Second-generation CEO Vittorio Missoni (pictured) tells Claire Adler how the family-run fashion house is riding out the recession in style.
The supposedly glittering world of high-priced luxury goods has taken a battering of late. Many small and medium companies without the financial and managerial muscle to react to difficult market conditions have sought bankruptcy protection including Christian Lacroix, Escada and Gianfranco Ferre.
Meanwhile, recent Luxury Institute research revealed that two-thirds of wealthy consumers believe the pricing of luxury brands is too high for the value they deliver. Unsurprisingly, upscale luxury brands are currently clamouring to retain their position as enduring luxury that can justify its price premium.
Family-owned Missoni has been at the forefront of Italian luxury fashion since husband and wife Ottavio and Rosita started creating unconventional knits in the basement of their home in 1953. Today it has revenues in the region of €180 million, 250 employees worldwide and 40 boutiques, mainly run as franchises.
Given the difficult last 18 months and an uncertain economic future, might the Missoni dynasty be tempted to compete on price?
Vittorio Missoni, second-generation CEO of Missoni, confirms that Missoni will definitely "not compete on price". What's more, he believes the company's family ownership is proving to be a key advantage in navigating the vagaries of the current climate.
"Missoni is not a public company. I believe that right now there is great value in the fact that we are the designers, owners and manufacturers of Missoni. We constantly retain the knowledge and tradition of our founders, who are members of our own family. We have day to day control and can take decisions easily," he says.
Missoni was founded after Vittorio's parents first met in London at the 1948 Olympics. Vittorio's father was competing as an athlete and his mother, Rosita, daughter of a family of shawl makers, was a student visiting London. The couple began by creating knitted active wear including wool swimwear.
Early in the 1960s, the company was banned in Florence for sending a model in a transparent dress onto the catwalk. The following year, Missoni showed in Milan at the same time Giorgio Armani was starting to make a name for himself. Another peer of the young designers was Gianni Versace, who was running a boutique with his mother and became one of Missoni's first customers.
Today, Missoni's signature zig zag and colour-rich repertoire spans clothes, shoes, scarves, shawls, socks, a home line of linens and crockery and fragrances licensed by family-run Estee Lauder.
CEO Vittorio, 55, runs the business along with his two siblings, Angela and Luca. From his early childhood he witnessed the company's creativity firsthand and learned the process of making yarns and fabrics before moving on to production and distribution. Having built on his exposure to all areas of the company, he now supervises the licensing aspects of the business and drives marketing.
Angela Missoni is the creative director in charge of menswear and womenswear design. Brother Luca is the technical and production expert, running the manufacturing processes and overseeing the 57-year-old company's archives. He is also in charge of the Ottavio and Rosita Missoni Foundation. Mother Rosita runs the hotel arm, bringing her creative talents to the home line and hotel interiors. All three children and their parents sit on the board.
Missoni is one of a number of Italian luxury goods companies still in private hands, including Bulgari, Prada, Armani, shoemaker Berluti and pen specialists Tibaldi and Montegrappa.
"Sometimes, at Missoni we have limitations compared to large brands, who can move faster thanks to the support of being part of a large group. But we feel it's important to retain our Italian way, it's crucial for the kind of products we make," says Vittorio.
A Made In Italy label typically evokes the image of a craftsperson labouring in a picturesque Italian workshop. With Missoni, this is more than apt. In the 1960s, the company began creating new jobs for women, training them in knitting in the Lombardia region of Italy. Some of Missoni's employees have remained with Missoni for over 20 years and originally worked for Vittorio's parents.
In recent years, Margherita Missoni, 27-year-old daughter of creative director Angela, has been busy transporting that coveted Italian flair round the world. She has appeared in advertisements and at high profile events including the Cannes Film Festival and in November 2009 at the 30th anniversary gala at the Los Angeles Museum of Contemporary Art. After several years spent pursuing studies in philosophy at Columbia University in Manhattan, and a colourful acting career, Margherita is now officially back in Italy working alongside her mother supporting Missoni's fashion design team.
"Margherita has great talent and is inspired by her mother," says Vittorio. "She's building her experience now and learning how the company works." Meanwhile, Vittorio's 25-year-old son Ottavio is following in his grandfather's footsteps working on production.
Vittorio confesses conflict sometimes arises within the company between the different agendas of the production and design teams. "Design might have a certain view but then production wants it limited and can sometimes be seen as the enemy. Dialogue is important though. We all work for the brand," he says.
Missoni does not have a family constitution but the recession has led to the three partners talking more than in the past about how to push the business forward and grow.
