CEOs on Coronavirus: Sergio Rossi’s Riccardo Sciutto on How to Turn a Crisis into an Opportunity

In a new series, top leaders from across the footwear industry discuss the deep impact of the coronavirus and the challenging road ahead.

“I’m a positive person so I look at a crisis as an opportunity,” said Sergio Rossi CEO, Riccardo Sciutto, speaking via a Zoom video call from Italy, which will soon begin to ease some lockdown measures.

According to Sciutto, key qualities to navigate this challenging time are the ability to be flexible and reactive, while exercising objectivity. “You need to rethink the company from zero, realizing that what previously seemed important might no longer be relevant,” he said.

Likewise leaders must act fast. You can’t sit back and hope that next month will be better, he warned, “because next month will be too late.”

Most profound changes to the business landscape, he continued will include a vast acceleration in digital technology with localization becoming increasingly important.

The CEO discussed his focus on integrated e-commerce, how he’s reacting to changing consumer behavior, necessary cutbacks and his priorities when it comes to spending.

The leader also offered an insightful alternative to current state aid for businesses and presented an innovative new retail opportunity for the way ahead.

Where does your main focus lie at this time?

“With stores closed, we are focusing on our e-commerce and taking an omnichannel approach. We have the license to ship via our Italian distribution centers, which are still in operation, enabling us to move merchandise from Europe to China to replenish those stores that have  reopened. We started to integrate our store and e-commerce business in December, changing the contract with Tmall to let us ship from that store.”

During confinement have you seen a difference in regional shopping habits?

“In Europe and the U.S., online sales saw a drop from mid March. However, the reaction was  different in China. which had previously been less open to buying online. In the last three months, we sold more online there than in the entire of last year”

How will you adapt your strategy to react to this new normal?

“We need to have a global vision but to act locally. I believe ‘made in Italy’ and ‘made in France’ will both become stronger. We won’t have many tourists coming to Europe until December so we need to speak to the local market. The clientele for our Japan store is 90% local, so until recently it didn’t suffer at all. China used to buy 70% of its luxury goods abroad, but if they are now unable to travel there is more opportunity for local stores there too.”

How will this impact in-store experience when boutiques reopen?

“My feeling is that when people can finally leave our homes they will take things slowly. For instance, they will invite friends to dinner rather than going out to a restaurant. Similarly, people will want to feel at home in a store. For that reason, it’s better to have 10 sections of 70 square meters, than an open-plan space. Innovation will also be crucial. I don’t think there will be a fashion week in September so we are working on trials that would integrate digital [presentations] in store.”

How have you adjusted your social messaging strategy?

“For now, our social messaging is not about pushing product. For the month of April, I have decided not to show shoes at all on our Instagram. Instead we are posting positive messages of hope.”

Sergio Rossi Shoes Make a Difference Campaign
Sergio Rossi’s fundraising campaign is centered around the “Shoes Make a Difference” theme.

Where do you foresee making cutbacks?

“If I have a store that was already underperforming last year, now is the time to close it as that will save money and energy. The last thing I want to touch is the people because. For me, a company is the people. But it depends on how long this goes on — if things last for six months, even Gucci will have to cut people. If I am losing millions, they are losing hundreds of millions.”

What are your priorities in terms of allocating budget?

“You need to pay your suppliers on time. Some of them work 70 or 80 percent for Sergio Rossi alone so if I didn’t pay them for a couple of months they are going to go out of business. But it’s difficult if you have practically zero sales for two months. I am ready to restart production immediately it is permitted because I want to send a positive message to the economy.”

Have you been able to take advantage of the Italian government secured loans?

“We are one of the few companies without bank debt but I am still unable to secure bank lending. I am working with my investors, Investindustrial, instead.”

How could the government loan situation be better managed?

“It is a mistake to let the banks decide who receives the loans as they are reluctant to lend. It’s better for the state to give money to companies direct. The interest rate should not be zero percent for 10 years or it will never be paid. Make it increase in increments —1% the first year and so on to encourage repayment.”

Do you foresee any new retail opportunities coming out of the crisis?

“International travel will be impacted, so there is an opportunity in duty free away from the airport. If I were in the duty-free business I would I would open in cities like Milan and Paris — duty-free malls that sit between outlet and full price. You already have this in Korea.”

Do you have any updates on the Shoes Make a Difference campaign you launched last month?

“We donated 100,000 euros and 100% of a week’s proceeds to the ASST Fatebenefratelli hospital in Milan. We chose 100% because we didn’t want to use the situation to make money. Each purchase has more meaning for the individual if they know that every penny went to help people. It encouraged other companies in the Investindustrial portfolio (the fund that owns Sergio Rossi) to do similar. The donation total for the group brought in over 6.5 million euros.”

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