Those who have attended a Pitti Filati fair will understand that it is not just another exhibition. “If a supplier wants to introduce something new, they must do it at Pitti,” states Raffaello Napoleone, general manager of organizing committee, Pitti Immagine. Known to match Italy’s reputation in quality, the yarn exhibition has this year attracted over 43,900 buyers from all over the world. “We’ve always had the best international appeal,” exclaims Mr. Napoleone. Luxury brands like Hugo Boss, Ralph Lauren, Prada and dozens of others have one time or another tapped into Pitti Filati for inspiration.
Held in Fortezza da Basso, a fortress built in 1535, over 100 of the finest exhibitors have gathered to defend Italy’s yarn industry from a new enemy – the global economic recession. ISTAT estimates that sales in the Italian spinning industry have declined 7.3% in 2008 versus last year, and the future will not look any brighter. “2009 will be a very tough year for everybody,” said Leopoldo Varasi, CEO of Manifattura di Leganano.
Throughout the exhibition spinners complained about the decline in European and American buyers. “We have lost a few customers in New York and U.K. because of the exchange rate,” said Daniela Barberis Canonico, general manager of Lanecardate S.P.A. The inverse movement of the dollar against the Euro have frustrated those that depend upon Western retailers. “It’s a difficult situation for foreign markets,” explains Dino Fusar Poli, sales manager of Ima Filati.
Designers too are feeling the pinch from American firms. “Buyers are asking for lower cost embroidery,” said Ramakant Kanodia, director of hand embroidery firm Ricamo India. Julia Robinson, one of the head designers at Kiosk, said that she is also “selling less to Americans and more towards other markets”. This prompted Ms. Robinson a trip to the East to find new customers. “We are considering a trade fair in Shanghai for the first time,” she said.
The decline in Western demand has other suppliers looking for new markets as well. “Four years ago, 100 percent of our sales were in Italy,” said Mr. Poli, “Now its 50 percent and we are confident in sales abroad.” Matheo Belisti, sales representative for Filati Power also describes his company’s similar direction, “20 to 30 percent of our sales are international, but we are certainly pushing for more foreign markets.”
The question is how to break into these markets. With Asian factories undercutting Italy’s prices, local suppliers are turning to what they do best: quality. “Companies often focus on the brand and not quality,” said Mr. Poli, sales manager of Ima Filati, “We use the finest raw material to provide customers the highest quality.” Spinners understand the fine balance of pricing their yarns just high enough to not repel the cash-strapped market.
Some companies are finding success in branching out beyond their core competencies. At Lanecardate S.P.A, the Mr. Varasi, general manager, decided to offer a more customized approach. “We’re pushing for co-orientated garments that incorporates yarn and fabric,” he said, a big departure for a company that has sold single styled garments for several generations. It will also drive up the cost of production, but developing co-orientated garments may just be the perfect niche in a saturated market. Mr. Varasi is also investing in new avenues. “We have more investment in the knitwear field. It is growing in markets such as Japan and Europe”.
Larger, more established suppliers are putting on a bold front of certainty. “We feel the crisis,” says Valentina Visigalli, at Iafil, “but our company is so big, we can afford to lose [some customers]”. As one of the bigger, more flamboyant booths at the show, Iafil displayed no signs of reducing their marketing efforts. “We don’t [worry] about the crisis a lot,” adds Ms. Visigalli.
Unlike the U.S, Italy’s domestic market was not hit as heavily by the financial crisis. Although local demand alone may not make up the loss suffered overseas, the country’s retail sales fared much better compared with neighboring countries like Germany and Spain. “Lots of buyers are coming back to Europe to produce,” said Mr. Napoleone. Thanks to the fact that the Italian government which has made loans more difficult to get, consumers are less prone to debt than their counterparts in America. The decline in the Euro has also stirred interest among buyers as prices for European goods are now lower. Mr. Napoleone is convinced that Italy will pick up again. “Genius Loci,” he says. “It means the ‘spirit of the place’, and that is what our country belives in.”
The eco movement has been felt by the yarn industry.Almost every spinner is going green in response to consumer’s environmental awareness. The Italian government has also sent delegates to encourage the reduction of carbon footprints and cleaner production. “Now it’s a major issue,” said Mr. Napoleone when describing why he insisted the show to be deemed eco-friendly. And the companies are not shy in promoting it either. With names like Green Cotton for their materials, Mr. Belisti emphasizes that the two main components to marketing their new line is “Environment and health.”
For spinners at Pitti Filati, it will be a year of focusing on cost efficient innovation and quality in order to stay ahead. But they will be minor tweaks, as there was no interest to jump the gun in drastically changing their companies. “Look, nobody has clear ideas concerning everything,” said Mr. Varasi refering to the economy. A change is more likely to happen at the back end as suppliers begin to work closer with buyers to improve efficiency. “In the meantime, we can help buyers cut unnecessary costs and lead times,” he said. “To develop a differentiating strategy,”. he believes is not so much a problem of weak markets, but rather, a weak company image.