Last October and November Missoni was forced to let go of five managers in order to cut costs, centralise operations and retain all 250 employees at its Sumirago manufacturing plant. One of the casualties was general manager Massimo Gasparini, the most senior non-family employee who had been with Missoni since 2007.
To take over the area of operations that Gasparini covered, Luca is now responsible for production and industrial decisions and Angela is overseeing marketing and communications with staff. "We must be quick and elastic to react to today's changes and challenges," Vittorio said at the time.
Still, Vittorio remains defiant. Sales figures overall at Missoni are currently down 10% to 15%, although its ready-to-wear line, M diffusion, is holding up well. While Vittorio believes the recession will continue to impact Missoni through 2010, he is upbeat about new openings in the strongest markets in the US and Europe.
The company opened the doors to its first South American store in November in Sao Paolo and its first Los Angeles store on Rodeo Drive in January. "The west coast of America is doing better than the east coast," remarks Vittorio. Having opened their first London boutique in winter 2008 in Sloane Street, Vittorio maintains the impact of the recession in London has been minimal. Further boutique openings are also slated for the Middle East.
At the same time, Missoni is reducing its presence in weaker spots such as Japan, Russia and the east coast of America. "In the Far East our growth in the 1980s and 1990s was too fast. Everyone wanted malls and shops in department stores. But then when the crisis hit, we were left with too much distribution. It's been the same in Russia."
Missoni's range of crockery and linens, known as Missoni Home, was initially a natural progression for the company. Now it is proving an important area of growth, enjoying an increase in sales of 10-15% each season, especially in the Middle East and South America, particularly in Brazil. "People recognise Missoni's knowledge of colours and fabrics and it's easy to translate that to home design," says Vittorio.
Missoni Hotels are also forging ahead, the first one having opened in Edinburgh last June. Missoni's relationship with hotel owners the Rezidor Hotel Group began when Rezidor wanted to incorporate a niche design hotel into its stable.
"I've seen so many of these hotels with grey, black and brown and minimalist design – this is distinctive and colourful. As soon as you walk through the doors you know its Missoni," Ritter said at the June opening of Hotel Missoni Edinburgh, which was a sell-out the entire summer.
Rezidor is one of the fastest growing hotel companies in the world with 80,000 rooms in 59 countries and Rezidor CEO Kurt Ritter refers to Hotel Missoni as "a totally new breed of hotel".
More openings are planned for 2010 in Kuwait City, Oman, Cape Town and eventually North and South America and Asia. Missoni's challenge is to ensure the Missoni brand filters through on every aspect of the hotels from the atmosphere and colours to the staff uniforms and the cuisine.
"The Missoni atmosphere is one thing but we're also responsible if the coffee is no good," says Vittorio. The Missonis have teamed up with chefs from London's Michelin star restaurant Locanda Locatelli, whose owner, Giorgio Locatelli, hails from the same northern Italian village as the Missoni family. Naturally, Missoni's bold hues and striking patterns permeate the décor extending to chinaware, tablecloths and napkins all from the Missoni Home collection.
So how is Missoni now working to ensure it remains successful in the next 12 months?
"Luxury shoppers have changed their habits and they may not go back to their old ways," says Vittorio. Many are waiting for discounts before buying and while they used to buy two or three items at a time, at the moment they are only buying one or perhaps two. Missoni is now carefully monitoring distribution and ensuring a high quality of service where the customer is always made to feel special.
"The most important thing now is to take care of the products and the value of the brand," says Vittorio. "Even though we love to sell, we need to concentrate on selected distribution. The Valentino Fashion Group work hard with us to retain that. We don't compete on price – that is not our job and it won't help profits," he re-iterates. "A piece of Missoni is something that you keep for longer than six months. It is fashionable but its quality and Italian tradition give it greater value. Missoni is about that unique combination of fashion and tradition."
A Missoni retrospective exhibition held this past autumn, at London's Italian art museum, the Estorick Collection of Modern Italian Art, served to reinforce this message. There are plans for the exhibit to travel to Italy, northern Europe and America.
Service to retailers and end customers is now increasingly important too. Vittorio is currently working on ensuring deliveries always arrive on time, assisting stores with refurbishment and making re-ordering and moving merchandise between stores a more efficient process.
Vittorio's first hand experience of working in fashion stores in the early days of his career instilled in him the importance of good customer relations. It was while working in an international fashion boutique in London in the 1970s that he learnt the pivotal importance of "always saying yes to customers". Even when they don't look good in something? "No!" he laughs.
So despite all the advantages of being a private family-owned business, would the Missonis consider an IPO?
"We do get approached," says Vittorio. "But now is not the right time. We need to continue keeping the long-term value and the market's respect for our company. This crisis will help brands come out stronger. So maybe we'll see in the future."