that can protect the wearer from electromagnetic fields generated by mobile phones, cordless phones, microwave ovens, wi-fi networks, television broadcasts and so on. Their fabrics are used in various fields, from everyday clothing to industry, from the military to furniture (Ozen et al. 2015).

6 Additive Manufacturing and Smart Textiles

161

6.4.2 Nanotechnologies, E- and Smart Textiles Nanotechnology is the handling of material at an atomic or molecular level and is expected to have a major impact on the textile industry in the future. Nanoparticles are either inserted directly as fillers into the fibers (in this case it is called composite fiber) or applied through different coating techniques once the yarns have been braided or knitted to create the garment (spray coating or electrostatic deposition) in the finishing phase of the fabrics to give them particular functional properties and improve their mechanical properties. The final results can cover an extensive range of products from garments that control humidity, that are super hydrophobic, anti-stain or anti-fold to garments that can provide the body with medicines, aromatherapy and anti-aging moisturizing treatments (Yetisen et al. 2016; Sawhney et al. 2008). For example, silver has powerful antimicrobial properties; it creates an ion shield that can prevent the growth of bacteria and fungi. Textile materials and clothing are known to be susceptible to microbial attack and this may lead to objectionable odor, dermal infection, product deterioration, allergic responses and other diseases. Nanotechnology, by manipulating structural materials on the level of individual atom and molecules, is capable of enhancing physical properties of conventional textiles in many areas such as antimicrobial properties, water repellence, dye ability, color fastness and strength of many textile materials, even silk (Smitha and Rajni 2017). Nitinol (nickel and titanium) is an example of material capable of changing shape and therefore belonging to the category of products with shape memory. This material has extraordinary properties including super elasticity and damping capacity. Nitinol shape memory alloys undergo a phase change in their crystalline structure when heated or cooled. Nitinol alloys are the most of-ten used shape memory alloys in the area of smart textile materials, especially in clothes (Lah et al. 2016). E-textiles belong to the category of extrinsic tissues, that is, as mentioned previously, those that produce effects and reactions that can be experienced by the wearer and those around them; they can interact with the environment that surrounds the wearer to capture stimuli and

162

A. Cabigiosu

stimulate in turn. These tissues can conduct, create, diffuse and conserve energy, illuminate or change color. As the demand for flexible and comfortable electronics grows, new conductive materials are being developed and incorporated into fabrics. Researchers at the University of Tokyo have developed a highly conductive, rubbery, stretchy material with which elastic circuits can be built. The wires are made of carbon polymer nanotubes capable of stretching 1.7 times the original size without any effect on performance. The forecasts for the future of this material are the most promising; it is believed that it will particularly revolutionize the world of sports and robotics (Bao 2016). Power Felt is a project that has been worked on for some time at the Nanotechnology and Molecular Materials Centre at Wake Forest University, North Carolina. Composed of tiny carbon nanotubes locked in flexible plastic fibers, resembling in every respect a normal fabric, Power Felt uses the temperature differentials of the environment or the body to generate energy that can recharge a mobile phone, a small medical device or a wearable sensor (Neal 2012). In the future, we could recharge our cellular devices, medical devices and other battery-operated devices by bringing them trivially closer to our garment. Today, a multitude of artists, designers and researchers are already experimenting with electroluminescent and photonic fabrics to create sets and costumes and even some that can respond in time to music. Musicians and performers of the caliber of Lady Gaga, U2, Katy Perry, Black Eyed Peas have already used electronic costumes in their shows that can change color or light up during the performance. Two of the world’s most watched television events—the opening ceremony of the Sochi Winter Olympics and the half time show of the American Super Bowl—chose LED costumes for incredible and spectacular visual effects. The result, integrated with sounds, lights, costumes and stage, engaged the audience who could create a connection with the performance. Therefore, the fields of application of such manipulations in fabrics are essentially fashion, design and art (Peppler 2013). Giving clothes a futuristic upgrade means redesigning their shape and function. One of the most fascinating examples of the tech-chic

6 Additive Manufacturing and Smart Textiles

163

trend is the dress called Medusa made by the visionary designer Richard Nicoll. It is made of optical fibers which makes clear the concept of technology intersecting with fashion and digital innovation. The model almost seemed to float on the dark catwalk of London Fashion Week, simulating the movements of the marine animal of the same name (Hill 2015). optical fibers are filaments of glassy or plasticized materials that allow the light to pass through them for guided propagation. Fabrics made of fiber optic filaments transmit a single LED of light along their entire length, transforming a single point of bright light into an illuminated path along the entire surface of the fabric. The visual effect is mesmerizing and scenic as demonstrated by the fabric by DreamLux, an Italian company that for 60 years has been studying the art of innovative weaving with optical fibers, producing luxury fabrics for furniture (Kelly and Cochrane 2015). Finally, photoluminescent fabrics are those that increase their brightness in response to the surrounding environment, producing the so-called “glow in the dark” effect. Inspired by the process of photosynthesis, these fabrics absorb energy radiated by the sun during the day and convert it into electricity, releasing luminescence during the night. The stability and durability of this kind of photoluminescent fabrics makes them particularly suitable for applications in the fields of design, furniture and security. Designers and artists are also studying the manipulation of color as well as lighting, and everything that includes the visual and aesthetic sphere deserves the same attention in their work. Therefore, it often happens that these two aspects are incorporated simultaneously in a fabric to create a real, living work of art. The most classic and well-known examples of fabrics that can change color are the thermo chromatic ones which, as the word itself suggests, are influenced by the fluctuation of temperature owing to the introduction of low-voltage electric current which when varied causes color changes (Lu et al. 2016). Researchers have indeed gone much further; the latest studies concern the observation of marine creatures and their unique way of defending themselves from threats through camouflage and color mutations and

164

A. Cabigiosu

aim to imitate these processes through muscles of artificial fibers to be applied on smart textiles (Pikul et al. 2017). Hopes for the near future are that these technologies will make fabrics so intelligent that they will independently adapt to external stimuli and the environment around them at any time, changing color and ensuring successful camouflage. In addition to traditional fabrics, there is a wide range of smart nonwoven fabrics used in applications ranging from women’s clothing to body protection and so on. Many of these materials are developed in the form of foams, films and laminated compounds. Experiments with these particular non-woven fabrics have resulted in cutting-edge designs that demonstrate the dynamism of these materials. New manufacturing techniques have been developed for welding and sewing, laser cutting and 3D printing (Duncan et al. 2018). One of the primary functions of non-woven fabrics is insulation. The Italian research laboratory Grado Zero Espace has worked on a project, in collaboration with the European Space Agency (ESA) called “Safe&Cool”. During the implementation of the thermal and cooling qualities of the fabrics, Grado Zero developed aerogel, a fluid material made of nanogel originally designed to insulate instruments in space. Capable of withstanding extreme temperatures and virtually weightless, aerogel was later applied by the company to clothing products. The “Absolute Zero” jacket, owing to its insulating gel, can withstand and protect at temperatures below −50 °C (Pailes-Friedman 2016). One of the main problems with the use of protective sports equipment is that they, in one way or another, inhibit the athlete’s movements and inevitably damage their performance, which often leads to athletes to giving up, risking injury or, in extreme cases, even death. To solve this problem a new group of materials which deserve to be counted among the list of smart drawn up so far, is emerging: the smart foams. These materials work to free the athlete from the weight and encumbrance of the classic protective equipment by promoting the movements of the body without sacrificing safety during the race. For example, Poron® is a microcellular technology that works to dissipate the force resulting from an impact on a large surface through phase changes. It is a light, breathable and flexible foam able to react to very violent impacts. When the

6 Additive Manufacturing and Smart Textiles

165

impact occurs, phase change occurs and the molecules stiffen, ensuring protection.

6.5

Conclusions

The use of 3D printing in the fashion industry poses a number of advantages compared to traditional manufacturing processes, including an accelerated design and production processes, lower inventory costs related, warehousing, packaging, and transportation. This chapter has discussed the advantages and disadvantages of 3D printing methods in the fashion industry with a focus on shoes design and production. In addition, the chapter provides an overview on how smart textiles are used in fashion, their typologies, evolution and functionalities. Today, all these technologies jointly contribute to innovate fashion firms’ offering and improve the ability of companies to answer to specific clients’ requirements thanks to the direct involvement of customers, products customization or via smart textiles with functionalities tailored on clients’ needs. This may become particularly relevant in an industry in which main clients are Millenials, digital natives that value innovative products and materials as well as those technologies, such as applications that scan shoes, that ensure new and better shopping experience. Also, as discusses in previous chapters, Maisons try to meet Millennials’ needs by introducing street-style collections, which include those garments that more than other benefit from the above technologies and new textiles, such as sneakers. Finally, we expect that both Generation Y and Z will especially value active smart textiles, which improve the communication and fit between our body and the external environment. But while additive manufacturing and smart textiles can be the next frontier of competition in fashion, in luxury fashion they still present some criticalities. In this setting, manual and artisan processes are largely considered one of the pillars of the traditional luxury and an important competitive factor: production processes are not standardized and repeatable, and the personal skills of expert craftsmen play a leading role. Firms in the luxury industry will need to craft a new luxury concept

166

A. Cabigiosu

by combining technology with heritage, technology and uniqueness not via craft production but relying on digital one-to-one customization processes. Today printed shoes can be made with smart, soft and flexible materials designed to support and flex with the movement of each foot. These shoes utilize a 4D printing, or an ultra-personalized approach in that they are printed and designed to fit the user while they move and change (Nachtigall et al. 2018). This is the new frontier of luxury coherent with Generations X and Y’s mindsets. Although 3D printing and smart textiles have a clear potential for the new luxury model, it remains currently under-researched their introduction process, the impact on the supply chain and on firms’ core competences and competitive advantage. Future studies are needed to analyze new business models that will include an ever-increasing number of technologies (computer aided design tool, augmented reality systems, e-textiles and many others) supporting luxury firms. Finally future studies are of importance for appreciating if and how 3D printing can be employed for mass production processes and how small firms can approach additive manufacturing and smart textiles. While today 3D printing is used for prototyping and small batches production also by small firms, eventually relying on external service providers, large scale production is still limited and challenging also for larger competitors.

References Alam, Firoz, Harun Chowdhury, and Hazim Moria. 2019. A review on aerodynamics and hydrodynamics in sports. Energy Procedia 160: 798–805. Amza, C˘at˘alin, Aurelian Zapciu, and Diana Popescu. 2019. 3D-Printed shoe last for bespoke shoe manufacturing. MATEC Web of Conferences 290: 1–6. Arribas, Veronica, and José A. Alfaro. 2018. 3D technology in fashion: From concept to consumer. Journal of Fashion Marketing and Management: An International Journal 22 (2): 240–251. Attaran, Mohsen. 2017. The rise of 3-D printing: The advantages of additive manufacturing over traditional manufacturing. Business Horizons 60 (5): 677–688.

6 Additive Manufacturing and Smart Textiles

167

Bao, Zhenan. 2016. Skin-inspired organic electronic materials and devices. MRS Bulletin 41 (11): 897–904. Baumers, Martin, and Matthias Holweg. 2019. On the economics of additive manufacturing: Experimental findings. Journal of Operations Management 65 (8): 794–809. Ben-Ner, Avner, and Enno Siemsen. 2017. Decentralization and localization of production: The organizational and economic consequences of additive manufacturing (3D printing). California Management Review 59 (2): 5–23. Bogan, Kelly, Abdel-Fattah M. Seyam, and Jeremiah Slade. 2018. Evaluation of the electrical integrity of E-textiles subjected to environmental conditions. The Journal of the Textile Institute 109 (3): 393–409. Bonesso, Sara, Fabrizio Gerli, Claudio Pizzi, and Eleftherios R. Boyatzis. 2020. The role of intangible human capital in innovation diversification: Linking behavioral competencies with different types of innovation. Industrial and Corporate Change 29 (3): 661–681. Boschma, Ron A., and Anne L.J. Ter Wal. 2007. Knowledge networks and innovative performance in an industrial district: The case of a footwear district in the South of Italy. Industry and Innovation 14 (2): 177–199. Brooke, Eliza. 2013. Architect Bradley Rothenberg does 3d-printed fashion at the annual victoria’s secret show. Techcrunc h, available at https://techcr unch.com/2013/12/06/at-victorias-secret-annual-show-3d-printed-fashion/? guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8& guce_referrer_sig=AQAAAKy9guX5JwjakdW3umfu07ou9K6G-3l8g8RjNp aTuBd0jwDJBow2sJo-URHOZiCu5qedDh70Dh5ePOAp1KSZ2Mzv-2YE qeLJtCxt8qlxzdHxwcwR5-AVVWCpxLdlfB1uNz7uC7C0bHk05c050qR_ Cl2qB-7NHy0CT2M2jzAziaMm. Accessed on 14 Feb 2020. Castano, Lina M., and Alison B. Flatau. 2014. Smart fabric sensors and e-textile technologies: A review. Smart Materials and Structures 23 (5): 053001. Duncan, Olly, Shepherd Todd, Moroney Charlotte, Foster Leon, Praburaj D. Venkatraman, Winwood Keith, Tom Allen, and Alderson Andrew. 2018. Review of auxetic materials for sports applications: Expanding options in comfort and protection. Applied Sciences 8 (6): 941–974. Govindan, Nalankilli. 2018. Smart, waterproof, breathable sportswear–a review. Journal of Textile and Apparel, Technology and Management 10 (3): 1–13. Grand View Research. 2019. Smart textile market size worth $5.55 billion by 2025, report available at https://www.grandviewresearch.com/press-release/ global-smart-textiles-industry. Accessed on 8 Apr 2020.

168

A. Cabigiosu

Gugliuzza, Annarosa, and Enrico Drioli. 2013. A review on membrane engineering for innovation in wearable fabrics and protective textiles. Journal of Membrane Science 446: 350–375. Hill, Jonathan. 2015. A landscape of architecture, history and fiction. Abingdon, Oxon: Routledge. Huang, Simon H., Peng Liu, Abhiram Mokasdar, and Liang Hou. 2013. Additive manufacturing and its societal impact: A literature review. The International Journal of Advanced Manufacturing Technology 67 (5–8): 1191– 1203. Kapetaniou, Christalla, Alison Rieple, Alan Pilkington, Thomas Frandsen, and Paola Pisano. 2018. Building the layers of a new manufacturing taxonomy: How 3D printing is creating a new landscape of production eco-systems and competitive dynamics. Technological Forecasting and Social Change 128: 22–35. Kelly, Fern M., and Cédric Cochrane. 2015. Color-changing textiles and electrochromism. In Handbook of smart textiles, 1–26. Singapore: Springer. Kim, Sohyun, Seong Hiunjin, Her Yusun, and Chun Jaheoon. 2019. A study of the development and improvement of fashion products using a FDM type 3D printer. Fashion and Textiles 6 (1): 1–24. Kobayashi, Takumi, Naoto Ienaga, Yuta Sugiura, Hideo Saito, Natsuki Miyata, and Mitsumori Tada. 2018. A simple 3D scanning system of the human foot using a smartphone with depth camera. Journal of the Japan Society for Precision Engineering 84 (12): 996–1002. Kokuryo, Daisuke, Toshiya Kaihara, Shota Suginouchi, and Swee Kuik. 2016. A study on value co-creative design and manufacturing system for tailormade rubber shoes production—Construction of value co-creative smart factory. In 2016 IEE International Symposium on Flexible Automation (ISFA), August 1–3, 2016. Koncar, Vladan. 2016. Smart textiles and their applications. Duxford: Woodhead Publishing. Krishen, Kumar. 2011. Expert commentary: Multiple aspects of space technology transfer. IETE Technical Review 28 (3): 195–206. Lah, Alenka Šalej, Fajfar Peter, Lavriˇc Zoran, Bukošek Vili, and Rijavec Tatjana. 2016. Preparation of shape memory NiTiNOL filaments for smart textiles. Tekstilec 59 (2): 168–174. Laplume, Andre, Gerald C. Anzalone, and Joshua M. Pearce. 2016a. Opensource self-replicating 3-D printer factory for small-business manufacturing. The International Journal of Advanced Manufacturing Technology 85 (1): 633– 642.

6 Additive Manufacturing and Smart Textiles

169

Laplume, Andre, Gerald C. Anzalone, and Joshua M. Pearce. 2016b. Global value chains from a 3D printing perspective. Journal of International Business Studies 47 (5): 595–609. Lewis, Tasha L., and Brittany Haas. 2014. Managing an iconic old luxury brand in a new luxury economy: Hermès handbags in the US market. Global Fashion Brands: Style, Luxury & History 1 (1): 167–178. Lipson, Hod, and Melba Kurman. 2013. Fabricated: The new world of 3D printing. Indianapolis: Wiley. Lu, Xin, et al. 2016. Flexible and stretchable chromatic fibers with high sensing reversibility. Chemical Science 7 (8): 5113–5117. Marconi, Marco, Alessandra Papetti, Marta Rossi, and Giulia Di Domizio. (2019). Improving the shoes customization process through a digitallyenabled framework. In International Conference on Design, Simulation, Manufacturing: The Innovation Exchange, 317–328. Springer, Cham. Martin, John. 2015. Go fast with the flow. Mechanical Engineering 137 (05): 40–45. McCann, J. 2013. Smart protective textiles for older people. Smart Textiles for Protection 2013: 244–275. Menato, Silvia, Giuseppe Landolfi, and Marino Alge e Marzio Sorlini. 2014. Empowering widespread shoe personalization via a 3D foot scanning App. In 2014 International Conference on Engineering, Technology and Innovation (ICE), June 23–25 2014, IEEE. Micelli, Stefano. 2011. Futuro artigiano. L’innnovazione nelle mani degli italiani. Marsilio. Venezia. Mordor Intelligence. 2019. Global textile industry—Growth, trends, and forecast (2020–2025), available at https://www.mordorintelligence.com/ industry-reports/global-textile-industry—growth-trends-and-forecast-201 9–2024. Accessed on 7 Apr 2020. Moria, Hazim, Harun Chowdhury, Firoz Alam, and Aleksandar Subic. 2010. Comparative aerodynamic analysis of commercial swimsuits. Sports Technology 3 (4): 261–267. Nachtigall, Troy Robert, Tomico Oscar, Wakkary Ron, Wensveen Stephan, van Dongen Pauline, and van Noorden Leonie Tenthof. (2018). Towards Ultra Personalized 4D Printed Shoes. In Extended Abstracts of the 2018 CHI Conference on Human Factors in Computing Systems, 1–9, April 21–26, 2018, Montréal, Canada. Neal, Katie. 2012. Power Felt gives a charge. Wake Forest News, available at https://news.wfu.edu/2012/02/22/power-felt-gives-a-charge/. Accessed on 3 July 2019.

