Alessandro Barberis Canonico, president, Milano Unica, and CEO, Vitale Barberis Canonico, commented on the last results from Milano Unica, the industry's mood and attitude to face the present market challenges and environmental safeguarding.
The sensations I had at the beginning of the third day were very good, and the final attendance data confirmed it, even if it’s easy to speak about such results after our previous edition that lasted two days only. We had kept our last edition running for two days only because we knew that a good part of the world would have not been able to participate.
Obviously, we experienced great enthusiasm for various reasons. First because the market is going very well, and it is pushing our clients to return and look for new inspiration and new themes.
We generally saw a return of the US visitors who could not travel before. Along with it, the US market is going very well, its players are selling and returning to the show to look for new materials and ideas. Europe had lowered its attendance last July, now all European countries are back.
The recovery is happening in all countries generally. It is slightly stronger in the US, slightly less in Europe, and Asia, where China is slightly behind when compared with other countries, because of frequent lockdowns, shops are often closed, and they have difficulties in selling. This doesn’t mean it is not performing well, but as before the pandemic it was living a very high growth, now between lockdowns, blocking and the impossibility for them to travel, people cannot travel, do smart working, obviously its performance is lower.
The rest of Asia is working fine, more Korean than Japanese people, but it is all fine. I think the high-spending luxury market is highly recovering entirely.
German visitors are increasing. During last seasons, that market had problems, and they didn’t list us last season. Obviously, that market is recovering, too.
What are figures saying?
The market is generally getting back to getting great figures and, by the end of 2022, our industry will return to pre-COVID results with a market going back to normality.
For instance, people are going back to old habits. Marriages and ceremonies are celebrated again. They simply postponed and moved what was planned for 2020-2021 to 2022 and 2023. Obviously, this will bring a constant flux of orders in this direction.
An exhibitor expressed some cautiousness. There is great euphoria and companies have started producing, but then, if for some reason there could be some unexpected slowing down, wouldn’t that bring difficulties to companies that have started producing again and should keep huge amounts of products in their warehouses?
I don’t agree to that. Stocks of our clients are low for two reasons. First they had diminished, as during the pandemic they didn’t sell. So our clients’ stocks in shops were low - and At this moment they are losing sales, especially for most requested sizes. Because of this productive bottleneck, we cannot guarantee to go back to normal offering. In a few months time only, this will bring a good flux of orders also in the first part of 2023, and we think that also the second part of the year will be good.
Obviously, there are some doubts about an eventual worldwide slowing down that other sectors like automotive and plants are registering now.
Because of significant increases due to an 8% inflation in Europe and 9% in The US and the increased cost of electricity, there is a small worry about the second part of 2023 because they think that big central banks will increase discount rates, stock market exchanges - that usually anticipate economic phenomena - are not performing well by now, and there is still a war happening, even if localized in a specific area.
Their aim at this moment is to rebuild their stocks and try to reestablish to help sales and serve their clients. And this gives us the confidence that also the first part of 2023 should run well. When stocks will be rebuilt and the system will be back to the pre-pandemic configuration, we might think of that, but now. It is too early. We should see this evolution of the second part of 2023 by February.
Will this increase in prices have a strong impact on your client?
Obviously, this process of the price increase is much faster in commodities and daily goods, while, in the short time, such results are not so visible in fashion as the pieces of apparel you buy today were probably produced six months ago or in pre-pandemic times, therefore the increased costs’ effects haven’t had their impact on the market yet.
What we are selling now will go on the market between 2023 and the end of it. Therefore, the effect on the fashion or apparel sector will be visible in about six-eight months.
What about the final consumer?
It all depends upon how the consumer is living all this.
Apart from the case we had to face a global recession, I think that the impact might be very limited as the luxury sector should have not many problems in absorbing a price increase. Obviously, our clients are not happy about it and show their discontent for that, but in the end, for the high-spending final consumer, paying €100 more is significant, but if the dress or the accessory are beautiful, a client will not stop for that.
In 2008, high-spending consumers didn’t want to spend money, mostly because of the overall situation. For instance, they preferred not to change their car or reduce their expenses, mostly because they saw a significant slowing down of the financial market. Sometimes what counts more is how the consumer perceives that reality in that specific moment. But by now looking at 2022 and the beginning of 2023, we are very positive.
Within your company, Vitale Barberis Canonico, did you increase prices, too? How much?
We all did it. We added a 23% more than we cannot absorb energetic costs that are four times more and that might fourth grow and increase to five-six times.
What about the cost of raw materials?
It has grown too, but the main reason for the growth of prices is due to transportation costs. For us wool manufacturers, we most use wool. In the Biella area where most companies are wool manufacturers, its price has grown between 12% and 16%, but the problem is not the raw material. The highest increase was caused by the growth in the cost of renting ships.
But above all, the main cause is the cost of electricity as the transformation of the product, like, for instance, the dyeing step, requires warm temperatures and the dyeing substances which are derived from oil, plus, especially, many of our machinery use huge amounts of electricity for all of their productive steps.
Sustainability is no longer perceived as a trend, but as a worldwide necessity. We are all noticing and are conscious we need to find a solution as lakes are rivers are now almost dried, and CO2 is increasing. These problems can only be faced by advancing in research, technology and innovation.
What is Milano Unica doing in order to support the industry advance in this?
We at Milano Unica are trying to approach this aspect scientifically. Sustainability is achieved through measuring. Substantially anyone can find parameters that measure their company’s environmental impact - that has to better with the passing of time, as our clients are asking for that.
At Milano Unica we hare hosting ten certifying companies. By meeting them, our clients coming from all over the world can certify themselves, their productive process and their product. As we host third-part certifying entities through them, our clients can get real evaluation of their impact.
In addition, we can help the smaller companies to certify themselves and ask for advice in order to understand in which field they need to operate and better their performance. Moreover, they can also define their development plan in order to achieve lower impact results.
Together with Camera Moda, we want to inform companies they can get specific information that can be further shared with the final customer. This way, when consumers buy a piece of apparel, they can be more aware they're doing the right choice in order to help the environment.
In addition to all that, all the products are shown at Milano Unica are already sustainable as they are durable. A piece made with materials from this show is very expensive, but high quality and made with raw materials that can be used and last for at least ten years.
It will. Some companies are becoming aware that by producing in some countries, some guarantees are missing. Instead, Made in Italy products belong to a higher level of quality and philosophy also obtained thanks to specific advantages in terms of certifications. Thanks to it, brands can explain to the final consumer that a specific product was produced according to more responsible criteria.
Then the choice of the consumer will also play its part and takes more conscious decisions by choosing products they can use more times for many years.