Italian Shoe Brands Were Banking on China’s Booming Luxury Market — Now What?

Update, Feb. 24: Since we first reported this story on Friday, the situation in Italy has changed significantly. On Monday, the day after Milan Fashion Week closed, 229 cases of coronavirus had been confirmed in the country, according to CNN, and seven deaths had been reported. Most of the cases are in the northern part of the country, near Milan. Most of the city’s tourist attractions are shut down this week, and many businesses have stipulated that employees work from home. 

As the coronavirus outbreak in China continues to cripple business, financial warnings from the big public fashion and athletic companies are dominating headlines this week. But the situation is also troubling for many of the smaller made-in-Italy brands who have been relying on China’s booming retail market — and the country’s well-heeled travelers — to fuel sales.

Bain & Co. said in a report last November that Chinese consumers now make about 35% of luxury purchases worldwide — and they accounted for 90% of the growth of the high-end market in 2019.

At Milan Fashion Week — where most Chinese buyers, editors and influencers are absent — the coronavirus was top of mind for many executives and designers presenting their fall ’20 collections.

Riccardo Sciutto sergio rossi
Riccardo Sciutto
CREDIT: Courtesy

Riccardo Sciutto, CEO of Sergio Rossi, said he predicts that the situation is going to impact business for all of 2020. “It’s not just going to last only one or two months,” he said, adding that he speaks to his team in China every day to send support.

Sergio Rossi, which has eight stores in the market and additional franchised locations, has been working to build the business by taking a local approach, mirroring an strategy employed by many major brands and retailers.

Sciutto believes that China will come back “stronger than before,” but he’s targeting other growth avenues. One area of opportunity? Manufacturing shoes for outside brands inside the Sergio Rossi factory. “A recovery plan will be more production in Italy,” he said.

The 62-year-old Casadei brand had planned to open three stores in China at the end of the year, according to third generation family member Arianna Casadei. “For the moment, we put the projects on hold. It’s hard to predict right now what’s going to happen in the future,” she said, noting that when SARS hit in the early 2000s, business was down for a quarter and then quickly started to grow double digits.

Cesare Casadei and Arianna Casadei.
Cesare and Arianna Casadei.
CREDIT: Casadei

She likened the uncertainty in the China to the London landscape, where Casadei has a store. “With Brexit, we don’t know what it’s going to be like with the customs situation,” she said.

Like Casadei, Aquazzura has also put its retail plans in China on hold, said co-founder Ricardo D’Almeida Figueiredo. He noted that while the market is still a small part of the brand’s business, the coronavirus is impacting its important wholesale accounts such as On Pedder and Lane Crawford as well as online partners like Net-a-Porter and Matches. Many of the same luxury purveyors in Hong Kong have been hit hard for months amid pro-democracy protests.

And in America, Aquazzura and many other brands who have stores in tourist-centric upscale shopping malls — such as South Coast Plaza in California — are also seeing a marked decline in the number of Chinese customers traveling abroad.

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