170

A. Cabigiosu

Ngo, Tuan D., Alireza Kashani, Gabriele Imbalzano, Kate T. Nguyen, and David Hui. 2018. Additive manufacturing (3D printing): A review of materials, methods, applications and challenges. Composites Part B Engineering 143: 172–196. Orazi, Leonardo, and Barbara Reggiani. 2020. Innovative method for rapid development of shoes and footwear. The International Journal of Advanced Manufacturing Technology 106 (5): 2295–2303. Ozen, Mustafa Sabri, Erhan Sancak, and Mehmet Akalin. 2015. The effect of needle-punched nonwoven fabric thickness on electromagnetic shielding effectiveness. Textile Research Journal 85 (8): 804–815. Ozturk, Emrah, Hasan Koseoglu, Mustafa Karaboyaci, Nevzat O. Yigit, Ulku Yetis, and Mehmet Kitis. 2016. Sustainable textile production: Cleaner production assessment/eco-efficiency analysis study in a textile mill. Journal of Cleaner Production 138: 248–263. Pailes-Friedman, Rebecca. 2016. Smart textiles for designers: Inventing the future of fabrics. London: Laurence King Publishing. Peppler, Kylie A. 2013. STEAM-powered computing education: Using etextiles to integrate the arts and STEM. IEEE Computer 46 (9): 38–43. Pikul, J.H., S. Li, H. Bai, R.T. Hanlon, I. Cohen, and R.F. Shepherd. 2017. Stretchable surfaces with programmable 3D texture morphing for synthetic camouflaging skins. Science 358 (6360): 210–214. Riello, Giorgio, and Peter McNeil. 2006. Shoes: A history from sandals to sneakers. Oxford: Berg. Sahmelikoglu, Ayse Gizem, Sacide Karakas, Ayfer Metin Tellioglu, Niyazi Acer, and Mehmet Bilgen. 2019. Radioprotection in prenatal care using a nonwoven fabric with electromagnetic shielding property. Erciyes Medical Journal 41 (4): 444–450. Sawhney, Amar Paul Singh, B. Condon, K.V. Singh, S.S. Pang, G. Li, and D. Hui. 2008. Modern applications of nanotechnology in textiles. Textile Research Journal 78 (8): 731–739. Seyedin, Shayan, Simge Uzun, Ariana Levitt, Babak Anasori, Genevieve Dion, Yury Gogotsi, and Joselito M. Razal. 2020. MXene composite and coaxial fibers with high stretchability and conductivity for wearable strain sensing textiles. Advanced Functional Materials 30 (12): 1–11. Shi, Qiuwei, Jianqi Sun, Chengyi Hou, Yaogang Li, Qinghong Zhang, Hongzhi Wang. 2019. Advanced functional fiber and smart textile. Advanced Fiber Materials 1: 3–31.

6 Additive Manufacturing and Smart Textiles

171

Smitha, M.S., and Singh Rajni. 2017. Microwave mediated impregnation of silver nanoparticles on silk fabric for hygienic clothing. Journal of Bacteriol Mycol 5 (4): 00142. Stacey, Michael. 2014. The FAB LAB network: A global platform for digital invention, education and entrepreneurship. Innovations Technology, Governance, Globalization 9 (1–2): 221–238. Starner, Thad. 2001. The challenges of wearable computing: Part 1. IEEE Micro 21 (4): 44–52. Sun, Lushan, and Li Zhao. 2017. Envisioning the era of 3D printing: A conceptual model for the fashion industry. Fashion and Textiles 4 (1): 25. Turinetto, Marco, Carla Lunghi, and Francesca Romana Rinaldi. 2019. What’s fashion? It’s method!: The values of idea in fashion companies. Milan: Egea. Vanderploeg, Alyson, Seung-Eun Lee, and Michael Mamp. 2017. The application of 3D printing technology in the fashion industry. International Journal of Fashion Design, Technology and Education 10 (2): 170–179. Wang, Shiyong, Jalifu Wang, Daqiang Zhang, Di Li, and Chunhua Zhang. 2016. Towards smart factory for industry 4.0: A self-organized multi-agent system with big data based feedback and coordination. Computer Networks 101: 158–168. Weller, Christian, Robin Kleer, and Frank T. Piller. 2015. Economic implications of 3D printing: Market structure models in light of additive manufacturing revisited. International Journal of Production Economics 164: 43–56. Winick, Erin. 2019. These amazing Met Gala looks took more than a thousand hours of 3D printing. MIT Technology Review, available at https://www.technologyreview.com/s/613500/these-amazing-metgala-looks-took-more-than-a-thousands-hours-of-3d-printing/. Accessed on 7 Aug 2019. Yetisen, Ali K., et al. 2016. Nanotechnology in textiles. ACS Nano 10 (3): 3042–3068. Zanardini, Massimo, A. Bacchetti, M.A. Pour, and S. Zanoni. 2015. Benefits and costs of additive manufacturing applications: An evaluation guideline. In Proceedings of the Summer School Francesco Turco, 43–48, September 13– 15, 2016, Naples. Zhao, Yunmeng, Dashen Dong, Shu Gong, Laurence Brassart, Yan Wang, Tiance An, and Wenlong Cheng. 2019. A moss-inspired electroless goldcoating strategy toward stretchable fiber conductors by dry spinning. Advanced Electronic Materials 5 (1): 1800462–1800470.

Part III The Business Model of the Most Growing Brand: Gucci and the Kering Group

7 The Kering Group and Gucci’s Success

7.1

The Kering Group

The Kering Group, an international holding company based in Paris, is undoubtedly one of the dominant players in the world of luxury, owing to the leading brands and retailers it has acquired during the years and the ability to connect with Millennials by leveraging on their heritage and brand in combination with the opportunities offered by digitalization. After tracing the most important events in the group history, this section provides a synthesis and analysis of the Group’s structure and drivers of growth. The Group history dates back to 1963 when François Pinault opened the establishment François Pinault in Renne, France, a company specializing in timber trade. Owing to the excellent revenues and some acquisitions, in 1988, Pinault SA became a company listed on the Paris Stock Exchange. Only two years later, it took control of CFAO, Compagnie française de l’Afrique occidentale, initially engaged in the trade of consumer products and then specialized in the distribution of industrial products such as automobiles and pharmaceuticals. The years to come were marked by a series of consecutive acquisitions: in 1991 Conforama, a French furniture retailer; in 1992 Printemps, a French © The Author(s) 2020 A. Cabigiosu, Digitalization in the Luxury Fashion Industry, Palgrave Advances in Luxury, https://doi.org/10.1007/978-3-030-48810-9_7

175

176

A. Cabigiosu

chain of department stores; in the same year, Pinault also bought the majority of the shares of Redoute, a French retailer of mail order clothing and in 1994 Fnac, a French retailer of multimedia, books and electronics. It is in this phase that, following the merger with Redoute, the group changed its name to Pinault-Printemps-Redoute, which in 2005 was named as PPR. Pinault therefore created his empire starting from the commercialization of wood, subsequently gaining ground in the world of the information and multimedia and thereafter in the wine sector, becoming the owner of the company Château Latour and controlling one of the most important retail outlets (Donzé 2018). In 1999, Pinault modified his strategy and started considering the luxury fashion industry. It was the year in which Pinault and Arnault, President and CEO of the LVMH Group, got involved in the clash over the acquisition of the Gucci Group, the event that was remembered as “The Handbag War”. This was the period in which Gucci returned to the forefront owing to the artistic direction of Tom Ford and the leadership of Domenico De Sole, thus becoming the coveted prey of the two French giants. Arnault wanted to enrich his already prestigious portfolio that included fashion, accessories, perfumes, watches and wines, by incorporating Gucci within its group. Pinault, on the other hand, was attempting to take control of the luxury division of the Group to achieve his goal of entering the fast-growing luxury industry. In 1999, Pinault acquired 42% of shares and in 2001, he finally acquired the control over the Gucci Group (Kapner 2001). In 1999, the Group also acquired Yves Saint Laurent and gained control over Sergio Rossi, the Italian footwear brand which was subsequently sold in 2015. In 2000, the Group entered the jewelry and watch sector acquiring Boucheron. The year 2001 was the year of the Italian Bottega Veneta, famous for its leather bags, the French Balenciaga and of Stella McCartney who, however, turned independent in 2018. In the following years, the Group acquired Alexander McQueen, the British luxury fashion house, Puma, Brioni, Volcom, Qeelin, Christopher Kane, Pomellato, Altuzarra, Tomas Maier, Ulysse Nardin and created a joint venture with Yoox S.p.A (Donzé 2018).

7 The Kering Group and Gucci’s Success

177

After the radical transformation from a conglomerate primarily focused on distribution into an international group of luxury and lifestyle brands, on 22 March 2013, PPR announced the change of name of the Group to one that would reflect this new identity. PPR became Kering on 18t June 2013. The name Kering embodies the Group’s philosophy, based on the pronunciation which is similar to “caring”, which expresses the corporate culture at the base of taking care of people, the environment, its customers and all stakeholders. The suffix “-ing” symbolizes the dynamism and movement that have always been part of the Group’s DNA. The root “ker”, which can be translated from Breton as “home”, as well as “honoring” from French, tells the story of the Group’s protective role toward its brands. Just like the new symbol, the stylized owl, a discreet and protective animal, is the personification of wisdom and intelligence. Finally, the new signature “Empowering imagination” embodies the Group’s vision: to encourage the creativity of its brands, strengthen brand managers and designers by pushing them toward ambitious strategies, developing talents and realizing their potential.1

7.1.1 Holding Structure Over the last few years, the Kering Group has become an integrated group encompassing some of the world’s most prestigious luxury brands. The multi-brand business model is structured in such a way as to help each brand realize its growth potential, benefiting from share-centralized functional areas and projects. The Group operates internationally, and its chief markets are Europe, America and Asia-Pacific (including Japan). The Group has three main Maisons: Couture & Leather Goods, Watches and Jewelry, and Kering Eyewear. The objective is to entrust the various activities to a more circumscribed and professional management to strengthen control and concentrate the skills and resources available to support its brands and encourage their growth (Pambianconews 2014).

1 https://www.kering.com/en/news/ppr-becomes.

178

A. Cabigiosu

The Couture & Leather Goods division manages the brands Gucci, Bottega Veneta, Yves Saint Laurent, Alexander McQueen, Balenciaga and Brioni and was initially placed under the control of Marco Bizzarri. From September 2015, Grita Loebsack was directly in charge of emerging brands, namely Alexander McQueen, Balenciaga, Brioni, Christopher Kane, Stella McCartney and Tomas Maier. The other brands remained under the direction of François-Henri Pinault and the brands Christopher Kane, Stella McCartney and Tomas Maier were dismissed. The Watches and Jewelry division includes Boucheron, Pomellato and Dodo, Ulysse, Nardin, Girard-Perregau, JeanRichard and Qeelin brands (DeMarco 2016). The Kering Eyewear took its first steps as a startup in 2014 and after that year underwent exponential growth. Today, it has 15 Luxury and Lifestyle brands. Today, Kering Eyewear designs, develops and distributes eyewear for Gucci, Cartier, Saint Laurent, Balenciaga, Bottega Veneta, Alexander McQueen, Stella McCartney, Alaïa, Courrèges, Montblanc, Brioni, Boucheron, Pomellato, McQ and Puma (Kering Activity Report 2018). From 2018, Kering started investing in the Sports and Lifestyle segment dedicated to sportswear which included Puma, Volcom and Cobra. Cobra was acquired by Puma in 2010, while the Californian sports accessories brand Electric was sold in 2016. In 2018, Kering sold Volcom, considered no longer a strategic brand, as well as Puma whose progressive distribution of shares began. Pinault wanted to send a clear message: focus and strengthen the luxury sector. During that year, Stella McCartney also left and regained 100% control of her brand. The same year, Christopher Kane announced that he wanted to regain full control of his brand as well. This reorganization seems to shed light on a new strategy of the Group which aims to speed up the rationalization of its assets to focus on the most profitable luxury brands such as Gucci, Saint Laurent and Balenciaga (Muret 2018). The Group strategy is focused on brands’ organic growth and on strengthening their synergies and integration. Each House must boost the efficiency of commercial operations as well as improve customer experience and the multiple sales channel approach. While the Houses

7 The Kering Group and Gucci’s Success

179

each retain their unique character and exclusivity, they also benefit from synergies deriving from centralized functions and shared resources at the Group level. For example, most of the Houses now rely on Kering Eyewear for their eyewear lines, thus combining Group expertise and their own creativity. Furthermore, the Group manages the relationships with shared supplies of raw materials and is opening shared logistics centers. Another contributor is the Group’s ability to share an international pool of talents and skills by implementing an integrated human resources structure based on international mobility and a shared culture. Kering is also carrying out numerous transversal projects to strengthen its brands in the digital or sustainability areas. In 2003, Kering created a sustainability team and in 2007, a Sustainability Department to develop shared best practices and plans. From 2010, managers’ rewards were computed by also considering sustainability objectives. In 2013, the group was included in the Dow Jones Sustainability Index (DJSI) and on the CDP Climate Disclosure Leadership. During the same year, the Materials Innovation Lab (MIL) was installed which is still helping designers choose more sustainable and conscientious options for their creations.2The first Group Environmental Profit & Loss (EP&L) was released in 2015 and two years later, the 2025 Strategy was announced worldwide. During the same year, Kering was declared to be the most sustainable association within the Textile, Apparel and Luxury Goods sector. In 2018, the organization distributed its very own first integrated report and the following year, it was graded as the second-most sustainable group in the world. It created a 2025 Strategy plan which illustrates how to reduce Maisons’ environmental impact and the goals to be achieved by this date. Kering aims to create sustainable value for customers and for the society as a whole and has launched the fashion industry’s first verified ecological supply chain and verified regenerative sourcing solutions. It has also developed a new network of farms from which it can source sustainable materials. The Group is the first to use 100% traceable

2 https://keringcorporate.dam.kering.com/m/7a57d2f917ef38a2/original/2018-Reference-doc

ument-pdf#page=47.

180

A. Cabigiosu

organic cotton with environmental impact 80% lower than that of traditional cotton. The Group has been using these standards since 2018 to assess and select new suppliers to assist already approved partners to comply with technical support, training and best practice sharing based on the Kering Standards. The Group is also planning to roll out its Animal Welfare Standards in 2019. In 2018, Kering joined the Sustainability Committee with a new committee made up of Millennials inside and outside the Group, “The Young Leaders Advisory Group”, assuming the forward-looking role of bringing new ideas and new ways of thinking within (Dekhili et al. 2019; Franco et al. 2019). Owing to the support of the Group, the different brands are now bringing to light unique and innovative ideas and developing new product categories that are meeting the taste and aspirations of consumers, arousing desire, dream and emotion. The Group is also undertaking many projects within the omnichannel framework supported by digital technologies. A very important growth lever for the Group is the optimization of sales in the direct stores of each brand. Brands, owing to the support of dedicated teams, implement various initiatives to increase the in-store sales and the customer experience. Moreover, to reach new consumers and stay constantly connected and present simultaneously on different communication platforms, it is necessary to integrate sales strategies in different channels. From distribution agreements to e-commerce to social media to travel retail, brands must know how to manage every point of contact with the consumer and personalize their experience. Today, Kering is announcing new milestones on its digital journey. The following initiatives will strengthen Kering’s focus on enhancing the Group’s omnichannel capabilities and further developing its Houses’ digital activities. Kering is working on a suite of apps in partnership with Apple to be used by Houses’ staff in store. The first of these is a store experience app that allows sales associates in-store access to stock levels in real time to help them provide their customers a fully personalized service. Via the app, sales associates know instantly if a specific size or color is available in store or if it can be ordered from other stores; they can also give customized styling recommendations. In addition, Kering is exploring advanced technologies with Apple to further enhance client

7 The Kering Group and Gucci’s Success

181

experience on iOS devices including improving the in-store payment experience. Kering developed a new approach to customer service with centralized teams in Europe and the US, focusing on addressing customers’ requests. Gucci, Saint Laurent and Bottega Veneta have dedicated teams, while other brands have grouped their efforts under a single customer service unit operated by Kering on their behalf. All brands use best-in-class digital tools that provide their Client Service Representatives with a 360 view of each client, enabling them to deliver a fully personalized experience (McDowell 2019). A China digital team has been created to specifically adapt digital practices and solutions to the Chinese market. Kering has also launched several pilot projects using data science techniques to deliver personalized messages and experiences to customers based on their profile and purchasing history. All Kering Houses have launched or are launching WeChat mini programs to build as close a relationship as possible with their Chinese customers and to establish efficient social commerce (Business Wire 2018). Kering will fully internalize the e-commerce activities currently handled through the joint venture with YNAP. Following a highly successful and fruitful seven-year partnership with YNAP, these ecommerce activities will transit to Kering in the first half of 2020. Coordinated efforts and shared expertise with YNAP have enabled Kering Houses to enhance the level of service of their e-commerce websites. Most of them now offer services such as check availability, instore reserve, make store appointment, in-store pick up, in-store return, in-store exchange and in-store online purchase. Kering also has an innovation team which task is to instill an internal culture of innovation and to work on more disruptive technologies (Business Wire 2018). Overall, the Group’s goal is to shape the luxury of tomorrow and be more responsible and environment-friendly while remaining faithful to the extraordinary history and excellence of each Maison. Confident of the Group’s support for functions such as logistics, purchasing, legal affairs, accounting and development of new tools, each brand can focus on its core business: creativity, production, quality, creation of customer relationships and brand communication.

182

A. Cabigiosu

7.1.2 Group Performance In recent years, the luxury goods market has proved to be dynamic and has shown the ability of recovering quickly and effectively. This is confirmed by the numbers of the large Luxury Groups that have recorded double-digit growth. The Kering Group’s brands also have been achieving brilliant results particularly Gucci. In 2015, the creative director in Gucci changed with the arrival of Alessandro Michele who substituted Frida Giannini and profoundly changed the brand strategy. The same year, Demna Gvasalia substituted Alexander Wang in Balenciaga. The year 2015 is also the year in which the Group launched Kering Eyewear with its first “One Collection” presented at Palazzo Grassi in Venice, and the Luxury division was divided into the Couture & Leather Goods and Watches & Jewelry divisions. In light of these events, the performance data of Kering Group from 2015 have bene examined. In 2015, the group revenue was e11,584 million. The Group’s revenue in 2016 reached a growth of +8.1% compared to the previous year. These results are undoubtedly significant compared to the previous two years in which growth had reached a maximum of +4%. However, 2017 and 2018 showed phenomenal double-digit growth of 27.2% in 2017 and of 29% in 2018. Furthermore, the analysis of the main economic indicators confirm the excellent performance of the Kering Group over the years.3 Finally, in 2019 the Group accounted 38,068 employees, recorded a revenue of 15.88 billion euros showing a growth of +16.2% compared to the previous year and +13.3% on comparable data. Overall, in between 2015 and 2019 the revenue doubled, the recurring operating income moved from 1.53 billion to e4.75 billion and the recurring operating margin moved from 19.9 to 30.1% (Kering Financial Document 2019). The competitor LVMH reported a revenue of 53.67 billion euros in 2019 and a growth of 15% in 2019, 10% in 2018 and 13% in 2017 (LVMH Financial Documents 2017a, b, 2018, 2019).

3 Annual

and financial reports are available at https://www.kering.com/it/finance/publications/.

7 The Kering Group and Gucci’s Success

183

In 2019, the first three brands that contributed to the Group sales were Gucci constituting the 61% of sales, Saint Laurent constituting 14% and Bottega Veneta constituting 9%.

