In the 1980s, Zegna was one of the first companies to set up a vertically integrated business with its own supply chain: its textile business serves the ready-to-wear segment which in turn serves the retail business.
It was also among the first Italian luxury brands to travel across borders, opening its first boutique in Rue de la Paix in Paris in 1980. In India, it opened a 3,000 sq. ft store at the Taj Mahal Palace hotel in Mumbai in 2007.
Zegna now operates three stores in Mumbai, New Delhi and Hyderabad. In 2010, it entered into a joint venture with Reliance Brands Ltd and soon after, in a nod to local heritage, launched its Guru Collection featuring slim-fit bandhgala suits and royalty-inspired jackets.
Gildo Zegna, chief executive since 2006, has led Zegna’s expansion into the Middle East, Australia, Brazil and Africa. By the end of 2016, the brand had 513 stores (287 directly operated ones) in 100 countries, with €1.1 billion in revenue. The fourth generation Zegna was in Mumbai earlier this month to celebrate the brand’s 10th anniversary. He spoke to Mint about the making of a luxury brand and the “peculiar market" that is India. Edited excerpts from an interview:
Zegna is a family-run business with a long history. Tell us an anecdote, an early memory that represents the spirit of Zegna.
Back in the early ’70s my father used to travel to Japan. I was still in school. He observed that real estate in Japan was very expensive. So stores were fairly small, and not too many suits could be shown in a small store. So the Japanese would keep one pattern and one size of suit in the store and if the customer liked a particular style, they would order it for him. My father came back thinking about how he could develop a made-to-measure system but manufacture at a bigger scale, to do it in an engineered way, if you will. In those days we didn’t have the store yet, so it was anyway hard to show a broad variety of goods in a haberdashery shop. Zegna was born like that and today such a made-to-measure system is key to our business. Zegna is about how to take an idea and recreate it for yourself.
In your years as CEO of the company, did you have a specific agenda that you wanted to implement?
My personal agenda was to transform the brand into a retail and lifestyle brand, and to represent it across a broad spectrum around the world. We have been pioneers in new markets in how we introduced our brand concept, and how we opened it up from a strictly clothing brand to a lifestyle brand; that’s the vision I had. Of course, keeping the company financially sound is an important aspect, and also preparing the children to step in one day.
What is the biggest challenge to a menswear luxury brand today?
Digital. It’s a challenge for any CEO these days, regardless of what he or she does. How to win the digital game while defending your DNA. Because one can go digital and start promoting products but then you kill the brand. You have to be careful of how you enter, what you do, who you partner with.
What approach has Zegna taken towards going digital? Does being a luxury brand complicate this approach?
Luxury clothing itself has limited appeal on digital (platforms) for the time being. Beyond just offering specifics of the garment, the fabrication or textile, there has to be an emotional component even to digital communication.
It’s not only to create awareness among consumers but also to create interest among new potential customers who are attracted by social media. Whether they eventually buy online or offline, we really don’t care, but today digital is the biggest communication piece one should consider.
Three years ago, I was spending a fraction of our total communication budget on digital. Next year, we’ll probably be spending 50% on social and digital. That tells you how a traditional men’s warehouse is changing.
However, I think clothing will continue to be bought in stores because a person’s intervention is important in luxury. If you go to the store right now, I’ve got my head tailor and head of retail in the store, meeting the customer and telling them the story of Zegna, showing them exclusive pieces. This is hard to do online.
Everyone has a slightly different definition of luxury. What does it mean to you?
Good question. I think the word is often abused. For me luxury is a mix of exclusivity, super high quality, emotion, and a rich heritage. If you look at the most exclusive luxury brands, they have a strong history. Heritage differentiates you from anyone else.
The idea of luxury menswear is changing. It is becoming casual, perhaps less traditional. Suits being worn with sneakers, for instance. How does a traditional menswear brand think about it?
Listen, good taste and elegant style remains. The code of dressing keeps changing. Until a few years ago, business wear was very important, now it’s rare to see men wearing a tie. Until a few years ago, sneakers were worn only by teenagers. Now you look around, everyone is wearing them. And these are not sneakers from Taiwan, these range from 100 to 1000 dollars and more. Well-known designers, including our own (Alessandro) Sartori, are making them. Just to give you an idea, 50% of the shoes we sell—and we sell quite a good number—are sneakers. They are worth 300 dollars and up. There are new paradigms to be learnt and evolve with. You see people wearing casual suits with a pair of sneakers without socks, it’s a different attitude.
Zegna has completed 10 years in India. Tell us about the experience.
India is a peculiar market. When we entered, we thought the market will grow bigger and faster. The first year we opened six stores. Today we have three, and we do more or less the same business as the six stores did. It tells you that consolidating and focusing on a few key cities makes sense.
However, we believe that the market here will grow provided there’s infrastructure. There’s an interesting project that Reliance is starting in Mumbai’s Bandra Kurla Complex. It will include a luxury mall, a theatre, a convention centre, public spaces and more. It would be a new way of showcasing lifestyle in the city. We are part of that project as well and it is expected to take off in the first half of 2019. If you have the infrastructure, luxury will follow. If not, it cannot be sold on the street.
The new taxation system has removed duties, so it’s become a less protected country. That helps by improving the margin and being able to invest in resources here. We have to invest in stores, in people, in marketing, because we must ensure that the brand is kept up like everywhere else in the world.
Zegna has 500-plus stores worldwide. What is the growth strategy?
Besides the macro analysis, we have quite an advanced CRM system. So when we look at a new market, we look at how customers of a nationality shop. Is it a wholesale market? Shall we set up with a partner or on our own? That is one of the things we measure.
The other measure is the infrastructure. If an important luxury centre is being set up, then we get invited.
In the early days, we used to go pretty much on our own. China, for instance. We were one of the first luxury brands to enter in 1991. An important French brand came later. Have we been crazy? Maybe. Lucky? Maybe. Successful? Yes. Is it possible to move too early? Yes. But in the long term we were right. Sometimes we’ve had to fight in a market. But that’s entrepreneurship. You have to take risks. You have to be willing to bet your resources, time, brain, capital on a new project.
In all of this, where does your heart lie? Textiles, fashion, business..
I like product. If I could spend 70% of my time developing (a) product, I’d be happy. It could be in textiles, shoes, styling, inventing something new; I enjoy that. It’s hard today to invent something new. This suit I’m wearing is new. It’s the first time that the brand has created a superfine merino wool suit that is washable in a washing machine... 30 degrees centigrade, normal spin, pull it out and wear it without ironing. It’s an innovation.
We are able to do something like this because, one, we have the textile know-how, but also because we like to apply technology and ideas and make something new. So after 35 years, I still enjoy product the most.