Made In Italy: A Legacy at Stake?

While the 'Made in Italy' moniker still represents the highest level of craftsmanship, the retail industry-leading country is threatened by multiple factors.

Made In Italy is synonymous with the highest quality within the fashion world. Slap the word “Italian” in front of any fabric something made of and most people will assume it’s expensive, and for good reason. Roughly two-thirds of luxury companies use Italian firms for their production needs. Luxury goods makes up 5.1% of Italy’s GDP. Craftsmanship has always been a priority, and the world knows it. But what happens when the macroeconomy is working against you, your workforce is deficient around digital skills, and your succession plans are nearly nonexistent? You end up with a fragmented workforce that makes consumers, fashion executives, and the government uncertain about the future.

The Luxury Slowdown

Vogue, Business of Fashion, Forbes, and dozens of other publications have written about the slump that luxury brands are facing. This has come at a time after the industry saw impressive revenue increases from global consumers over the last few years post-COVID. Now we see people questioning if the high price tags are still worth it. Regardless of where clothes are made, the conversation is starting to revolve around dips in quality. Climate change is still a hot topic and companies are feeling the social pressure to adapt. Government agencies around the world are also starting to implement regulations to change the materials they use and reinvent the wheel for their supply chain processes to reduce greenhouse emissions. Companies like Hermés and Prada have done a good job of rebuffing this headwind through marketing efforts and positioning, but most brands can’t say the same. And when they start seeing customers not buying products and the inventory starts piling up, they’ll start putting in smaller orders, and Italian also manufactures feel the brunt of that impact.

Digital Deficiency

Every industry has gone, is going, or will go through some type of major digital transformation, and fashion is no different. Multiple sources and reports confirm that Italy is considered a laggard in terms of digital skills and knowledge. According to the Digital Decade Report, “Italy has achieved 45.8% basic digital skills coverage, compared to the EU average of 55.6%¹.” This skill deficit is worrisome for several reasons. First and most important, this can lead to not understanding your data. In a world where companies live and die by key metrics, Italian companies may not be making decisions that are critical for short and long-term health and growth. Secondly, they could be missing out on implementing software to help improve efficiency. Designers may not be equipped with the latest and greatest design tools to bring their creations to life. Manufacturing companies may be missing out on improving their production output. Marketers might be held back by not having the best software to create quality campaigns or can’t properly conduct social listening exercises. Even if a luxury house is headquartered in a different country, they’ll likely see this drag in a different part of their value chain with an Italian-based supplier and/or manufacturer. Finally, they miss out on properly archiving techniques and historical context that have been refined over the last several generations.

Lack of Succession Plans

While mass production of goods allows brands to meet the demand of the masses globally, there are plenty of consumers who value and crave handcrafted luxury. Leather goods and accessories fit squarely into this category. There are people who have been handcrafting items for decades and this aging population is in desperate need to hand the reins off to a younger generation. Similar to the U.S., the youth of Italy aren’t nearly as interested in going down vocational paths. The thought of becoming a marketer or a designer is much more desirable to them than working on the production side (either by hand or operating hyper-specialized machinery.) Through 2028 there will be roughly 75,000 technical jobs that need to be filled, and at the current rate, only half will be taken. There are also not enough easily accessible training facilities that can help ease this burden. Akin to a grandmother’s recipe that was never written down and dies with her, companies are facing an insufficient transfer of knowledge.

Photo Courtesy of Italian Artisan

There is a significant uphill battle but I’m quite bullish on the Italian labor market and its ability to keep a foothold within fashion. This is a widely known and understood problem within the country and companies are rushing to solve it. Even the Italian Prime Minister has stepped in a few years ago to create legislation to protect the country’s reputation. I’ll be keeping a close eye on them to see how they overcome this hurdle.

1. Italy: a snapshot of digital skills by Lidija Kralj; https://digital-skills-jobs.europa.eu/en/latest/briefs/italy-snapshot-digital-skills