7.2

Gucci: History and Growth

Gucci Group was acquired in 1999 by Pinault, and became part of what would in a few years be one of the most renowned international luxury holding companies. At the time of the acquisition, the Italian company had already had more than half a century of history. Founded in 1921 in Florence by saddler Guccio Gucci (1881–1953), it was initially dedicated to the production of luxury leather, travel and riding goods (Jackson and Haid 2002). References to equestrian imagery can be found in the Maison’s symbols such as the famous Horsebit and the green-red-green stripe inspired by the saddle belly. In the ’30s, the brand expanded, meeting the taste of the Tuscan nobility and many international tourists. The rise of Gucci continued even during the period of autarchy with the use of cheaper and more easily available materials, such as hemp, linen and bamboo. The latter would become another future symbol of the brand owing to the famous Bamboo bag. After the death of the founder in the first post-war period, the company was inherited by his four sons and continued its growth owing to the opening of numerous shops abroad and to the support of Italian and international celebrities till the boom of the ’70s and the first readyto-wear collections. In the 1980s, Gucci became a S.p.A. and was then sold to the investment company InvestCorp. In 1999, Gucci was acquired by PPR, that is today’s Kering Group. After a few troubled years, the brand is back in vogue owing to the administration of Domenico De Sole, president and CEO of Gucci Group from 1994 to 2004 and the creative director Tom Ford whose sensual and provocative imagery marks an era. After their exit, the two key figures were followed Alessandra Facchinetti and Frida Giannini. Since 2006, Frida Giannini has taken the creative helm of the brand, starting the transformation from the use of “GG” monograms to the

184

A. Cabigiosu

return of the great classics. Iconic models of the 60s such as the Bamboo bag, the Jackie bag and the Flora motif are back in vogue and have acquired a significant place in the wishlist of the fashion world. Another key factor in Gucci’s phase under the leadership of Frida Giannini is the resumption of the link with Hollywood characterized by glittering gold dresses and tailored dresses worn by eminent personalities such as Blake Lively and James Franco (Matarrese 2014). After 12 years of collaboration, 2015 is the year in which, following stagnant sales, the Giannini-Di Marco duo (administrator since 2009) also came to an end and was replaced by Marco Bizzarri and Alessandro Michele. The new managing director, in contrast with the trend of a succession of creative-celebrity directors at the helm of the various Maisons, chose to entrust the unknown internal talent Alessandro Michele with the leadership of the brand and the responsibility of bringing it back to the center of the international fashion scene. This task was carried out with unquestionable success and today Gucci has the highest weight on the Kering Group’s turnover. With a turnover of almost e8.3 billion in 2018, it represents more than 37% of the total turnover of the holding company and a double-digit growth rate with a peak of about 33.4% in 2018. In 2018, 36% of the sales came from the Asia-Pacific region followed by Western Europe (29%) and North America (21%). The most sold items were leather goods (57%) followed by shoes (18%) and ready-towear items (14%) (Kering Financial Document 2018). Gucci’s success began in the last quarter of 2015, following the new creative-administrative strategy and recording a +4.8% compared to the previous year. The new creative vision of the brand was enthusiastically received by the press and customers, giving new impetus to the company and laying promising foundations for a progressive increase. Gucci’s reinvention led to a growth in proprietary stores to a boom in online sales and to an increase in sales in directly managed stores. All of the brand’s primary product categories contributed to accelerating the pace of revenue growth, particularly handbags (including the new lines), shoes and the ready-to-wear women’s and men’s collections. Real success came in 2017 with +44.6% in sales and +69.1% in operating income.

7 The Kering Group and Gucci’s Success

185

As pointed out in the Kering Group’s annual report, this extraordinary performance was achieved through the combination of outstanding instore sales, low price reductions, online sales that increased by more than 80% and continuous investments to support growth in terms of product and image. The exponential growth of the brand is, in fact, due to and supported by the radical image change that began with the first collection presented by Alessandro Michele in February 2015.

7.2.1 Breaking the Rules: The Creative Direction of Alessandro Michele With Alessandro Michele, Gucci embraced a new fashion concept, modern and romantic, but still rooted in high quality and attention to detail characteristic of Italian craftsmanship. The new Gucci reality uses the language of the new generations not only in technological and digital terms but also through a composite, gender fluid and inclusive image. The strategy of Bizzarri and Michele, reported in Kering’s Reference Document 2017, is clear: innovation, continuous experimentation and creativity have identified the need for a new image and positioning for Gucci more in tune with the current context and more attractive for long-standing and emerging luxury customers. The implementation of this value proposition has been successful owing to the constant and consistent use of Michele’s creative narrative at all points of contact with the brand, with particular attention to digital platforms. Moreover, the leading position in the sector has been strengthened by the brand’s ability to challenge the status quo and break the traditional rules of the fashion system. Key factors include unified fashion shows, no price reduction policies, narrative advertising and pioneering collaborations. Michele has thus moved away from the elegant and sensual image of Gucci established by Tom Ford and Frida Giannini to propose a joyful, romantic and ironic one which draws on versatile vintage and historical inspirations presented in a single fashion show for men and women and then replicated through all the brand’s communication channels. The coherence of the message is crucial. As Bizzarri said in an interview with

186

A. Cabigiosu

Rivista Studio (Sarica 2018), some business models, more prudent and conservative, often involve two different creative directors, one for the men’s and one for the women’s collections and hire an external communication agency and a marketing department. As Bizzarri points out, the strategy used by Michele was not to identify a particular category or age group of consumers but to communicate the values of the brand directly to a larger audience using a flexible structure, such as that of social networks, that allows space for dynamism and creativity. Another key factor that has determined the recent success of the brand has been the adoption of strategic artistic collaborations coupled with alternative communication channels such as Instagram, considering that 92% of social interactions related to luxury goods take place on this platform (Napoli 2017). Gucci was, in fact, one of the pioneers of the use of the meme and the hashtag for the promotion of products, campaigns and generally for the communication of the brand image. In the words of Bizzarri himself (Sarica 2018), “I think the real issue is communication. The secret is the digital engagement Alessandro and his team have achieved, all the partnerships they have started, more than 150 in the first three years, including with partially unknown artists. I’m thinking about personalities, influential people within the digital world, who have been allowed to interpret the Gucci brand in a completely unfettered way”. Alessandro Michele made sure that the interpretation of the brand was communicated by artists he judged to be in line with the brand heritage, allowing them free rein and space for their creativity. Allowing them to post their vision of Gucci on social media and get immediate and direct feedback from consumers has proved to be a unique and distinctive strategy for Gucci.

7.2.2 The Heritage, Artistical and Digital Contaminations Gucci in recent times has shown a growing interest in contemporary art and young artists. The brand seems to have finally grasped the contribution of active communication, curated and realized with artists who

7 The Kering Group and Gucci’s Success

187

best express the philosophy of the collections and, generally, of the brand (Casadei 2017). The Art Wall project is an example of how Gucci collaborates with artists and the art world to increase the visibility and uniqueness of the brand and to communicate with clients. This project involves the creation of large murals which anticipate and publicize future collections of the brand. The works are made in fashion centers around the world and “exhibited” until the release of the dedicated collection. Furthermore, once again this project portrays a close link between art and new technologies. For example, the mural created in 2017 in Milan was painted by Angelica Hicks, an illustrator discovered by Michele on Instagram and their collaboration produced multiple paintings by Angelica dedicated to the Gucci world that gained considerable visibility on social media. They also announced a limited edition of free gender t-shirts of only 100 numbered pieces. Another example is the collaboration between Gucci and Coco Capitàn, an emerging young Spanish artist. Already on the catwalk of the Fall-Winter 2017–2018 collection, Coco had decorated two Gucci looks. The artist collaborated for the design of unisex garments and accessories in various colors. The artist used these products as canvases on which to write messages and warnings (Yotka 2017). The launch of this mini collection was also preceded by the new chapter of the Art Wall project in which Coco decorated a wall of Lafayette Street in NY and painted the writing “What are we going to do with all this future”. Coco also worked on a wall of Corso Garibaldi in Milan where the artist wrote, “Common sense is not that common” (Iacolucci 2017). Among others who collaborated for the Art Wall project are Ignasi Monreal and Marina Abramovich. Alessandro Michele also worked with the artist Trevor “Trouble” Andrew and they developed the project Gucci Ghost. A multi-channel project characterized by illustrations of a small ghost interwoven with the famous Gucci monogram was reproduced on the walls of New York, on canvases and on various items of clothing. Owing to slogans such as “real” and “Life is Gucci”, the project established dialogue with the work of Warhol, Basquiat and Mark Gonzales and has inspired two

188

A. Cabigiosu

Gucci collections. Alessandro Michele explains his choices by emphasizing how young generations, or those who feel young, seek a sort of craziness in fashion and he relies on collaborations with artists to feed this need and generate original and artistic capsule collections as real pieces of art that could not be on sale. Therefore, while seasonal items are often discounted, Gucci now has a new price policy and both continuous items and capsules never go on sale. The Gucci 4 Rooms project saw four artists recreating Gucci’s eclectic and imaginative soul within real and virtual spaces. These artists were Chiharu Shiota, Daito Manabe, Mr. and Trouble Andrew who were asked to create a Gucci room inspired by the themes and motifs introduced by Alessandro Michele. “A visionary and extraordinary way of redesigning and communicating the brand’s identity, involving fetishes of the present and memories of the past, it feeds on visual art and aesthetic thought, poetry and literature, interweaving metropolitan graffiti and phytomorphisms from nineteenth century illustrations, cartoon characters and looks and grandmother’s furniture, ancient wallpapers and digital screens” (Casadio 2016). Even in this case, Gucci seeks a constant union between art, fashion and the digital realm: rooms were launched digitally on Gucci’s site and hosted pieces from Gucci’s collections. This is the new world of Gucci that can create added value beyond the quality of the product itself. Artistic collaborations generate a new concept of luxury more eclectic and able to reach a younger and larger audience, creating a growing buzz around the brand. The number of artistic collaborations initiated by Gucci in the recent years has risen to more than 150. In February 2020, Gucci designed the provocative and eclectic clothes of Achille Lauro, an Italian singer, for his four exhibitions during the most important Italian music festival, San Remo, and explained that we cannot divide theatricality from voice because without a performance, we would only have wonderful choristers. These clothes were featured in Italian newspapers for days (Tibaldi 2020). Alessandro Michele also renewed fashion shows. In 2016, the artistphotographer Petra Collins was selected by Michele for shooting numerous campaigns, and for the Autumn 2016 Show she herself took

7 The Kering Group and Gucci’s Success

189

part as the protagonist, which is in line with the choice of unconventional models such as the transgender model Hari Nef or the bartender Arun Roberts. This choice has been much appreciated by Millennials who are closer to micro influencers and self-made internet stars than stereotyped beauties (Eden 2018; Rocca 2017). Alessandro Michele relies on artistic collaborations to place Gucci at the service of new luxury consumers and for this reason Gucci has come to embrace streetwear and the influence of popular culture. For example, in 2019, Gucci had a collection of vintage sneakers inspired by the ’70s that included 24 models for women and 30 for men and a wide collection of t-shirts and sweaters. Moreover, Gucci continuously enriches its collections (fall-winter, spring-summer, pre-fall and cruise) with many thematic collections such as the classical Horsebit or the more recent Raja in which the tiger dominates as the decorative element.

7.2.3 The ArtLab The demand for Gucci products has almost doubled in the last three years and significant investments have been made in the supply chain with particular attention to preserving manufacturing skills, innovation, vertical integration and lead time reduction. In order to meet the increasing demand for Gucci’s products, Gucci opened the ArtLab, a center for the development of industrial craftsmanship and an experimental laboratory for leather goods and shoes. The space covers an area of about 37,000 square meters with over 800 employees. It will help support the exceptional performance of the brand’s business which has confirmed 900 hires in the two-year period of 2017–2018 in the production of leather goods and footwear alone. The opening of this center of excellence for leather goods and footwear is the distinctive element of Gucci’s industrial platform and confirms Gucci’s belief in creativity, Made in Italy craftsmanship, innovation and sustainability. Additionally, it is a clear testimony to the link with the territory, that is, a place to learn and develop skills, a laboratory of ideas. Furthermore, for the first time in the luxury sector, Gucci ArtLab brings together leather goods

190

A. Cabigiosu

and footwear activities (two product categories that together account for more than 70% of total Gucci sales) in a single area to maximize the sharing of expertise and best practice, working in an integrated and synergistic way. The main projects developed in the Gucci ArtLab are the following: prototyping for all leather goods (bags, suitcases, small leather goods, belts) and footwear (women/men, elegant/sports); research and development for new materials, metal accessories and packaging; testing laboratory (climatic chamber and environment for chemical and physical tests); accessories laboratory; internal molding and heel-making for footwear; Bamboo laboratory for leather goods; pre-industrialization area. Gucci ArtLab also has close relationships with the factories and with all the supply chain partners (Sassall 2018). Finally, Gucci is concerned about energy and water consumptions or dangerous chemicals and is willing to construct all its new facilities and buildings respecting sustainable benchmarks and guidelines; it uses sustainable packaging and sustainable and chemical-free fibers and substances. In 2009, the brand became part of the Responsible Jewelry Council and embraced a Corporate Sustainability & Responsibility Management System which pays attention to the environment, human rights and the quality of products. As for now, it has declared itself carbon neutral both with respect to its own enterprises and its entire supply chain.

7.2.4 Social Networks In the age of social media, the fashion industry inevitably deals with information and data provided and shared across the new digital platforms. Luxury brands face the constant pressure of time and the increasing number of collections they have to develop and present to the world. Today, it is not enough to create clothes, show them on the catwalks and be present on the market. Companies now compete on the ability to establish dialogue with Millennials, their chief clients, via social networks and mainly via Instagram and Facebook. Millennials are always connected and search contents, updates and fast purchases. In contrast

7 The Kering Group and Gucci’s Success

191

to these, ease of access and speed of communication brands still have to build customer loyalty using new digital tools. Brands such as Gucci, Louis Vuitton and Chanel have always promoted an exclusive image in their marketing campaigns. Social media and the rise of Millennials consumers, on the other hand, have led to a sort of democratization of the sector, thus forcing brands to adapt both their products and their communication strategy. Gucci is an excellent example of adaptation. In 2015, Alessandro Michele embraced his extreme and romantic aesthetic, creating curious, subversive and iconic pieces of geek chic. The artistic director has also increased the relevance of more casual and relaxed products coherently with Millennials’ preferences. Social networks are in line with clients’ desire to express themselves and become a link between the brand and its community. Digital communication is the cornerstone for creating the necessary link between brands and their communities—a link that is becoming increasingly intense and necessarily fast. Currently, Instagram is the primary social media platform for Gucci (which in February 2020 had about 39.5 million followers, 2.3 million more than Louis Vuitton), followed by Twitter, Facebook and various online news websites. In addition, the success of the brand is largely due to the communication of a lifestyle that people want to emulate; the prominent social presence is supported by a high degree of consumer engagement. Gucci was also one of the first brands to engage with Flipboard, a social network and a social news aggregator. In addition, it has completely renewed its website, making it more user friendly and usable on multiple platforms. This digital tailoring, which favors the visualization of features, soon led to a 150% increase in traffic. It is therefore clear that Gucci, despite being a company closely linked to tradition, can establish a highly interactive platform for multimedia digital communication, to make the user feel completely immersed in the reality of the company, thereby blurring the border between the physical store and the online environment. Alessandro Michele believes that creativity is nurtured by digital media, the vital source of the new visual culture which is now essential

192

A. Cabigiosu

for the industry. Gucci has been exceptional in its digital development; it has effectively integrated e-commerce, social media, digital marketing and mobile applications. The brand understands and skillfully uses the visual nature of the new digital platforms by regularly feeding all channels with videos and/or photos of the “behind the scenes” of the catwalks, parties, events, campaigns and so on. A practical example is Facebook Live, which is used to live stream the brand’s fashion shows. Consequently, the relationship that the brand has managed to create with its consumers is absolutely holistic. Gucci has demonstrated how a strong digital presence built on a defined brand identity and supported by a strategic framework can have a significant impact on a brand’s future success. Furthermore, Gucci uses the digital platforms to provide visibility to its artistic collaborations, thus creating a self-reinforcing cycle in which artistic collaborations add value to collections and generate new capsules. They also generate new content for online platforms that support sales and tremendously increase the visibility of Gucci’s creativity. Nowadays, we are all on the internet and no longer need to go to a museum; we only need to open Instagram on our smartphones and we have immediate access to art and events (Yotka 2015). Gucci seems to have managed to grasp the factors that determine success in a market where it is necessary to retain an increasingly informed consumer and capture the attention of the Millennial generation (Monteleone 2017). Generally, it is the ability of a product (a brand, a blog or an application) to create solid and lasting relationships with its users, in other words ‘engagement’, which can be measured in different ways such as counting the visits to a site, the bounce rate or the time spent on the site. During Milan Fashion Week FW17 (2017), Gucci with its hashtag #GucciFW17 had the highest engagement among brands (+58% compared to the fashion show of September 2016), with 3.8 million interactions on the posts. This was followed by Versace and Moschino with about 2 million interactions each and Armani with 1.2 million (Balsan 2017). As Bizzarri stated, among the keywords for the success of the brand, in addition to creativity and consistency, communication has undoubtedly played a fundamental role and specifically digital communication.

7 The Kering Group and Gucci’s Success

193

If the Millennials are considered the “Always On” generation, it is clear that there can be no success without an adequate digital strategy. Gucci has succeeded in capturing the attention of the audience, especially the youngest, at a time of overload of images and information (Sarica 2018). Multiple campaigns were specifically designed for the Gucci’s digital channel such as for the launch of the Le Marche des Merveilles homonymous line of watches, communication was entrusted to a series of artists and meme creators accompanied by the hashtag #TFW (That Feeling When). For #TFWGucci, the brand employed Instagram influencers and meme creators to pair original imagery with sardonic and absurdist captions. The memes featured or referenced Gucci items and were distinctly elevated over the average meme owing to high-quality photography, art history references and original illustration. The Campaign #GucciGram was launched in 2015 to promote #GGBloom and #GGCaleido prints in collaboration with different artists. It was a creative digital project in which illustrators and image creators were invited to create works that incorporate the Gucci Bloom and Gucci Caleido motifs and share them on their social profile and on the official Gucci Instagram account. Gucci then created a micro-site to collect all the works of the project. The Campaign #GucciPreFall17 was launched on Instagram with the creation of teaser videos to promote street casting of the PreFall2017 collection. The advertisement was launched on social media three months before being presented. These are just a few examples of all the initiatives that Gucci is undertaking in the digital world. The brand’s presence on the web has in fact reached record levels such that it has become the first brand that is an international digital leader, reaching and surpassing Burberry (Meliado 2018).

7.2.5 The Omnichannel Strategy in Gucci Online sales of Kering luxury goods reached e34 billion in 2019 (up by 22% at comparable exchange rates), representing about 12% of total worldwide luxury sales. The Group is also making relevant investments in key digital functionalities (such as a single cross-channel customer

194

A. Cabigiosu

database and reserve online and in-store pickup) and e-commerce sales for the luxury sector are expected to grow 24% annually through 2020 (Milnes 2016). Kering’s CEO François-Henri Pinault told CNBC that about 50% of Gucci’s sales come from Millennials and Generation Z (Primo 2018). This means that Gucci has a core category of customers who are digital natives, and numerous analysts attribute Gucci’s success to its ability to develop efficient internet strategies and how the company has integrated digital experience and shops with the in-store experience to achieve a true omnichannel customer experience. This includes sales made through brand and department stores, websites and by e-tailers. The online channel is the fastest growing channel driven by Asia and by Generation Y and Generation Z consumers. Within e-commerce, brands and e-tailers are the top performers. Gucci is accelerating its development of online activities, expanding both its geographical reach and the assortment in its e-stores. Gucci e-commerce is operated fully internally. Gucci also utilizes a variety of partnerships to grow digitally, working with partners from Hollywood, digital influencers, art museums and car manufacturers (Centric Digital 2016). Gucci’s achievements in the digital space have been remarkable. Gartner research4 selected Gucci as best performing digital fashion brand in 2016 and in 2017. Gucci’s “digital competence” has been evaluated analyzing its website and e-commerce, digital marketing, social media and mobile. In these key measures, it has outranked Michael Kors, Burberry, Fendi and Louis Vuitton. In 2018, Gucci started offering an online product customization service called DIY—do it yourself. This feature is available on the official website and allows one to create Gucci’s products with the addition of their own initials. Online sales are growing significantly, reflecting greater penetration in a more countries and owing to the seamless blend of e-commerce functionalities and rich storytelling and consistent focus on delivering a best-in-class experience. Nevertheless, in 2018, 85% of Gucci sales still 4 https://www.l2inc.com/research/fashion-us-2017.

7 The Kering Group and Gucci’s Success

195

came from directly operated stores (Kering Financial Report 2018). In fact, Gucci extensively invests in its stores and in the new store concept coherently with the new brand’s esthetic and creative vision, emphasizing customer inclusivity and enhancing cross-selling opportunities. Moreover, luxury clients still want to see and experience products before buying. Accordingly, in 2018, Gucci opened the Gucci Garden, a lively and interactive shop in the heart of Florence, and Gucci Wooster, a hub for creativity, culture and innovation in SoHo, New York; these were created to offer customers a new way to experience the eclectic spirit of the brand. The relevance of physical stores and the growth rate of e-commerce clearly indicates the relevance of an efficient omnichannel strategy that integrates the two aforementioned aspects. Furthermore, the integration also involves social media that to date has been the major pillar of the Gucci’s digital strategy. Unlike other competitors, Gucci was among the first to recognize the relevance of Instagram and its influence on clients and their buying decisions. The app allows the quick consumption of different trends and amusing memes. Gucci also recognizes that it must be more responsive to its online customers. Gucci has built a Facebook-integrated chatbot. Customer service technology such as chatbots can dramatically enhance shopping satisfaction and further provide Gucci’s site advantage against competitors. Gucci also relies on digital tools to take a step further toward transparency and sustainability: the brand launched Gucci Equilibrium,5 a new portal linked to the website dedicated to environmental issues, people and the search for new models. The new project, which is part of the 10-year plan to support sustainability and employees, will be one of the key tools for updating employees, the press and customers on the results achieved in this regard. Gucci’s leadership in the digital area was endorsed by the Digital IQ Index explaining that Gucci has reached a perfect blend of site functionality, a seamless shopping experience, integrated content and robust search and navigation; the brand was declared the Top Genius brand for the third year in a row (Marketingdive 2017). 5 http://equilibrium.gucci.com/it/.

196

A. Cabigiosu

Gucci’s omnichannel strategy has introduced new avenues for customers to enjoy, access and purchase its products. Whether the Gucci customer is shopping online or in a store, the experience and product access is coherent. This empowers the brand to reach several demographics and customer bases while maintaining its own identity: customers can find and experience products both offline and online depending on their preferences and attitudes and design their own journey through which they get more familiar with the brand and its values. In 2018, 55% of the investments in media contents were dedicated to the digital world, overcoming the investments in traditional media channels. Bizzarri identifies in the digital world a way to reach more consumers while building a strong emotional relationship with them (Kering 2018). Gucci’s smartphone and tablet website experiences were customized for these user environments; once again they were seamlessly linked to the main site and with the stores. Gucci is an excellent example of how content can drive the omnichannel strategy. For example, in celebrating its iconic Horsebit loafers, Gucci used a suite of content methods, from shoppable mobile videos to user-generated photography. It then distributed this across its social network pages, email newsletters and on its website. Content was adapted to formats for every environment yet remained consistent and on-brand across its overall ecosystem; prices were also always constant (Centric Digital 2016). The online platform has made the market universal and, above all, transparent in terms of prices. Space barriers have been eliminated with Asian customers seeing the products and prices of European customers and vice versa along with time barriers with shopping possible all day long. The digital media is used to eliminate demographical barriers and to create a community where people can feel free to self-express. In 2018, Gucci received the Altagamma Digital awards Gucci for the best customer relationship in the digital area. Gucci stands out for its focus on web browsing and product selection, quality of style advisory service via chat and telephone, excellence in direct marketing and a wide range of delivery options for products purchased online (Altagamma 2018).

7 The Kering Group and Gucci’s Success

7.3

197

Conclusions

This book debates how luxury is changing in the digital era. Luxury fashion firms have new clients, Millennials, and new technologies available. The Kering Group is undoubtedly one of the dominant players in the new world of luxury. Kering has acquired the ability to connect with Millennials by leveraging on its brands, their heritage and in combination with the opportunities offered by digitalization. This chapter describes how Kering is approaching the new luxury and how it supports its brands. Also the chapter provides an in-depth description of how Gucci approaches Millennials and uses digital technologies. The Kering Group has a multi-brand business model structured in such a way as to help each brand realize its growth potential, benefiting from share-centralized functional areas and projects. While the Houses each retain their unique character and exclusivity, they also benefit from synergies deriving from centralized functions and shared resources at the Group level. Centralized functions and projects include: many projects within the omnichannel framework supported by digital technologies (for example Kering developed an app to support sales associates in-store); the ecommerce activities that will be fully internalized; projects to create sustainable value for customers and for the society as a whole and an innovation team which task is to instill an internal culture of innovation and to work on more disruptive technologies. While Kering supports its brands journey toward new luxury, each brand develops its own identity and interpretation of new luxury. As explained in previous sections, luxury still evocates the concepts of heritage, quality, craftsmanship, creativity, brand awareness, the relevance of physical stores but also requires to dialogue with new additional themes that include innovation driven by digital technologies, sustainability, communication via social networks, omnichannel strategy, proximity to art but also to clients’ everyday life. This chapter explains how Gucci created a performing business model by including and leveraging new and old luxury variables. The new Gucci reality uses the language of the new generations not only in technological and digital terms but also through a composite,

198

A. Cabigiosu

gender fluid and inclusive image. The strategy of Bizzarri and Michele is clear: innovation, continuous experimentation and creativity. The leading position in the sector has been strengthened by the brand’s ability to challenge the status quo and break the traditional rules of the fashion system. Key factors include digital platforms and an omnichannel strategy, the adoption of strategic artistic collaborations with young artists coupled with alternative communication channels such as Instagram, narrative advertising, the opening of the ArtLab, an experimental laboratory for leather goods and shoes to invest in the Made in Italy craftsmanship, innovation and sustainability, unified and genderless fashion shows, no price reduction policies. Gucci has been exceptional in its omnichannel strategy targeted to Millennials, the “Always On” generation: Gucci has effectively integrated e-commerce, social media, digital marketing and mobile applications. Gucci was among the first to recognize the relevance of Instagram and its influence on clients and their buying decisions. Social networks and digital communication are the cornerstone for creating the necessary fast and intense link between Gucci and its community. Creativity is nurtured by digital media, the vital source of the new visual culture which is now essential for the industry. Furthermore, digital platforms provide visibility to Gucci’s artistic collaborations, thus creating a self-reinforcing cycle in which artistic collaborations add value to collections, generate new capsules and new content for online platforms that support sales and tremendously increase the visibility of Gucci’s creativity. Overall, fashion remains the reflection of our culture, but in a transitional age in between old and new luxury there may exist tensions when firms try to accomplish the need of old and new generations. The environment in which luxury firms operate is changing both from the demand and the supply aspect. Currently, the main clients of luxury fashion firms are Millennials, requiring ad hoc design, communication and distribution strategies (Kervilera and Rodriguez 2019; Deloitte 2018. In this context, digitalization has allowed Kering and Gucci to develop new strategies coherent with Millennials’ mindset and based on the relevance of social networks, omnichannel and heritage.

7 The Kering Group and Gucci’s Success

199

The next chapter, by comparing the business models of the main Kering Group’s brands, discusses differences and commonalities between Maisons’ business models and debates their sustainability.

References Altagamma. 2018. Burberry, Gucci, Louis Vuitton, Dolce & Gabbana e Valentino, vincitori degli altagamma digital awards 2018, available at https://altagamma.it/news/info/121/. Accessed on 8 July 2019. Balsan, A. 2017. Blogmeter analizza la MFW su Instagram. The Influencer, available at http://www.theinfluencer.net/2017/03/03/blogmeter-ana lizza-la-mfw-su-instagram/. Accessed on 5 Mar 2017. Business Wire. 2018. Kering announces new developments in its digital strategy, available at https://www.businesswire.com/news/home/201811 25005169/en/Kering-Announces-New-Developments-Digital-Strategy. Accessed on 18 Feb 2019. Casadei, M. 2017. Gucci conquista New York con il wall painting. Il Sole 24 Ore, available at http://www.ilsole24ore.com/art/moda/2017-02-08/ gucci-conquista-new-york-il-wall-painting–161216.shtml?uuid=AEeGA2Q. Accessed on 18 Feb 2020. Casadio M. 2016. Gucci 4 rooms a Tokyo, available at http://www.vogue.it/ news/vogue-arte/2016/10/11/gucci-4-rooms-inaugurazione-mostra-tokyo/. Accessed on 15 Nov 2016. Centric Digital. 2016. Why Gucci’s digital strategy is working, available at https://centricdigital.com/blog/digital-trends/why-guccis-digital-strategyis-working/,18/05/2016. Accessed on 5 Aug 2019. Dekhili, Sihem, Mohamed Akli Achabou, and Fatmah Alharbi. 2019. Could sustainability improve the promotion of luxury products? European Business Review 31 (4): 488–511. Deloitte. 2018. Global Powers of Luxury Goods 2018, available at https:// www2.deloitte.com/content/dam/Deloitte/at/Documents/consumer-bus iness/deloitteglobal-powers-of-luxury-goods-2018.pdf. Accessed on 29 May 2019. DeMarco, A. 2016. Interview: Albert Bensoussan, Kering CEO of Luxury— Watches & jewelry. Forbes, available at https://www.forbes.com/sites/ant

200

A. Cabigiosu

honydemarco/2016/04/04/interview-albert-bensoussan-kering-ceo-of-lux ury-watches-jewellery/#61fa3c7f7289. Accessed on 10 Mar 2019. Donzé, Pierre-Yves.2018. The birth of luxury big business: LVMH, Richemont and Kering. In Global Luxury, 19–38. Singapore: Palgrave. Eden, Nellie. 2018. Actress and model Hari Nef on the beauty of not conforming, available at https://www.dazeddigital.com/beauty/soul/article/ 42392/1/hari-nef-gucci-bloom-growing-pains. Accessed on 8 Aug 2019. Franco, Jacqueline Campos, Dildar Hussain, and Rod McColl. 2019. Luxury fashion and sustainability: Looking good together. Journal of Business Strategy 41 (4): 55–61. Iacolucci, Alessandro. 2017. Gucci art wall: La nuova capsule con Coco Capitàn. Posh, available at https://www.posh.it/2017/07/03/gucci-art-wallla-nuova-capsule-con-coco-capitan/. Accessed on 15 Aug 2017. LVMH Financial Document. 2019. Available at https://r.lvmh-static.com/ uploads/2019/12/lvmh_documents-financiers_2019-va.pdf. Accessed on 05 March 2020. Jackson, Tim, and Carmen Haid. 2002. Gucci Group—The new family of luxury brands. International Journal of New Product Development and Innovation Management 4 (2): 161–172. Kapner, Suzan. 2001. Pinault wins long battle to control Gucci Group. The New York Times, available at https://www.nytimes.com/2001/09/11/ business/pinault-wins-long-battle-to-control-gucci-group.html. Accessed on 1 June 2019. Kering Activity Report. 2018. Available at https://www.kering.com/en/group/ discover-kering/activity-report/interactive-version/common/data/Kering_ 2018_Activity_report.pdf. Accessed on 4 July 2019. Kering Financial Document. 2018. Available at https://keringcorporate.dam. kering.com/m/3ba17a6b64aae82d/original/2018-Financial-Document.pdf. Accessed on 15 December 2019. Kering, Financial Document. 2019. Available at https://keringcorporate.dam. kering.com/m/5950e4d285ac1f9a/original/2019-Financial-Document.pdf. Accessed on 17 Jan 2020. Kervilera, G, and Rodriguez C. M. 2019. Luxury brand experiences and relationship quality for Millennials: The role of self-expansion. Journal of Business Research. 102 (2019): 250–262. LVMH Financial Document. 2017a. Available at https://r.lvmh-static.com/upl oads/2017/11/2017-financial-documents.pdf. Accessed on 13 Jan 2019.

7 The Kering Group and Gucci’s Success

201

LVMH Financial Document. 2017b. Available at https://r.lvmh-static.com/upl oads/2019/12/lvmh_documents-financiers_2019-va.pdf. Accessed on 17 Jan 2020. LVMH Financial Document. 2018. Available at https://r.lvmh-static.com/upl oads/2019/01/2018-financial-documents.pdf. Accessed on 20 Jan 2019. Marketingdive, David. 2017. L2: Luxury fashion brands increase Instagram followers by 53%, available at https://www.marketingdive.com/news/l2-lux ury-fashion-brands-increase-instagram-followers-by-53/510345/. Accessed on 6 June 2019. Matarrese, Giuliana. 2014. Frida Giannini e Gucci: una lunga storia d’amore Icon Magazine, available at https://www.iconmagazine.it/donne/frida-gia nnini-gucci-lunga-storia-damore/. Accessed on 17 Feb 2019. McDowell, Maghan. 2019. There are no digitally native luxury brands: Kering wants to retrofit one. Vogue Business, available at https://www.voguebusi ness.com/technology/kering-chief-digital-officer-gregory-boutte-gucci-saintlaurent. Accessed on 10 June 2019. Meliado, Edoardo. 2018. I brand italiani dominano il mondo digitale, Gucci in testa. Fashion Network, available at https://it.fashionnetwork.com/news/ I-brand-italiani-dominano-il-mondo-digitale-Gucci-in-testa,982130.html#. XF18eVxKhPY. Accessed on 10 Apr 2019. Milnes, Hilary. 2016. The digital strategy driving Gucci’s growth. Digiday, available at https://digiday.com/marketing/digital-strategy-driving-guccisgrowth/. Accessed on 9 July 2019. Monteleone, Maria. 2017. Perché per l’alta moda essere co-creativa è una buona idea. Market Revolution, available at http://www.marketrevolution.it/ alta-moda-co-creativa/. Accessed on 15 Jan 2020. Muret. D. 2018. Tomas Maier chiude il suo marchio di prˆet-`a-porter. Fashion Network, available at https://it.fashionnetwork.com/news/TomasMaierchiude-il-suo-marchio-di-pret-a-porter,991370.html#.XFiQlVxKhPY. Accessed on 20 July 2019. Napoli C. 2017. US: Marketing Luxury to Gen Z. WGSN. Available at https://www.wgsn.com/content/board_viewer/#/70753/page/1. Accessed on 18 January 2019. Pambianconews. 2014. Kering divide il lusso a metà. Bizzarri ai vertici. Pambianconews, available at https://www.pambianconews.com/2014/04/ 28/kering-divide-il-lusso-a-meta-bizzarri-ai-vertici-145555/. Accessed on 05 Sept 2019. Primo, Diane. 2018. What can luxury brands learn from Gucci about millennials? Forbes, available at https://www.forbes.com/sites/forbesagency

202

A. Cabigiosu

council/2018/11/02/what-can-luxury-brands-learn-from-gucci-about-millen nials/. Accessed on 8 Apr 2019. Rocca, Jane. 2017. How Melbourne barista Arun Roberts became the face of Gucci. Executive Style, available at http://www.executivestyle.com.au/howmelbourne-barista-arun-roberts-became-the-face-of-gucci-gxaaan. Accessed on 26 Aug 2018. Sarica, Federico. 2018. Marco Bizzarri and the Gucci Revolution. Rivista Studio, available at https://www.rivistastudio.com/marco-bizzarri-gucci/. Accessed on Accessed on 7 Jan 2019. Sassall Yeong. 2018. Gucci launches an experimental lab for leather goods and shoes. Vogue, available at https://www.vogue.com.au/vogue-living/design/ gucci-launches-an-experimental-lab-for-its-leather-goods-and-shoes/imagegallery/bbc3f02f29952e64ddec9303d4df7473. Accessed on 7 Aug 2018. Tibaldi, Serena. 2020. Alessandro Michele: Vestire Lauro è stato come piazzare una bomba all’Ariston. Repubblica, available at https://rep.repubblica. it/pwa/intervista/2020/02/09/news/alessandro_michele_vestire_lauro_e_ stato_come_piazzare_una_bomba_all_ariston_-248198995/. Accessed on 17 Feb 2020. Yotka, Steff. 2015. Exclusive: Gucci collaborates with artists on an Instagram initiative.Vogue, available at https://www.vogue.com/article/gucci-gram-ins tagram-project. Accessed on 10 Nov 2015. Yotka, Steff. 2017. Coco Capitán sounds off on her Gucci collab for fall 2017. Vogue, available at http://www.vogue.com/article/gucci-fall-2017-ready-towear-coco-capitan-collaboration. Accessed on 23 Dec 2017.

8 A Comparative Analysis: Gucci, Saint Laurent, Balenciaga and Bottega Veneta

8.1

Saint Laurent

In 1961, Yves Saint Laurent, with Pierre Bergé, founded his eponymous Maison, which is today considered one of the most important fashion houses of the twentieth century. Since its early days, the brand has been shaping trends both in fashion and in the broader socio-cultural sphere. During the 1960s, it introduced new iconic elements to the world of women’s fashion: trouser suits, safari jackets, transparent garments and, above all, the women’s tuxedo which will always remain associated to its name (Polan and Tredre 2009). Art has been one of the main sources of inspiration for Yves Saint Laurent since the beginning. In his collections often emerge tributes to artists from Matisse, Picasso and Mondrian to Andy Warhol. In 1966, he revolutionized fashion by becoming the first Haute Couture house to offer luxury ready-to-wear items under the name of “Saint Laurent Rive Gauche”. This turning point has shaped the brand’s identity, making it synonymous with youth, freedom and modernity. Saint Laurent designs and markets an extensive range of ready-to-wear apparel, handbags, men’s and women’s shoes, small leather goods, jewelry, scarves, ties and eyewear. © The Author(s) 2020 A. Cabigiosu, Digitalization in the Luxury Fashion Industry, Palgrave Advances in Luxury, https://doi.org/10.1007/978-3-030-48810-9_8

203

204

A. Cabigiosu

In 1999, the brand was acquired by the Gucci Group and later became part of the of the Kering Group and the ready-to-wear line passed under the guidance of art director Tom Ford, while the haute couture line was still designed by Monsieur Yves Saint Laurent. The designer continued to put his signature on haute couture till 2002 when he closed the doors of his Maison. In 2004, the creative direction passed to Stefano Pilati who reinterpreted the solid garments of Saint Laurent faithfully, namely the tuxedo, the safari jacket and tulip skirts. After eight years of collaboration, the helm passed to designer Hedi Slimane. These were revolutionary years for the brand in which Slimane regained the spirit of youth, freedom and modernity that inspired the founder, and changed its name to “Saint Laurent Paris”. The new creative director also redesigned the ysl.com website, enriching its contents and adding an e-commerce platform to implement the retail strategy through this distribution channel. At the same time, several social media initiatives were launched based on an integrated and global communication strategy. Since December 2012, Yves Saint Laurent has almost 1.2 million fans on Facebook and is one of the most popular luxury brands on Twitter with over 1.1 million followers. Under the leadership of Hedi Slimane and Francesca Bellettini, CEO since September 2013, the brand continues to grow, launching new product lines in all major categories. One of the most relevant examples is the “Sac de Jour” stock exchange. The brand has been growing steadily since 2013, a significant year both for the introduction of new products and for the strengthening of the sales network, with selective openings and renovations. In 2014, revenues increased by 27.2% on a comparable basis, reflecting the renewed appeal of the brand and the significant contribution it makes to the results of the Kering Group. In fact, in the space of three years, sales almost doubled, mainly owing to sales in directly managed stores which saw an increase of 40.3%. The rise of Saint Laurent continues with a revenue growth rate of almost 38% in 2015 and sales exceeding one billion euros since 2016 (Kering 2014, 2015, 2016a, b). In April 2016, Anthony Vaccarello was nominated art director who, while respecting the heritage of the Maison, introduced more contemporary lines with a significant focus on femininity. With the arrival of the new art director Anthony Vaccarello, the success was driven both by the

8 A Comparative Analysis: Gucci, Saint Laurent …

205

sales of the permanent collections and by the seasonal products introduced. Yves Saint Laurent grew more than 20% for three consecutive years and of about 17% in 2019. The category that influences the revenues the most is leather goods with its 69% contribution to total sales in 2019, and the most relevant regions in terms of sales are Western Europe (35%), Asia Pacific (28%) and North America (24%). Sales by directly operated stores represent 69% of overall sales. During 2019, ysl.com sales also grew dramatically, strengthening the House’s position in e-commerce. At the end of 2019, the brand, now named Saint Laurent, also reached the significant milestone of e2 billion revenue (Kering 2019). The Italian-Belgian designer Anthony Vaccarello called to lead Saint Laurent is a Millennial; he defines himself as a member of the “MTV Generation” with an aesthetic education that starts from the visual: his inspirational muses are music and video clips as well as photography. The creative director declares that he discovered the works of Yves Saint Laurent through the shots of Helmut Newton. In relation to his creative contribution, the designer does not speak of change but of evolution. He has had the opportunity to touch the archives of the historic collections, understand their poetics and method and then rework them through his sensitivity (Mancinelli 2017). The new art director of the Maison presented his first ready-to-wear women’s collection during the Spring/Summer 2017 Paris Fashion Week. The show was a mix of black leather garments, faded blue jeans and embossed sandals on metal heels. It was a collection that turned out to be a success also on social media and was in line with the imprint of Monsieur Yves Saint Laurent: provocative, it reflected the feminist revolution of the sixties and seventies. Vaccarello also brought back to the scene cargo trousers, the leather jacket aviator style and the iconic tuxedo. His style approached the Millennials’ attitude towards the body, which rewards the right to reveal and feel at ease, characterizing the right to free will (Holgate 2018). Vaccarello also pushed the Maison to a rapid growth on Instagram, Weibo and YouTube with an increase in presence on all three social networks. Simultaneously, the creative director established important artistic collaborations to enrich the brand with new levels of experimentation and innovation. For example, the collaboration between the brand

206

A. Cabigiosu

and rapper Travis Scott, who in addition to being testimonial of the SS19 campaign, has left room in Saint Laurent for the production of the video of his latest single: an unusual parade of jackets, trousers and striped bomber signed by Anthony Vaccarello on motorcycles in the race. The SELF project is also ambitious and involves collaboration with 60 artists, leaving them free to express Saint Laurent’s identity through their eyes, giving them carte blanche to interpret what the brand evokes, reinforcing the concept of diversity, individuality and sincerity. Self is an artistic look at society, through the eyes of artists and filmmakers, photographers and authors (Baudo 2018). The first in the list is SELF 01 by the Japanese photographer Daido Moriyana famous for his ability to capture the beauty of Japanese street life which is also portrayed in the shots produced for the brand. SELF 02, on the other hand, was created owing to collaboration with photographer Vanessa Beecroft and her photographic exhibition presented at the Art Basel Miami Beach. The artist chose to highlight the freedom of the Saint Laurent woman. The company implements its strategy rigorously and efficiently. The basis of this commitment is the management of important projects such as the optimization of information systems and the supply chain, the improvement of distribution, particularly through the expansion of the network of physical stores and the development of online sales, the growth of which will be explained in detail in the next paragraph. The brand, therefore, is undoubtedly pursuing a growth strategy on all fronts from retail to cost control and from communication to relations with the wholesale channel (Crivelli 2017). In September 2014, Yves Saint Laurent had 128 directly operated stores. In the same year, the brand opened its biggest women’s boutiques in Los Angeles as well as a store dedicated to men’s collections both located in Rodeo Drive. The opening of these stores was accompanied by other investments in stores in Milan, Rome, Canton Road in Hong Kong and Sloane Street in London, demonstrating the continuous development of the sales network. The openings continued in the following years. In 2015, the most important ones were the flagship store in Avenue Montaigne (Paris), the store in SoHo (New York) and the largest boutique for men and women in Tokyo. In addition to this, there

8 A Comparative Analysis: Gucci, Saint Laurent …

207

were also significant investments for the renovation of numerous stores around the world. The following year, the brand also entered new countries, namely Canada and Malaysia. In 2017, the Maison opened other 25 directly operated stores in Europe, US and China. The expansion strategy was continued throughout 2018, reaching 222 directly operated stores in 2019 (Kering 2014, 2015, 2016a, b, 2017, 2018a, b, 2019). The brand has also strengthened its bond with consumers in the digital world. For the success of its brand, Saint Laurent offers a complete and consistent omni-channel experience. Since the arrival of Hedi Slimane in 2012, the ysl.com website has been redesigned and enriched with the implementation of an e-commerce platform. It is also the year of the joint venture with Yoox which provides the infrastructure for managing all operations, while the brand retains control of the image, product assortment and editorial content. In 2014, ysl.com expanded its business in Asia and became available in Chinese and Korean. Three years later, Saint Laurent launched the fourth version of ysl.com, modernizing the site to offer a more engaging and attractive experience and improving the functionality of e-commerce. In addition, the brand announced an agreement with Farfetch.com that will make it the first brand to benefit from the e-commerce platform created by the partnership between Farfetch and JD.com in Greater China. Social media initiatives continue in parallel, doubling the number of fans on Facebook and quadrupling the number of followers on Twitter. Since June 2016, the Maison has also implemented a new Instagram strategy that has led it to reach 7.6 million followers in February 2020. The brand’s strategy is clear: to build a multi-channel customer relationship, embracing a digital strategy, with a strong and solid online presence, and developing proprietary sales channels attempting to create consistent and attractive content for consumers.

8.2

Balenciaga

The history of the brand has its roots in the early twentieth century when the young Cristóbal Balenciaga opened a fashion house in San Sebastián and subsequently inaugurated an atelier in Barcelona and

208

A. Cabigiosu

Madrid. Among his clients, members of the royal family stand out accompanied by the Spanish aristocracy. The civil war led him to close his salons, but in 1936, he founded his own Maison in Paris. Balenciaga’s clothes were among the favorites for special occasions, made with refined techniques and precious fabrics. In each collection, he presents a model made exclusively by himself. Balenciaga considers fashion an art. Balenciaga believes that a designer must be an architect for the cut, a sculptor for the shape, a painter for the colors, a musician for the harmony and a philosopher for the style (Polan and Tredre 2009). The designer marked fashion between the ’30s and ’60s, introducing balloon, tunic, sack and pinafore dresses. Balenciaga’s exquisite technique, masterful cut and constant innovation in his use of fabrics led him to have a special place in the hearts of his customers. In the midforties, Balenciaga was famous all over the world and represented luxury par excellence. Among the precious habitués of his garments there were Helena Rubestein, Jackie Kennedy, Greta Garbo, Wallis Simpson and Grace Kelly (Attanasio 2017). In 1968, with the advent of ready-to-wear, disappointed by a fashion that in his opinion has become too mass produced and has lost its elegance, he closed the doors of his ateliers. In the 1990s and early 2000s, after returning to the fashion world, the brand experienced a renaissance, expanding its product universe beyond ready-to-wear. The brand also started investing in handbags, shoes and accessories along with its retail network, which helped strengthen brand awareness around the world. The creative director Nicolas Ghesqiuère joined Balenciaga in these years and developed an original and radical vision of design with a focus on cutting and constant innovation in fabrics. In 2001, Balenciaga was acquired by the Gucci Group, subsequently joining the Kering Group. In 2011, under the leadership of CEO Isabelle Guichot, Balenciaga implemented a selective international growth program to ensure sales that respect its spirit, not only in directly operated stores and e-commerce but also through franchising and stores in major multi-brand stores. This led to 12 new openings worldwide including Italy, Japan, the United States, mainland China, Taiwan and Hong Kong and to an expansion of the franchise network in key markets such as Singapore, Thailand, Indonesia, South Korea, Russia

8 A Comparative Analysis: Gucci, Saint Laurent …

209

and the Middle East. In 2012, the new creative director Alexander Wang arrived at the Maison, who with his talent, his modern vision and his cosmopolitan design enriched the heritage of Balenciaga. The first show of autumn 2013 was set on a track of black and white marble, a material that will become the leitmotif during the entire period of Wang in Balenciga from the boutique in the center of Manhattan to the prints of the bags “Le Dix”. In 2014, Balenciaga pursued its strategy of expansion in retail, using the new store concept defined by Alexander Wang with the opening of a first flagship store in Tokyo, a first store in Munich and two in the United States. In addition, the brand opened a first store at Hong Kong airport and extended its presence in luxury department stores with five new stores in France, Korea, Japan and Greater China. Alexander Wang presented the “China Edition” composed of looks designed exclusively for the Chinese market on sale in the store in Beijing. In 2015, the strategy of expanding the sales network continued through the renovation of several stores, the increase of the retail presence in department stores and the opening of the flagship store in Madrid, which brought the brand back to its place of origin. This was the final year of the collaboration with Alexander Wang. The designer’s latest looks were characterized by neutral colors, a soft light and with exquisitely finished and delicate design; it was a natural look, neither feminine nor masculine, with attention to details. In October 2015, Demna Gvasalia was appointed Creative Director, marking the beginning of a new chapter. This was followed by the consistent process of strengthening the brand’s network both physically and online. The turning point of 2016 was the digital world: the excellent performance of balenciaga.com, with more than 1.2 million followers on Facebook and 3 million fans on Instagram testifies to the growing reputation of the brand. Despite the lack of separate balance sheet data for the brand,1 François-Henri Pinault defined Balenciaga as the brand that is designing an impressive development path with a faster growth rate than all other brands in the group. 1 Kering publications provide separate performance data about Gucci, Saint Laurent and Bottega Veneta. For the other smaller brands financial data are aggregated.

210

A. Cabigiosu

All areas are enjoying exceptional results and the web experience is perfectly in line with the public and their purchasing preferences. Mobiles continue to be the preferred method for both browsing and shopping. Currently, there are nine local versions of Balenciaga.com in several languages including Chinese, Korean and Russian. The website is e-commerce enabled in nearly 100 markets such as the Middle East, South Korea and China. Furthermore, there has been constant growth on social media as well with the achievement of 11 million followers on Instagram in February 2020. These aspects reflect a growing interest in the brand’s collections and a significant gain in brand visibility (Kering 2019). The group’s chief financial officer, Jean-Marc Duplaix, revealed that in 2018, the brand achieved a more significant growth than Gucci in the second half of the year, i.e. more than 40%. This was primarily due to the sale of accessories, which account for 50% of revenues followed by shoes and ready-to-wear, each accounting for 25% (Sciola 2018). The brand’s top management predicted that Balenciaga will continue to benefit from the momentum generated by the new creative vision and the introduction of new products. One of the objectives is to further develop the men’s collection with dedicated spaces in new stores and to continue to expand the online offering of products and services which are part of the complex cross-channel retail strategy. As CEO (from 2016), Cédric Charbit announced at a press conference that focusing on menswear and the Millennials, which account for 60% of sales, the brand is moving forward to reach the e1 billion turnover target by 2019. In confirmation of the excellent status of the brand, Charbit also stated that the Balenciaga sell-out is increasing very quickly in all sectors with percentages sometimes higher than 100% in some sectors (Fashion Magazine 2018). At the of end of 2019, Balenciaga had a network of 155 stores and realized new openings of several stores in Asia and the United States. Several stores were also renovated in line with the new concept developed by Demna Gvasalia.

8 A Comparative Analysis: Gucci, Saint Laurent …

211

Demna Gvasalia, Georgian by birth and founder of the brand Vetements, is the new Millennial at the helm of Balenciaga since 2015. Just a year after his arrival, Demna won the title of International Ready-toWear Designer for his work in Balenciaga. The art director has renewed the meaning of luxury and the underground based on the needs of Millennials (Heller 2020). Balenciaga by Demna Gvasalia is an incredible mix of tradition and innovation. Think, for example, of the aesthetics of the ugly, the repositioning of luxury in everyday life, the theatrical effect of disproportion and the return of the “logo mania” in an exaggerated manner. Balenciaga has elevated streetwear to an outfit worthy of the main catwalks: Gvasalia has filled their collections with maxi sweatshirts, spandex shoes and maxi bags. In Balenciaga, as in Gucci, the artistic director guides the entire process from the creation to the promotion and sale of the garments, providing coherence and relevance to the projects and ideas. The style of the new luxury has become contemporary and experimental at the same time while continuously evolving. The CEO of Kering has repeatedly pointed out that since the arrival of Gvasalia, the brand has become dynamic and has positioned itself on the same wavelength as young customers, also managing to conquer a difficult goal for a brand of ready-to-wear, that is, male buyers (Fashion Magazine 2018). The creations of the art director for Balenciaga are sarcastic and full of pop cultural references which allow one to be protagonist of the digital world assuming the same communicative imprint. Accordingly, the “FRAKTA” bag by Balenciaga has a clearly ironic objective, proposing the model of the Ikea bag as a new form of luxury and triggering a viral reaction on the web. This ironic approach attracts the attention of the Millennials and speaks their own language. Another example of online success which became a viral phenomenon is the campaign that Balenciaga signed with Yilmaz Sen, a visual artist of Turkish origin. The campaign consists of a series of videos with 3D models that twist in an unnatural way while wearing the clothes of the brand. Gvasalia’s fresh and new design has undoubtedly allowed the brand to reach high levels and to be among the most talked about at the moment. However, the brand still has significant room for growth with respect to

212

A. Cabigiosu

the expansion of the sales network and product offering and therefore brings with it a very high potential for development (Sciola 2018). Finally, Balenciaga is investing to increase its sustainability both at the product and production process level and is committed to protect our ecosystem along the entire value chain. As a proof of this new attitude, Balenciaga released a limited-edition capsule collection in collaboration with Farfetch, which is among the most popular e-commerce websites, that is concerned with the safeguarding of endangered species. Specifically, different clothing items were embellished with pictures of jeopardized breeds such as elephants, pandas or rhinos.

8.3

Bottega Veneta

Founded in 1966 by Renzo Zengiaro and Michele Taddei, Bottega Veneta was founded as a small workshop for bags and leather goods. The name “Bottega” embodies the union of craftsmanship, typical of the workshop, and the tradition of the Veneto, a region in northeast Italy where the firm is located. From the beginning, the strategy was clear: elite products characterized by selected distribution, high price and the absence of the logo in sight. Already in the 70s, the company had expanded its sales abroad between Paris, Germany and New York (Vallin 2013). Bottega Veneta offers products made entirely by hand by expert craftsmen using the highest quality raw materials. Bottega Veneta’s handbags and leather goods became famous for their cross-hatching signature which became a real trademark and allowed the creation of elegant and never eccentric collections reinterpreted each season in different colors and materials. Towards the end of the 70s, when the company was in complete expansion, the personal issues of the two founders led them to separate. In 2001, Bottega Veneta was acquired by the Gucci Group, now part of the French holding company Kering. This year, the most recent chapter of the Maison began with the arrival of the creative director Tomas Maier who signed the collections of Bottega Veneta until 2018. The new creative director presented his first collection in September 2001, and for the 2002 spring-summer collection, Maier created one of Bottega

8 A Comparative Analysis: Gucci, Saint Laurent …

213

Veneta’s iconic pieces: the Cabat Bag (Kering 2016a, b). Maier’s strategy was clear right from the beginning: no logos, no celebrities, limited advertising. In the following years, the brand gradually extended its range of products to include perfumes, jewelry, furnishings and home accessories, offering prestigious collections of ready-to-wear, bags, shoes, eyewear and luggage. Under Tomas Maier and CEO Marco Bizzarri (from 2009 to 2014), Bottega Veneta re-established its high-end luxury positioning. By harmonizing the values of traditional luxury, such as exclusivity, craftsmanship and the highest quality, with innovation, Bottega Veneta products embody both modernity and timeless elegance. The brand owes its exceptional product quality to the work of meticulous artisans based in its Veneto laboratory. The slogan “When your own initials are enough” and the signature of Bottega Veneta found exclusively within its products is a testimony to the refined elegance of the brand. In 2012, Bottega Veneta presented “Initials”, a service available online that allows one to customize objects with their own initials. The brand is also committed to working with strategic partners who share the same values, namely high quality and craftsmanship. These include Poltrona Frau (furniture), KPM (porcelain), Victor Mayer (fine jewelry), Girard-Perregaux (watches), Safilo (eyewear) and Coty Prestigio (fragrance). Bottega Veneta was the first Italian fashion company to gain the LEED (Leadership in Energy and Environmental Design) certification which is the license acquired by buildings and industrial processes that respect sustainability canons and care for the environment. Moreover, the company invested in solar panels, recycling of water and the reduction of CO2 emissions. As far as communication is concerned, Bottega Veneta has collaborated with the creative agency Baron & Baron to invest in digital platforms and to offer communication that can speak more clearly and efficiently to customers through all the touch points of the brand. In 2015, the company took its first steps toward a new era of digital and social strategy, starting with the development of the new mobile site www.bottegaveneta.com and the launch of WeChat. Another point that

214

A. Cabigiosu

has always been essential for the brand is the distribution network. During 2015, the company focused on consolidating its existing sales network, improving the existing boutiques through renovations and expansions to ensure the best possible customer experience. The process of opening new selective stores was also pursued, going from 236 stores in 2014 to 251 in 2015. The new stores were distributed between emerging and mature markets (seven new stores in Asia Pacific, six new Europe Middle East and Africa (EMEA) stores and two new stores in America) (Kering 2015). Tomas Maier has initiated campaigns by art photographers and has transformed this project into a digital project. These comprise six short films, which tell a story of light, travel, colors and interactions between people, recalling the pillars of the brand. From these video clips, photos were subsequently taken for the advertising campaign. The objective of the brand is clear: to speak to customers in a different way reflecting today’s world (Phelps 2018). Despite the years of constant growth, in 2013, the growth rate of the brand slowed down from +30.4% in 2012 to +13.8% in 2013. The most critical year was 2016 when Bottega Veneta faced a turnaround in its turnover results. With a 9.4% drop in revenue, sales were affected by the reduced number of tourists, a phenomenon to which the brand is particularly exposed. According to the annual report, sales in directly operated stores have increased in mainland China and South Korea but the shift in demand in the Asia-Pacific region has not completely offset the reduced number of purchases made by Chinese tourists. The slowdown in sales in directly operated stores was particularly marked in Western Europe as was the slowdown in wholesale sales. The latter factor depended heavily on the company’s strategic decision to strengthen its exclusive positioning. The end of 2016, however, saw an improvement in the trend, owing to a recovery in tourist flows (Kering 2016a, b). One of the company’s objectives is to pursue a revitalized brand strategy, aiming at improving the visibility and attractiveness of new and potential customers. The year 2017 ended with a recovery in turnover, recording an increase of +2.4%. The “leather goods” segment which accounted for 85% of sales presented a new offer in terms of shapes, both fully woven products as well as innovation of new seasonal items

8 A Comparative Analysis: Gucci, Saint Laurent …

215

that provide an alternative to woven items. The product mix, in fact, is evolving, offering a wider range of styles more attractive for a younger market without sacrificing the high level of quality and design that has always characterized the brand. In these years, Bottega Veneta has also invested heavily in expanding the shoe and the ready-to-wear sectors. CEO Carlo Alberto Beretta reported in an interview for the magazine Business of Fashion that the commitment to the craftsmanship of each piece and the high quality of materials will not change neither will the timeless design that characterizes the products. Time for the brand is an essential factor in achieving these qualities and staying true to its identity (Pike 2016). Following 2017, which was a year of transition and consolidation for the brand, the revenue growth rate in 2018 was negative with a reduction of approximately −5.7% in turnover (Kering 2018a, b). The Maison combines the craftsmanship of the woven with the elegance and exclusivity of a monogram. With this offering, Bottega Veneta contrasts with today’s world of luxury characterized by flashy logos, casual wearing, celebrity endorsements and “it bags”. After 17 years, in 2018, Tomas Maier gave way to the new creative director Daniel Lee. Millennial Daniel Lee is an experienced British designer who has previously worked for brands such as Céline, Maison Margiela, Balengiaga and Donna Karan. In this phase of revitalization, products that open the doors to the unbraided style, appealing to the younger generations, were introduced. The year 2018 marked the adoption of a new and contemporary attitude for the brand with a search for novelty and innovation in all categories. The value proposition that drove these changes was to offer freshness to existing consumers and approach younger customers, providing them with an engaging omnichannel experience. Bottega Veneta aims to reach a wider audience around the world by introducing styles that reflect the desires of a new generation segment while remaining true to the essence of the brand. In February 2019, Bottega Veneta released the first fashion show by Daniel Lee (Fall 2019) marking a bold new approach for the brand. The collection introduced a renewed freedom, sensuality and modernity together with traditional craftsmanship. This and the subsequent Daniel Lee’s collection received an extraordinary positive response from

216

A. Cabigiosu

both new and existing clients. The brand also accelerated its marketing and communication investments. The product mix continued to evolve by expanding shoes and ready-to-wear segment as well as leather goods category which has been enriched with new shapes. Bottega Veneta focused on reinforcing its existing retail network throughout 2019 and on pursuing selective store openings. At the end of 2019, Bottega Veneta had 268 directly operated stores. In 2019, Bottega Veneta opened new stores in Kuwait, Osaka, Miami, Pechino and Milan. In 2019, Bottega Veneta recorded a revenue growth of 5.3% (Kering 2019). The category that influences the revenues the most significantly is leather goods with its 83% contribution to total sales in 2019 followed by shoes (8%), and the most relevant regions in terms of sales are Western Asia-Pacific (38%), Western-Europe (29%), Japan (15%) and NorthAmerica (12%). Sales by directly operated stores represent the 81% of overall sales (Kering 2019).

8.4

Business Models’ Comparison

A business model represents “how the enterprise creates and delivers value to customers, and then converts payment received to profits” (Teece 2010: 173). In the last few years, luxury fashion firms have been facing challenging business model innovation that is affecting the ways they do business and manage several key processes and resources (Amit and Zott 2001). The world of luxury is a market of continuous growth and expansion. It is a growth that does not simply have its roots in a fertile and prosperous ground for development but has as its context a changing market. First, it underlines the radical change on the demand side: new young, eclectic, novelty-hungry consumers living in a constantly connected world. This has led to the adoption of new ideas and new approaches by brands and the most successful ones have been those who have been able to reinvent themselves and adopt the “Millennial state of mind” and have innovated collections, introducing for example street style, new sales and communication channels.

8 A Comparative Analysis: Gucci, Saint Laurent …

217

Second, the technologies for selling and communicating luxury products have changed. On the sales side, e-commerce integrated with physical retail has led to the birth of the omnichannel strategy today that also embraces social media, a tool for both communication and sharing as well as sales. Third, the acceleration of sales and “consumption” of products and images online has multiplied the creative and communicative effort of designers, resulting in numerous artistic collaborations, new capsules and in some cases, the immediate sale of collections after the fashion shows. The marriage of fashion, speed, consumerism and art is also an attempt to preserve the value of garments beyond their seasonality and trends and to justify their premium prices. Finally, in this transformative environment, the fashion houses are called upon to innovate by leveraging new technologies, respecting the environment and without losing their DNA and heritage. In order to identify whether and how luxury brands respond to these challenges, the Kering Group, whose performance has been undoubtedly extraordinary in the last five years, was taken as the benchmark. The CEO of the holding company described 2017 as a phenomenal year with a 25% growth in turnover exceeding 15 billion euros. The analysis focused on the top four brands in Kering’s turnover: Gucci, Bottega Veneta, Saint Laurent and Balenciaga. These brands have different histories, peculiarities and strategies and the analysis aims at identifying commonalities and differences and hence key competitive factors that have led them to grow. Furthermore, while three brands, namely Gucci, Saint Laurent and Balenciaga are rapidly growing, Bottega Veneta is undergoing a restructuration after a period of crisis. Hence the analysis of these Maisons also allows the comparison of traits of the most and less successfully performing brands.

8.4.1 The Strategy Canvas The strategy canvas is both a diagnostic and an action framework developed by Kim and Mauborgne (2005) to detect blue ocean strategies. According to the authors, success comes not from benchmarking and

218

A. Cabigiosu

countering competitors’ moves but rather from making the competition irrelevant by creating “blue oceans” of uncontested market space. While the blue ocean strategy typically invokes both cost and differentiation advantages that do not well fit the luxury industry, the strategy canvas is a tool that graphically captures similarities and differences between firms’ business models. Hence, this model is useful for grasping similarities in the most successfully performing Kering brands’ strategies and the differences with Bottega Veneta which experienced a period of crisis. The canvas allows one to understand where the Maisons are currently investing in the graphic form. The horizontal axis lists the primary factors that the industry competes in while the vertical axis captures the offering level of each firm along each factor. When a firm has a high score on the vertical axis, it indicates that it is investing more in the corresponding factor on the horizontal axis. In the case of quality, a higher score indicates a higher quality. The authors call “value curve” the curve obtained by plotting the current offering of a firm across all the factors listed on the horizontal axis. The value curve is a graphic description of a company’s strategy and when multiple firms’ curves are plotted on the same canvas, they also represent the relative firms’ performance across multiple factors. In this respect, value curves are useful for identifying unsatisfied customers and potential spaces for a firm’s offering (Kim and Mauborgne 1999). A company uses the canvas to reorient its strategic focus from competitors to alternatives and uncontested spaces, and from existent customers to new customers of the industry. In this respect, the canvas fits the fashion luxury suitably where a new category of customers, the Millennials, is opening huge business opportunities and digitalization offers new means to satisfy Millennials. In this context, Maisons must understand how to reconstruct buyer value elements that reside across industry boundaries. While conventional strategic brands offer better solutions than rivals to existing needs, the most successfully performing Maisons were able to craft a new value curve. Sometimes there is a fundamental change in what clients want, and if companies are focused on benchmarking one another they might not perceive the change in client demand and lose the opportunity to

8 A Comparative Analysis: Gucci, Saint Laurent …

219

discover entirely new sources of value for buyers and create new demand. Firms should also eliminate or reduce investments that are no longer no more fruitful. For example, the omnichannel strategy does not necessary require adding investments in all retail channels but can also call for a rationalization of some of them. Finally, firms might increase their focus on pre-existing areas that are becoming more relevant such as social networks. An effective strategy has a value curve with three complementary qualities: focus, divergence (from competitors) and a compelling tagline that is easy to communicate. On the other hand, when a company’s value curve lacks these attributes, its business model becomes complex to implement and perceive. The company must eliminate, reduce, raise and create factors to construct a divergent value curve and identify the full set of complementary factors that can support the firm strategy. For example, artistic collaborations complement the development of new capsules and feed social networks, so they are complementary and their growth is positively correlated. On the other hand, we have shown how luxury fashion today relies on innovative technologies and materials to improve the quality and sustainability of its garments and also enhancing personalization. Craftmanship and heritage are still relevant but less so compared to the past. Kering’s 2018 annual report cites the word “sustainability” 203 times and the word heritage 9 times. Ten years before, in 2008, the same report cited the word “sustainability” 27 times and the word heritage 4 times. Since that year, we have been observing in Kering’s reports a steady increase in attention toward sustainability while the focus on heritage and quality remain almost stable. The next section systematically discusses the new key competing factors of new luxury, as observed in the analyzed cases, and those that still belong to the old luxury.

220

A. Cabigiosu

8.4.2 Old and New Luxury This section relies on the strategy canvas framework to compare Kering’s Maisons’ strategy and understand how they are different from more traditional fashion luxury business models and how they differentiate between them. As discussed in the previous chapters and particularly in Chapter 1, luxury fashion firms sell premium price products that perfectly calibrate a mix of attributes. The luxury brand experience is multifaced and combines innovation, creativity, tradition and history, superior quality and high prices, exclusive communication and selective distribution, imagination and storytelling. Particularly in the fashion industry, luxury combines product attributes, creativity and brand image. Luxury products are often also perceived as rare and can be adapted to clients’ personal needs. Furthermore, brand name, identity, status, reputation and awareness are considered fundamental and so are product and design attributes such as quality, craftsmanship, innovation, uniqueness, creativity, rarity, exclusivity and visibility. In this respect, communication and distribution strategies are central and proprietary luxury stores are considered crucial to a brand’s marketing and reputation. Brand heritage is still considered relevant and tell the firm’s history and tradition, but new generations and technologies have somehow questioned the ability of products built on firm’s heritage to answer to their needs. Maisons need to grasp Millennials’ needs and expectations to the fullest and have undergone a courageous “re-branding” process which builds on concepts such as street styles and sustainability and is guided by young designers. Overall, the analysis of previous chapters allows the identification of a set of competitive factors that characterize traditional luxury fashion firms: quality, heritage, craftmanship, creativity and art, brand reputation, proprietary shops, printed communication and high prices. However, these chapters also emphasize how new technologies and customer needs have changed and today, Maisons reinforce their brand awareness by increasing their understanding and proximity to Millennials: communication proximity via social networks, selling proximity via omnichannel strategies and product proximity by increasing the number

8 A Comparative Analysis: Gucci, Saint Laurent …

221

Fig. 8.1 Strategy canvas representing traditional and new fashion luxury firms’ strategy (Source Personal elaboration)

of collections that rely on more innovative, sustainable materials and on the street style concept required by new generations. The strategy of traditional luxury fashion firms compared to that of new or “Millennial” luxury fashion firms, i.e. firms that proactively target Millennials are compared in Fig. 8.1 using the strategy canvas. While it is beyond the purpose of this discussion to assess if Millennials’ luxury fashion firms pursue a blue ocean strategy, Fig. 8.1 contributes to the detection and summarization of the primary drivers of growth of new luxury firms as well as the opportunities and challenges they face. From Fig. 8.1, it is evident that today, there are new competing variables, namely the ability to communicate and sell via social networks, the omnichannel strategy and the relevance of streetwear, that is, the ability to combine luxury with everyday life. This further aligns with Gucci’s introduction of genderless garments such as tshirt, bags, sneakers, jackets and many others. In the new scenario, other competitive dimensions have now increased their relevance such as the number of collections and capsules that embody innovative materials or are produced with innovative technologies to feed the Millennials desire of newness and the relevance of sustainability polices. Proprietary shops, heritage, quality, craftmanship and prices remain constitutive elements of luxury but are not variables that can attract new clients and particularly Millennials. In this regard, interestingly, Gucci has eliminated sales, suggesting that creativity and quality cannot be on sale.

222

A. Cabigiosu

Finally, both creativity and brand reputation are as crucial as in previous years in determining the Maisons’ competitiveness even if they vehicle new contents and values such as the aforementioned sustainability. The relevance of brands is also expressed by bold logos and monograms we find both on accessories and clothes. In this Chapter and in Chapter 6, I particularly focused on the Kering Group which owns the Maisons that have been growing the most significantly in the recent years both in terms of sales and brand value. In fact, while the biggest luxury fashion group is still LVMH which owns Louis Vuitton, the most valuable luxury fashion brand, Kering is the luxury fashion group that in the last few years has experienced the highest growth rate in its top brands that are primarily targeting Millennials. Furthermore, Kering has the Bottega Veneta brand that continued adhering to the traditional luxury fashion model and after a contraction in sales is now undergoing a restructuration toward a more contemporary business model. Gucci is the Kering brand that exploded in the last few years with extraordinary growth rate of over 40%, a digital leadership and a 62% share of sales to Millennials recorded in 2018. Gucci was followed by Saint Laurent’s double-digit revenue growth and Balenciaga, considered the brand with the highest potential, which offers young consumers an ironic and completely new look. The fourth brand of the Group is Bottega Veneta that has a robust heritage to fall back on but that in recent years has experienced a reversal in revenue despite the investment in the expansion of the directly operated points of sales. In this setting, the strategy canvas can be also useful to better appreciate similarity and differences between brands in terms of strategy even within the same group. By comparing excellent results such as those of Gucci and less brilliant performances such as those characterizing the Bottega Veneta brand, it is possible to highlight brands’ strategic choices that helped them perform better. Through a comparative analysis of business cases, many key factors were identified that are relevant in this social and cultural context, and an attempt was made to assess the extent which individual brands have been able to develop and build on these factors to conquer the top positions in consumer preferences.

8 A Comparative Analysis: Gucci, Saint Laurent …

223

8.4.3 Comparing Kering’s Top Brands Starting from data and information collected on the aforementioned brands in this chapter and in Chapter 6 and the strategy canvas presented in Fig. 8.1, I have developed the strategy canvas that compares Gucci, Balenciaga, Saint Laurent and Bottega Veneta brands (see Fig. 8.2). Figure 8.2 shows that all brands approached the fashion luxury challenges of 2000 but after assigning a different weight to the new competitive variables. Gucci invested the most in the combination and complementarities between brand awareness, creativity, increased number of collections, innovation, communication via social network, an omnichannel strategy and attention to sustainability. Balenciaga followed a similar pattern but emphasized its new street style, pop and sporty vocation more while giving less relevance to heritage, quality and craftmanship, thereby suggesting a target of younger clients and a more pronounced displacement from the past. Accordingly, prices are slightly lower and they hold sales. Saint Laurent is still more anchored to its heritage and Vaccarello has been able to assert his vision of the brand, projecting Saint Laurent into the future with modernity while fully respecting the Maison’s DNA. Therefore, while brand awareness is crucial and well communicated via social networks, the Maison has invested less than Gucci and Balenciaga on streetwear, innovation and sustainability. Finally, Bottega Veneta is the brand closely tied to traditional luxury competitive variables:

Fig. 8.2 Comparison of Kering’s main brands strategy (Source Personal elaboration)

224

A. Cabigiosu

heritage, craftmanship and quality are central and they superimposed on creativity and innovation. This brand does not clearly speak to Millennials and has not yet prioritized street wear, social networks or omnichannel strategy. Table 8.1 also compares the relative importance that the analyzed competitive variables have in the business models of Gucci, Saint Laurent, Balenciaga and Bottega Veneta. The entries of the table allow understanding which set of variables better captures the source of each of these Maisons’ competitive advantage and better describe their value proposition. The analysis of Fig. 8.2 and Table 8.1 suggests the following considerations. Table 8.1 Comparison of the relative importance that the analyzed competitive variables have in the value propositions and business models of Gucci, Saint Laurent, Balenciaga and Bottega Veneta Heritage Quality Prices Craftmanship Creativity Brand Shops Printed communication Collections Innovation Sustainability Social network Omnichannel Street wear

Gucci

Saint Laurent

Balenciaga

Bottega Veneta

= + + = + + = –

+ + + = = + = –

– = – – + + = –

+ + + + – = = –

+ + + + + =

= – – = = =

+ + + + + +

= – + – – –

The table compares the relative importance that the analyzed competitive variables have in the value propositions and business models of Gucci, Saint Laurent, Balenciaga and Bottega Veneta. The entries of the table are “+”, which means that the analyzed Maison focuses its competitive advantage and value proposition on the analyzed variable; “=”, which means that the analyzed Maison invest on the analyzed variable but this is not distinctive in the Maison’s value proposition as compared to the offering of the other Maisons, and “−”, which means that the analyzed Maison does not primarily base its competitive advantage and value proposition on the analyzed variable Source Personal elaboration

8 A Comparative Analysis: Gucci, Saint Laurent …

225

First, the analysis emphasizes how some new competitive variables are crucial for all rapidly growing brands: the availability of more collections, capsules or special garments designed for specific sales channels, sustainability, social networks, the omnichannel strategy and the streetwear. These variables can be complementary between them in that social networks, omnichannel strategy and streetwear all increase the proximity and points of contact with clients and collections are the primary content of this intensified communication. Sustainability is also a content near to Millennials’ sensibility. Figure 8.2 and Table 8.1 also show that old or traditional competitive variables are still relevant and are particularly emphasized: quality, brand value and creativity, nurtured by artistic collaborations that are crucial in feed the need of newness and exclusivity of Millennials. While these variables are also complementary and coherent between them, they could generate tension when coupled with the competitive variables of the new luxury as discussed later on in this chapter. A clear sign of discontinuity with the past is the Kering group’s choice of changing the creative directors of all analyzed Maisons by hiring only Millennials as new creative directors: the last years were very dynamic and the analyzed brands all changed their creative directors by selecting artists belonging to (or close to) the generation of new consumers, that is Millennials, and who have grown up with the same mindset. Alessandro Michele arrived in Gucci in 2015, Demna Gvasalia in Balenciaga in 2015 and Anthony Vaccarello arrived in Yves Saint Laurent in 2016. The less performing brand, Bottega Veneta, changed the artistic director hiring a Millennial, Daniel Lee, only in 2018. Millennials have become the new creative directors in Kering and this is undoubtedly a fundamental and clear strategy of the group as a whole. In addition to the replacement of designers, it is also noteworthy that art directors are taking on the task of setting up the brand image in the aura of attraction that they themselves recreate around their own brand. On the contrary, Louis Vuitton is more conservative having introduced a Millennial artistic director, Virgil Abloh, only for menswear. In the world of luxury, it is not uncommon for brands to change their art directors, but what is really new is the choice of younger directors aimed to meet the demand of the most growing segments of luxury,

226

A. Cabigiosu

those represented by new Generations Y and Z. These creative talents share the same mentality with the market demand, which leads them to easily understand the taste and ethics of their own generation. The Gucci, Balenciaga and Saint Laurent brands are the image of their designers who are charismatic and popular and constitute a value added for their brands. While new creative directors created a discontinuity with the past, they are yet still anchored in the brand’s heritage. Bottega Veneta is the only Maison which has not yet lived this revolution and for which heritage is both a valuable identity and a binding element. Completely embracing its history of craftsmanship and quality, Bottega Veneta communicates to its customers through the discreet and exclusive language that has always distinguished it. Today, however, the history of the brand seems not to increase the perceived value of the brand to new consumers. Heritage seems to have given way to what is culturally important at a given time. The Millennials and younger generations demonstrate an antithetical approach to their predecessors. More than the history of the brand, they are interested in what the brand expresses and represents in the immediate context of reference; they want brands to portray the present. Therefore, Balenciaga has broken in with completely new canons compared to the past, Gucci has taken the essential elements and symbols of the Maison and reinvented and re-proposed them under new and never-daunting clothes. Saint Laurent has not forgotten the principles of quality, design and innovation laid down by its founder, but owing to the innovative elements always present, it manages to be relevant to the emerging needs in the market. Interestingly, data available about Bottega Veneta’s performance in 2019 suggests that the brand is still in a transitional phase, but the market has welcomed the Millennial Daniel Lee’s new collections. Second, the analyzed brands have also invested in multiple artistic collaborations: the link between luxury and art has always been relevant, and today, brands are further emphasizing collaboration with contemporary artists who allow them to achieve high levels of spectacle, offer additional sensory experiences and, ultimately, are shared on social media. Brands require the touch of famous artists to imbue the luxury

8 A Comparative Analysis: Gucci, Saint Laurent …

227

product with cultural relevance and create a kind of elitism and artificial rarity, for example, the capsule collections or the limited editions in collaboration with the most important artists of the moment. Once again, the first in the class is Gucci with over 150 artistic collaborations in 2018 alone. What distinguishes this Florentine brand along with Saint Laurent is that both have been give their artists carte blanche, so that they can reinterpret the brands according to their own gaze. This is how Gucci’s #GucciGram campaign and Saint Laurent’ s SELF project were born. Gucci’s additional ability is that, in addition to collaborating with the most established and unconventional artists, it manages to make its own projects viral. The fashion shows on the catwalks bounce off the newspapers and the media for a long time, creating buzz around the brand even long after the event is over. The 2018 Autumn/Winter fashion show is also worth mentioning where models adorned with dragon cubs and cut heads attracted global attention. Talking to the Millennials also means giving them a unique experience and reaching them both offline and online. Bottega Veneta is the only brand that has pursued limited artistic collaborations. Third, these Maisons symbolize the rise of the omnichannel strategy to reach the consumer through many interconnected touch points, from the physical store to the digital world, making the customer live a real experience that they can share and communicate via social networks. Millennials are digital natives and hypersocial. In fact, the close correlation between performance in sales’ growth and the number of Instagram followers is noteworthy: Gucci had 39 million followers at the beginning of 2020 while Balenciaga had 11 million, Saint Laurent had 7.5 million and finally Bottega Veneta had 2 million. These brands intend to provide young consumers with an engaging omni-channel experience which also includes social media. Millennials grew up in a world of connections and sharing and expect to establish dialogue with brands in the virtual reality as well. If Bottega Veneta has not yet put its strategy to good use, Balenciaga, Saint Laurent and Gucci already have all the cards in place. In particular, Gucci, with its 39 million followers has made Instagram the extension of its brand.

228

A. Cabigiosu

The Group’s brands have also pursued a strategy of expanding their directly managed physical stores, as well as restructuring those already present to ensure consistency in the communication message. Gucci delivers internationally, Saint Laurent is already online in 50 countries and has worked with Farfetch to enter Greater China. Balenciaga, on the other hand, has set up an online network that brings it to more than 100 countries. A step backwards compared to the other brands remains Bottega Veneta, whose digital experience is rather meager. Fourth, streetwear is the new dress code of Millennials and has entered the collections of all the analyzed brands, representing a convergence between casual wear and luxury. Luxury observes what clients wear and attempts to reinterpret the street style and relate it back to their heritage to identify more with democratic and easy-to-wear volumes and cuts that can eventually be genderless. Particularly, Gucci and Balenciaga have gone in this direction: Gucci has reinterpreted the icons of the brand, such as the floral print or the green and red stripes, and Balenciaga which is more focused on sportswear has introduced new iconic sneakers such as the triple, track and speed models. Maxi sweatshirts, t-shirts and luxury jeans have returned to the catwalk, staging an underground culture and a casual look. Brands must therefore be able to demonstrate great versatility when attempting to elevate purely sporting items to luxury goods. A step in this direction could be seen in Daniel Lee’s 2019 collections, a sign that Bottega Veneta is also winking at new consumers. With the relaunch of this brand, we could perhaps witness a sort of convergence within the Group synonymous with the fact that all luxury brands are heading in the same direction despite their historical and stylistic peculiarities. A first meeting point that unites all four brands is the use of co-ed, i.e. the combined men’s and women’s fashion shows. Fifth, for Gucci, Saint Laurent and Balenciaga, collections and capsules are strategic in communicating with clients and in enriching their offerings, for example, Gucci collaborated with Walt Disney in 2020 and designed garments with the iconic mouse or YSL that designs for both YNAP’s Net-A-Porter and Mr. Porter and has launched a number of key pieces across these webstores. All brands also have two main collections (fall/winter, spring/summer), pre-fall and prespring collections and cruise/resort collections. Ready-to-wear shows have been

8 A Comparative Analysis: Gucci, Saint Laurent …

229

reduced to two occasions a year. Gucci, Balenciaga, Saint Laurent and Bottega Veneta are in line with what has become a trend in the luxury market. While the classic seasonal collections are limited, there is also an emergence of new collections that occupy moments of emptiness between seasons. In fact, the time taken for the presentation, production and distribution of a ready-to-wear garment is about six months. Today’s market is much faster, and brands need to be present at all times to satisfy the new consumer’s need for innovation. It is for this reason that the attention towards the pre-collections, the Resorts or Cruise collections and the Capsule collections is increasing. Gucci, for example, presents the Resort and Cruise collections in exclusive locations, making itself the protagonist of a great event with a strong rebound in all the media. It should be stressed that it is not merely a question of getting people talking about themselves but catering to today’s consumers in the luxury market who always need something new to buy. This is a real challenge for a world based on creativity and quality such as that of luxury goods. The added value that can be derived from belonging to the same Group can be given by the synergies that undoubtedly develop within, allowing brands to be more efficient and perform better to devote energy to the core business: creativity. The support given by the Group can therefore include production activities and the logistics network—a crucial element in this fast-growing market. An important example regarding the synergies of the Group under study is the announcement made by Kering of the internalization of the management of digital platforms by 2020: e-commerce, data science and CRM. E-commerce is the fastest growing channel in the world and represented about 6% of the Group’s sales in the first quarter of 2018. The goal of bringing in-house digital tools is to deliver the best possible experience to customers at every point of contact. The strategic choice to focus on digital channels will also be reflected on its brands, allowing for a discreet alignment on this level. In addition, it will be possible for brands to leverage the resources of centralized teams and the results of studies on various pilot projects carried out to offer customers highly personalized communications and experiences. Sixth, the Kering group considers sustainability a priority. However, while the Kering Group’s commitment toward sustainability is clear, less information is available about each brand’s achievements, specific actions

230

A. Cabigiosu

and the role of sustainability in each brand’s strategies. Gucci appears as one of the more committed brands by declaring on its website the search of a more environmental and socially sustainable approach along the entire supply chain and by describing its multiple initiatives. Furthermore, Balenciaga and Bottega Veneta developed specific actions and invested in the production lines and processes to reduce their environmental impact, while less is known about Saint Laurent that launched a sustainability-focused couture training program in 2017.2 Finally, these Maisons answer to the quest of sustainability, exclusivity and comfort by relying on innovative materials and production processes. Kering has a centralized innovation team which supports projects at the brand level. At the brand level, the most vivid example of innovation in design and production processes is the Gucci Art Lab which develops R&D activities related to new materials, metal accessories and packaging, testing activities and prototypes and overall attempts to innovate processes and technologies. Moreover, Balenciaga has been investing in innovation in fabrics. Nevertheless, as anticipated previously, while the variables of new or “Millennials luxury” are complementary between them and indicate a growth pattern for luxury fashion firms, the variables of old luxury, which are still emphasized in the brands’ renewed business models, might generate tensions that constitute a threat for these firms. The next section discusses each of them.

8.5

Discussion and Conclusions

In the last few years, the competitive scenario has changed; particularly, clients have changed. Millennials are digital natives and hyperconnected who valorize experiences and speed when luxury is concerned. Accordingly, luxury fashion firms have started reshaping their strategy. While luxury fashion firms still invest in the constitutive elements of lux such as quality and brand value, their ability to speak to and attract Millennials depend on a set of interrelated and complementary variables: 2 https://fashionista.com/2017/07/saint-laurent-couture-sustainable-training-program.

8 A Comparative Analysis: Gucci, Saint Laurent …

231

there are new competing variables, namely the ability to communicate and sell via social networks, the omnichannel strategy and the relevance of streetwear, namely the ability to combine luxury with everyday life. Furthermore, the ability to grasp the growth trajectories of the market and their complementarities is a growth opportunity for luxury fashion firms. A digital generation wants to use digital tools both to communicate with brands and to buy products. Multiple channels such as social networks, e-commerce platforms and web sites become integrated and complementary in providing different information, experiences and access to the luxury world. These tools generate the required proximity with clients which is also translated into more comfortable garments designed for everyday life and nearer to the street style. However, these tools must also be fed with contents aligned with Millennials’ attention and search for new experiences. This has led to an increase in the number of collections, especially capsules, that embody innovative materials or are produced with innovative technologies or can be personalized to feed the Millennials desire of uniqueness and newness. These collections are often created in collaboration with young artists, simultaneously bringing in a sense of modernity and rarity to clothes that are designed for the everyday life and could lose their aspect of exclusivity. Finally, attention to sustainability and a sustainable lifestyle is also in line with Millennials’ mindset. Overall, all these trends are coherent and complementary and can be diversely combined to serve the multiple segments that still exist within Millennials’ world that cover a generation spanning from 40-to 20-year-old consumers. As the Kering brands exemplify, the analyzed new competitive variables can be mixed diversely to specifically satisfy specific Millennial populations, from Balenciaga that mainly speaks to younger Millennials to Saint Laurent and Bottega Veneta that still maintain a closer relationship to their heritage. While Millennials are digital natives and allow the virtual expansion of a brand market via digital tools, thereby facilitating brands’ access to clients, the development of a business model targeted to their needs in the luxury fashion industry also poses numerous challenges. Currently, luxury fashion firms compete in a setting where two different sets of competitive variables, traditional and new, coexist. However, these

232

A. Cabigiosu

two sets are coherent and complementary within their own boundaries and less with each other and challenge firms willing to design a new competitive landscape. Luxury fashion firms are tightropes in between zeroing the brand and respecting the heritage; in between craftmanship, increased number of collections and sustainability; in between street style, increased number of collections and perception of uniqueness and rarity; and in between speed and creativity. First, fashion luxury firms must defend their heritage and DNA while reshaping themselves especially with respect to the ability to design ready-to-wear collections nearer to everyday life. The analyzed brands have managed to reach this result by hiring Millennial creative directors who combined some icons of their Maison with signs of profound change, starting from new logos or brand name. Second, sustainability can be an opportunity, but it is also risky: firms have to learn how to combine sustainability with craftmanship and multiply collections with sustainable development. Luxury garments are produced often building on craftsmen’s knowhow and use of traditional materials such as leather. These were not conceived to respect sustainable standards and could raise specific issues. On the same vein is the increased number of collections that are often not compatible with sustainable instances regarding the waste generation or the disruption of unsold collections. In this regard, Maisons can attempt to increase their sustainability either to reach minimum standards or to develop a strategy focused on sustainability. Nevertheless, the focus on sustainability is easier for younger brands that entered the market with this specific mission such as Stella McCartney than for older Maisons with consolidated practices. Third, luxury fashion firms are tightrope in between street style, increased number of collections and perception of uniqueness and rarity. As debated in Chapter 1, luxury has multiple defining attributes that are challenged by the new vision of more wearable luxury such that sneakers are elevated to an icon of everyday lux. In pursuing this strategy, Maisons should balance the need of proximity of clients with the aura of exclusiveness that luxury still has to evoke. Moreover, the proliferation of items might negatively affect the perception of their value in that soon items

8 A Comparative Analysis: Gucci, Saint Laurent …

233

will be substituted by new collections. Moreover, for this reason, brands use capsules with a unique theme to suggest the idea of the unrepeatable, especially when signed by a guest artist. Fashion shows themselves are spectacular and creative directors themselves are perceived as visionary artists more than they were in the past. Fourth, speed and creativity require the capacity of a tightrope. New collections and capsules rapidly spread on the web and are bought and exhibited on Instagram or Facebook by clients. There is no waiting time before having and showing new purchase without embracing the seenow-buy-now formula. In this manner, luxury items are in line with Millennials’ need of newness, gratification and (eventually) ostentation, but Maisons are continuously asked to produce new items to satisfy them: quality and creativity might follow different time and patterns than those imposed by Millennials. Finally, omnichannel and social network strategies as well as new technologies such as 3D printing require specific competences and resources. Kering is emphasizing the need to achieve direct control over them by 2020 by internalizing digital activities and has already created the ArtLab for Gucci. In this respect, smaller Maisons might face specific challenges related to the lack of financial resources and competences. Fashion trends have also been a mixture of push fashion strategies such that brands design new iconic pieces such as the skirt or the trench or dictate chief fashion trends such as in the bold ages of eighties and pull fashion in which brands incorporate stylistic street style suggestions such as in the age of grunge. This era of fashion seems driven by an extraordinary proximity between Maisons and clients in which the two approaches merge and create a unique contamination of art and street style.

234

A. Cabigiosu

References Amit, Raphael, and Christoph Zott. 2001. Value creation in e-business. Strategic Management Journal 22 (6–7): 493–520. Attanasio, Debora. 2017. Cristóbal Balenciaga dimenticava l’amore perduto vestendo le donne più chic (e ricche) del pianeta. Marie Claire, available at https://www.marieclaire.com/it/moda/fashion-news/a19453325/cri stobal-balenciaga-biografia/. Accessed on 14 Feb 2019. Baudo, Giampietro. 2018. BLACKSTAGE: Art Saint-Laurent. MF Fashion, available at https://www.mffashion.com/news/backstage/blackstage-artsaint-laurent-201811151947049298. Accessed on 18 Feb 2020. Crivelli, Giulia. 2017. Lusso, il rilancio di Ysl con la « ricetta » dell’italiana Francesca Bellettini. Il sole 24 ore, available at https://st.ilsole24ore.com/art/ moda/2017-07-31/lusso-rilancio-ysl-la-ricetta-italiana-francesca-bellettini102310.shtml. Accessed on 10 Feb. Fashion Magazine. 2018. Balenciaga: grazie a uomo e Millennials, il target del miliardo di euro è più vicino, available at https://www.fashionmagazine. it/business/STRATEGIE-Balenciaga-grazie-a-uomo-e-Millennials-il-targetdel-miliardo-di-euro–pi-vicino-87273. Accessed on 10 Feb 2019. Heller, Nathan. 2020. Demna Gvasalia on Balenciaga, haute couture, and why he’s staying put in Zurich. Vogue, available at https://www.vogue.com/art icle/demna-gvasalia-on-vetements-and-haute-couture. Accessed on 18 Feb 2020. Holgate, Mark. 2018. How Anthony Vaccarello is making saint laurent his own. Vogue, available at https://www.vogue.com/article/anthony-vaccarellointerview-vogue-march-2018-issue. Accessed on 10 Feb 2019. Kering. 2014. Reference document, available at https://keringcorporate.dam. kering.com/m/0dd709c710ff0615/original/2014-Reference-Document.pdf. Accessed on 18 Feb 2019. Kering. 2015. Financial document, available at https://keringcorporate.dam. kering.com/m/014e7b7d4803ab1b/original/2015-Financial-Document.pdf. Accessed on 3 Mar 2017. Kering. 2016a. Financial document, available at https://keringcorporate.dam. kering.com/m/4d2785bc4daf344d/original/2016-Financial-Document.pdf. Accessed on 3 Mar 2017. Kering. 2016b. The dynamic duo. Kering Magazine, available at http://www. kering.com/en/magazine/dynamic-duo. Accessed on 10 Feb 2019.

8 A Comparative Analysis: Gucci, Saint Laurent …

235

Kering. 2017. Financial document, available at https://keringcorporate.dam. kering.com/m/3ba17a6b64aae82d/original/2018-Financial-Document.pdf. Accessed on 4 Apr 2018. Kering. 2018a. Financial document, available at https://keringcorporate.dam. kering.com/m/014e7b7d4803ab1b/original/2016-Financial-Document.pdf. Accessed on 8 Mar 2019. Kering. 2018b. Daniel Lee appointed creative director of Bottega Veneta. Kering Press Release, available at http://www.kering.com/en/press-releases/ daniel_lee_appointed_creative_director_of_bottega_veneta. Accessed on 12 Feb 2019. Kering. 2019. Financial document, available at https://keringcorporate.dam. kering.com/m/5950e4d285ac1f9a/original/2019-Financial-Document.pdf. Accessed on 17 Feb 2020. Kim, Chan W., and Renée Mauborgne. 1999. Creating new market space. Harvard Business Review 77 (January–February): 83–93. Kim, Chan W., and Renée Mauborgne. 2005. Blue ocean strategy: From theory to practice. California Management Review 47 (3): 105–121. Mancinelli, Antonio. 2017. Look’n’roll: intervista ad Anthony Vaccarello. Marie Claire, available at https://www.marieclaire.com/it/mclikes/a19414465/ant hony-vaccarello-intervista/. Accessed on 14 Feb 2019. Phelps, Nicole. 2018. A new Madison Avenue maison, a One-Off NYC runway show, and a digital campaign—Change is afoot at Bottega Veneta. Vogue, available at https://www.vogue.com/article/bottega-veneta-madison-avenuemaison. Accessed on 12 Jan 2019. Pike, Helena. 2016. Bottega Veneta combines women’s and men’s S/S 2017 shows to celebrate anniversary. Business of Fashion, available at https://www. businessoffashion.com/articles/news-analysis/bottega-veneta-combines-wom ens-and-mens-ss-2017-shows-to-celebrate-anniversary. Accessed on 12 May 2019. Polan, Brenda, and Roger Tredre. 2009. The great fashion designers. Oxford: Berg. Sciola, Giulia. 2018. Tutti vogliono Balenciaga. Pambianconews, available at https://www.pambianconews.com/2018/04/03/tutti-vogliono-balenciaga233277/. Accessed on 15 Feb 2020. Teece, David J. 2010. Business models, business strategy and innovation. Long Range Planning 43 (2–3): 172–194.

236

A. Cabigiosu

Vallin, E. 2013. Vi presento Renzo Zengiaro: l’artigiano che fondò Bottega Veneta nel 1966. Il Giornale di Vicenza, available at https://vallinele onora.wordpress.com/2013/07/27/vi-presento-renzo-zengiaro-lartigianoche-fondo-bottega-veneta/. Accessed on 15 Aug 2018.

9 Concluding Considerations and Directions for Future Research

9.1

Concluding Considerations

New technologies have provided to people, for the first time, the possibility of continuous confrontation, research and exploration without limits. An unexpected, expressive freedom has given rise to an open, informed and global generation, that of Millennials, who are digital natives and accustomed to the speed and connectedness of the world wide web. Millennials is the generation more likely to spend on luxury products and are considered as the most important segment for luxury market and they have specific and at times peculiar characteristics. They are the first high-tech and digitally connected generation and they embrace new media much more than previous generations. Millennials’ values are distinct from their previous generations and it becomes imperative to understand their “state of mind” and develop ad hoc strategies. Millennials are always on, get information about fashion products from their peers, brands, social media, celebrities, blogs and influencers. Moreover, Millennials use social media to contribute with their own posts, to share experiences and to participate to a community. Luxury © The Author(s) 2020 A. Cabigiosu, Digitalization in the Luxury Fashion Industry, Palgrave Advances in Luxury, https://doi.org/10.1007/978-3-030-48810-9_9

237

238

A. Cabigiosu

firms’ marketing strategy is increasingly complex because Millennials are both users and producers of digital media. Millennials are hyperconnected, spend money rapidly, they are impatient and demanding. Influencers and clients show their daily lives and purchases using social media that reinforce the pressure to conform to the norms of the reference group. Accessibility and inclusivity feed the web and social networks: new collections and luxury items rapidly spread on the web. They are bought and exhibited on Instagram or Facebook by clients, and there is no waiting time to see, buy and show items. Fashion brands are catering to their new clients’ needs with the help of novel technologies available. Companies must start relying more on e-commerce, social media or influencers. Digital communication is the link between brands and their communities. With the increasing purchases of luxury brands online, it is becoming highly necessary to understand factors underlying millennials’ attitudes toward luxury fashion brands. The “see-now-buy-now” strategy was born to compete in this fastpaced and ever-changing scenario in which images and news spread at the speed of light. We have seen the positive aspects of the model involve products arriving on the market when there is the highest peak of interest for the catwalk items and products more aligned to trends and needs along with positive effects on sales and brand visibility. Moreover, SNBN protects brands from fast fashion players imitating products and increases the possibility of inducing consumers to buy first, avoiding discount for a large amount of goods to sell the garments. On the other hand, there is the concern about the effects of SNBN pressure on creativity. Leading designers are required to constantly align with market demands at the expense of innovation. The SNBN concept has literally divided the judgments between those who find it a good idea and those who find it cannot fit the rhythms that have always guided the luxury industry—creativity, quality and craftsmanship take time. Adopting the SNBN business model implies dedicating less time for production. Furthermore, Maisons are continuously required to produce new items to satisfy their clients. The proliferation of capsule collections and mid-season collections feeds this recursive loop of the fast acquisition,

9 Concluding Considerations and Directions for Future Research

239

sharing and consumption of luxury goods. Luxury is becoming fast. However, the higher pace of consumption and diffusion of new collections render them more quickly obsolete and raise questions regarding their value. In this context, social networks are in line with clients’ desire to express themselves and exibit their new luxury items to their community. Digital communication is the link between fast luxury, clients’ attitude toward consumerism and rapid products’ obsolescence. Digital communication growth is momentous and necessarily rapid. To address this issue, brands rely on artistic collaborations that enhance their creativity and feed clients’ continuous need for newness. Furthermore, these collaborations generate original capsule collections that, being signed by artists, appear as real works of art. Garments thus have their value restored and their aura of uniqueness and exclusivity, which cannot be on sale, remains intact; catwalks become shows and creative directors are artists themselves. Art reaches out to consumerism by signing its garments. These “signed” collections feed a new concept of luxury, one which is more eclectic and can reach a younger and wider audience while creating a growing buzz around the brand. For example, Gucci uses digital platforms to give visibility to its artistic collaborations, thereby creating a self-reinforcing cycle in which artistic collaborations add value to collections, generate new capsules—which also generate new contents for online platforms that support sales—and tremendously increase the visibility of the brand. If Millennials are “Always On”, it is clear that there can be no success without an adequate digital strategy that can capture the attention of the audience at a time when images and information are in excess. Firms began to shift their marketing efforts from targeting everyone, everywhere, to focusing on the luxury customers of the future, the Millennials. Millennials are also powerful trendsetters capable of influencing the behavior and expectations of those around them. Consequently, brands must be closely connected to their clients to quickly satisfy them via new garments and communication channels and must reflect their everyday lives by producing clothes that are more “wearable” in the many pictures posted on social media. Collections have started including an increasing number of garments that look toward street and pop culture and push

240

A. Cabigiosu

brands to achieve a complex balance between heritage and tradition and innovation, reaching the so-called zeroing strategy in which brands’ DNA can be significantly reshaped. The book shows how the notion of luxury is subject to significant relativity and how this concept it is still evolving. Inaccessible luxury was characterized by custom-made products produced in limited numbers and distributed through a highly selective network. Creativity, quality and craftsmanship are the pillars of traditional or old luxury, and they require time. However, creativity and quality are still the pillars of new luxury, which compresses time. The “new luxury” has a lower degree of uniqueness and it is more inclusive and nearer to our everyday life, especially to that of Millennials. Coherently, luxury brands are undergoing a phase labelled “re-branding,” or zeroing, which signals the need to profoundly revise the brand image to cater to the most crucial ‘Millennial’ needs and expectations. In the last few years, luxury fashion firms have been facing challenging new business models that are affecting the ways in which they conduct business and manage several key processes and resources. The most successful business models are the ones that have been able to scrutinize and interpret the “Millennial state of mind” at multiple levels, from products to communication and distribution strategies. E-commerce integrated with physical retail has led to the birth of the omnichannel strategy that today also embraces social media, a tool for communication, sharing and sales, which celebrate the marriage between fashion, speed, consumerism and art. Finally, in this revolutionary environment, fashion houses are called upon to innovate by leveraging new technologies, respecting the environment and their heritage. The use of 3D printing in the fashion industry poses a number of advantages compared to traditional manufacturing processes, including an accelerated design and production processes, lower inventory, warehousing, packaging, and transportation costs. Also smart textiles have high performing and innovative functionalities that can boost the growth of luxury fashion. Generation Y and Z especially value active smart textiles. But while additive manufacturing and smart textiles can be the next frontier of competition in fashion, in luxury fashion they still present some criticalities. In this setting, manual and

9 Concluding Considerations and Directions for Future Research

241

artisan processes are largely considered one of the pillars of the traditional luxury and an important competitive factor: production processes are not standardized and repeatable, and the personal skills of expert craftsmen play a leading role. Firms in the luxury industry will need to craft a new luxury concept by combining technology with heritage, technology and uniqueness by relying on digital one-to-one customization processes. Today, Maisons reinforce public awareness of their brand by increasing their proximity to Millennials: communication proximity via social networks, selling proximity via omnichannel strategies and product proximity by increasing the number of collections that rely on more innovative, sustainable materials as well as the street-style concept required by new generations. Proximity is also achieved by bringing in Millennials as new creative directors who share the same mindsets as these new clients, which enables them to easily understand the tastes and ethics of their own generation. Fashion is characterized by cycles, and the aforementioned is the cycle of two-way proximity in which fashion brands and clients are closer than ever and are shaping each other. Proprietary shops, heritage, quality, craftmanship and prices are still constitutive elements of luxury but are not the variables that can attract new clients, particularly Millennials. Therefore, luxury fashion firms compete in an environment in which two different sets of competitive variables, traditional and new, coexist. However, these two sets are coherent and complementary within their own boundaries and less so with each other and challenge firms willing to design a new competitive landscape. For these reasons, fashion firms seem to be on tightropes in search for a balance between speed and creativity, speed and quality, innovation and heritage, art and sales, sustainability and sales, proximity and exclusivity. In the next years, and especially after Coronavirus pandemic crisis, firms may not be able to sustain these tensions, they have adopted the fast fashion business model and applied it to luxury products. But luxury takes time and luxury product should be timeless icons. Indeed, new luxury may be forced to decide which of its features will be its new building blocks, such as omnichannel strategies, and which should be abandoned, such as the “see-now-buy-now” sales model.

242

A. Cabigiosu

In the next years we will understand if new luxury will definitely substitute old luxury. In the days when I am writing the conclusions of this book, the Coronavirus is spreading in Europe and around the world. E-commerce trucks and vans are occupying the shopping streets and threatening traditional retails, forced to close. During the next weeks ecommerce will grow further at the expense of physical stores. The impact of Coronavirus on exports will be felt but luxury brands with the most organized online platforms can continue to sell. In short, e-commerce is no longer a mere alternative and an additional opportunity to increase sales, but today it is simply the only reality and new luxury models based on digital technologies may be closer than ever.

9.2

Directions for Future Research

Despite the globalization of fashion industry, the definition of luxury goods remains, at least partially, contingent on the age, sociodemographic or psychographic variables up to the individual level. The concept of luxury has more facets than expected, which change in time and on the basis of the perspective from which it is scrutinized. While this book focused on how Millennials conceive the new luxury, future studies should analyze similarities and differences between Generations Y and Z and discuss if and how the advent of Generation Z is expected to modify the current luxury fashion firms’ business model. The luxury fashion market has grown steadily in the last years. Particularly in the last years we observed a growth of the Chinese, Indian and Middle East markets. As luxury markets expand globally, more crosscultural research is needed to better understand how clients’ behavior and needs are impacted by their country-specific culture. A question relevant to global expansion is till what extent luxury fashion firms can standardize their offering worldwide. Firms can develop multiple collections targeted to different countries or try to push more “global” collections. This is a crucial point especially for smaller firms with limited resources. Interestingly, this is a relevant topic that once again recalls the need to understand how the concept of luxury is continuously evolving and if and till what extent it is country specific.

9 Concluding Considerations and Directions for Future Research

243

Globalization has also led to the shift from small family-owned businesses to multinational enterprises. In this scenario of new luxury and global growth, bigger firms and groups are those better equipped to face many raising opportunities and threats deriving by digital technologies. Nevertheless, we still have many medium firms that operate in the industry. Researchers will have to understand if SMEs can still be competitive in the luxury fashion industry and how. Researchers will also have to reflect if new entrants could be favored having no burden from the past and being free to design their strategy relying on new technologies, new generations’ value and building more sustainable production processes and value chains. Interestingly the new luxury can both require a “lifting” or a zeroing to traditional luxury brands (the incumbents) but it can also ease the entrance of new firms with a value proposition in line with Millennials’ needs and equipped to benefit to the fullest from new technologies. Examples are Off-White, which is an iconic brand of street-style, or Stella McCartney, committed to operating a modern and responsible business never using leather or fur and pioneering new alternative materials. Also, we do not know yet which will be the exact impact of the Coronavirus Pandemic crisis over the industry growth and how long it will last. We can expect that this crisis may led to further polarization between bigger and smaller firms, firms with healthy and critical balance sheets prior to the crisis, firms with digital capacity and online platforms and firms dependent on wholesalers, firms that learned to communicate with clients via social media and firms still focused on the relevance of fashion shows, firms with more agile supply chains and firms with longer supply chains that may face long shortage. To date, scholars have empirically investigated the most diffused firms’ omnichannel strategies and the supporting technological solutions, but we still need studies that show how firms manage the integration of a high number of different touchpoints and that describe how these strategies change in time by adopting a processual view. Future competition in the luxury fashion will be increasingly based on the omnichannel consumer experience, with the need of achieving a consistently high quality of interactions at all customer touchpoints. Customers will increasingly require personalized experiences across all

244

A. Cabigiosu

touchpoints, which will require firms to find technologies to identify consumers and to interact with them in real time. In this context artificial intelligence and big data analytics are the technologies expected to dominate firms’ ability to effectively interact with clients. Furthermore, successful omnichannel retail do not only require technologies but also competences and human resources to manage continuously changing functions, from logistics to sales activities. In this setting we need to understand how the management can lead this change by designing effective omnichannel strategies, identifying the required technologies and competences across multiple functions. Consequently, by shedding light on how and why omnichannel will influence business opportunities and operations, future studies can contribute to a deeper understanding of the process through which firms can approach an omnichannel strategy. Luxury fashion industry is integrating complex and wide technological and social changes. Additional studies are needed to understand how Maisons will cope with the old vs new lucury’s trade-offs, which variables will lead to superior competitive advantage, how new technologies and their usage will shape competitive advantaged and if old luxury will become a niche in the new luxury sector. Additional studies are also of importance to understand how other Maisons, and particularly those of LVMH Group, are transforming their business models to answer to Millennials’ needs and to benefit from the integration of new technologies. Finally, in-depth longitudinal case studies are needed to understand if the new luxury is an economically, socially and environmentally sustainable business model in the long run.

Index

A

Abloh, Virgil 20, 225 active textiles 153, 157 additive manufacturing 4, 133, 134, 136, 147, 165, 166, 240 Adidas 38, 106, 145–149 Arnault 25, 176 art 5, 12, 17, 51, 56–60, 63, 136, 152, 162, 163, 186–188, 192–194, 197, 203–205, 208, 211, 214, 217, 220, 225, 226, 233, 239–241 ArtLab 189, 190, 198, 233

B

Baby Boomers 33, 34, 36, 38, 39 Balenciaga 4, 5, 15, 20, 26, 59, 92, 108, 176, 178, 182, 207–212, 217, 222–231

big data 79–81, 96, 148, 244 Bizzarri, Marco 16, 178, 184–186, 192, 196, 198, 213 blog 3, 37, 42, 52, 54, 55, 61, 192, 237 blue ocean strategy 5, 218, 221 body scanning 87 Bottega Veneta 5, 21, 26, 176, 178, 181, 183, 212–218, 222–231 brand DNA 19, 20, 56 brand heritage 20, 59, 186, 220 brand identity 20, 50, 87, 192 brand image 18, 20, 25, 27, 71, 75, 83, 186, 220, 225, 240 Burberry 4, 21, 41, 47, 50, 92, 105, 108, 109, 111, 113–117, 123–126, 193, 194

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2020 A. Cabigiosu, Digitalization in the Luxury Fashion Industry, Palgrave Advances in Luxury, https://doi.org/10.1007/978-3-030-48810-9

245

246

Index

C

D

capsules 3, 42, 58–60, 63, 104, 111, 117, 125, 129, 188, 192, 198, 212, 217, 219, 221, 225, 227–229, 231, 233, 238, 239 Céline 21, 26, 58, 215 Chanel 12, 15, 20, 51, 53, 104, 191 Clienteling 87 co-branding 4, 59–61, 125 communication 3, 13, 18, 19, 37, 42, 43, 47–52, 54, 55, 57–59, 62, 71, 80, 83, 85, 89, 91, 93, 97, 111, 112, 114, 118, 139, 154, 160, 165, 180, 181, 185, 186, 191–193, 197, 198, 204, 206, 213, 216, 217, 220, 223–225, 228, 229, 238–241 Computer Aided Design (CAD) 134, 141, 142, 151, 166 Computer Aided Manufacturing (CAM) 141, 142 concept store 83 Corporate Social Responsibility(CSR) 45 craftmanship 1, 57, 93, 111, 220, 221, 223, 224, 232, 241 creativity 14, 17, 18, 56, 106–108, 128, 177, 179, 181, 185, 186, 189, 191, 192, 195, 197, 198, 220–225, 229, 232, 233, 238–241 culture 11, 20, 27, 35, 36, 38, 58, 60, 61, 63, 81, 92, 177, 179, 181, 189, 191, 195, 197, 198, 228, 239, 242 Customer Relationship Management (CRM) 80, 87, 90, 95, 97, 229

digital craftsman 140, 142 Digital kiosks 86 distribution centers (DC) 77, 78 district 13, 57, 92, 108, 151 Dolce & Gabbana 59, 89 3D printing 4, 46, 133–138, 142, 146, 151, 152, 164–166, 233, 240 dressing room 86, 88, 118

E

e-commerce 2, 24, 40, 49, 62, 72, 74, 75, 81, 82, 84, 88, 93, 95, 116, 118, 144, 180, 181, 192, 194, 195, 197, 198, 204, 205, 207, 208, 210, 212, 217, 229, 231, 238, 242 e-textiles 154, 160, 166 experience 2, 4, 10, 13, 14, 16–19, 23, 40, 43, 44, 48, 51–54, 56, 61, 62, 71, 72, 74–76, 79, 80, 82–90, 93, 95, 96, 114, 117, 120, 121, 127, 129, 144, 165, 178, 180, 181, 194–196, 207, 210, 214, 215, 220, 227–231, 237, 243 extrinsic textiles 155, 161

F

Facebook 41, 49, 50, 55, 62, 93, 115, 116, 190–192, 195, 204, 207, 209, 233, 238 fashion industry 1–4, 14, 17, 18, 21, 22, 25, 27, 45, 46, 59, 60, 88–90, 105, 108, 109, 128, 134, 136, 138, 151, 152, 156,

Index

165, 176, 179, 190, 220, 231, 240, 242–244 fashion week 20, 103, 105, 110, 111, 114, 122, 123 fast fashion 104, 106, 110, 112, 238, 241 Fendi 25, 26, 56, 60, 194 Ferragni, Chiara 55, 56 flagship store 83, 116, 119, 121, 206, 209 freedom 35, 44, 203, 204, 206, 215, 237

G

General Data Protection Regulation (GDPR) 81 Generation X 34, 38, 39, 43 Generation Y 34, 35, 38, 43, 165, 194, 240 Generation Z 24, 34, 48, 72, 194, 242 Gucci 3–5, 15, 16, 20–23, 25, 26, 47, 51, 52, 57, 59, 60, 83, 104, 108, 121, 176, 178, 181–198, 204, 208–212, 217, 221–230, 233, 239 Gvasalia, Demna 20, 59, 182, 209–211, 225

247

187, 190–193, 195, 198, 205, 207, 209, 210, 227, 233, 238 intelligent shoe factory 145, 148–150 intrinsic textiles 155

K

Kering 3–5, 21–26, 28, 175, 177–185, 193–199, 204, 205, 207, 208, 210–220, 222, 223, 225, 229–231, 233

L

Lauren, Ralph 4, 83, 113, 117–120, 123–125 Lee, Daniel 215, 225, 226, 228 Louis Vuitton 22, 26, 57, 60, 104, 191, 194, 222, 225 luxury 1–6, 9–28, 34, 38–43, 45–51, 53–63, 73, 74, 83, 84, 86, 90, 91, 93, 96, 97, 104, 106, 107, 112–114, 120, 121, 124, 125, 128, 129, 136, 139, 140, 152, 163, 165, 166, 175–178, 181–183, 185, 186, 188, 189, 193–195, 197, 198, 203, 204, 208, 209, 211, 213, 215–224, 226–233, 237–244 LVMH 23–26, 28, 88, 176, 182, 222, 244

I

immediacy 38, 122 influencer 3, 48, 53–56, 61, 62, 90, 105, 106, 189, 193, 194, 237, 238 Instagram 2, 41, 49–51, 55, 56, 62, 89, 93, 116, 117, 119, 186,

M

mergers and acquisitions (M&As) 24 Michael Kors 21, 25, 194 Michele, Alessandro 16, 20, 21, 83, 182, 184–189, 191, 198, 225

248

Index

Millennials 1–5, 21, 23, 24, 27, 34–44, 46, 48, 53, 56, 57, 59, 61–63, 72, 103, 104, 106, 119, 126, 128, 129, 150, 165, 175, 180, 189–191, 193, 194, 197, 198, 205, 210, 211, 218, 220–222, 224–228, 230, 231, 233, 237–244 Moncler 42, 58 multichannel 42, 54, 72–74, 77, 79–81, 120, 187, 207

N

nanotechnologies 155, 161, 162 narratives 16, 52, 53, 185, 198 Near Field Communication (NFC) 86 new luxury 3, 6, 14–17, 27, 28, 34, 165, 166, 189, 197, 198, 211, 219, 221, 225, 239–244 Nike 38, 60, 137, 138, 146, 158

O

omnichannel 2, 4, 5, 56, 72–82, 84, 85, 88, 89, 96, 97, 114, 118, 180, 194–198, 215, 217, 219–221, 223–225, 227, 231, 233, 240, 241, 243, 244

P

passive textiles 153, 155 phygital 4, 85, 96 platform 2, 28, 47, 49–51, 53–56, 72, 75, 81, 84, 87, 89, 91, 93–95, 97, 104, 114, 117, 144, 180, 185, 186, 189–192,

196, 198, 204, 207, 213, 229, 231, 239, 242, 243 Prada 15, 53, 56, 92 Puma 38, 176, 178 Q

Quick Response (QR) Codes 74, 86 R

rebranding 20, 21, 27, 220, 240 retail 2, 22, 23, 72, 73, 89, 91, 96, 118, 119, 121, 135, 136, 152, 176, 180, 204, 206, 208–210, 216, 217, 219, 240, 242, 244 RFID technology 85, 118 S

Saint Laurent 4, 5, 20, 21, 26, 178, 181, 183, 203–207, 209, 217, 222–224, 226–231 Saint Laurent, Yves 12, 20, 26, 58, 104, 176, 178, 203–206, 225 The Sartorialist 54 scanner 142–144, 152 seamless shopping 74, 75, 84, 117, 195 see now buy now (SNBN) 4, 103, 104, 106, 107, 109–117, 119, 120, 122–129, 238 Siloe 91–95, 97 Slimane, Hedi 21, 204, 207 smart labels 86 smart textiles 4, 152–157, 160, 164–166, 240 sociality 43 social media 2, 3, 5, 28, 36, 42, 46, 48, 50–52, 55, 56, 61, 62, 79,

Index

80, 88, 89, 104, 106, 112, 114, 118–120, 180, 186, 187, 190–195, 198, 204, 205, 210, 217, 227, 237–240, 243 social network 2, 16, 21, 37, 41, 43, 47, 48, 50, 52–56, 62, 72, 74, 87, 91, 97, 116, 186, 190, 191, 196–198, 205, 219–221, 223–225, 227, 231, 233, 238, 239, 241 storytelling 16, 18, 51–53, 194, 220 strategy canvas 217, 218, 220–223 street-style 5, 13, 20, 165, 216, 220, 221, 223, 228, 231–233, 241, 243 supply chain 1, 2, 28, 45–47, 71, 74, 76, 77, 106, 109–112, 114, 115, 118, 120, 123, 124, 126–128, 135, 148, 150, 153, 166, 179, 189, 190, 206, 230, 243

249

sustainability 2, 26, 45–47, 63, 134, 142, 150, 179, 189, 195, 197–199, 212, 213, 219–225, 229–232, 241

T

Tisci, Riccardo 21, 114, 117 Tom Ford 4, 41, 105, 113, 121, 122, 124, 176, 183, 185, 204 transparency 2, 40, 43, 195 Twitter 49, 50, 116, 191, 204, 207

V

Vaccarello, Anthony 204–206, 223, 225 Versace 13, 21, 25, 192 vertical integration 83, 110, 189

Y

YouTube 50, 205