Diesel jeans billionaire looks to stitch together Italian fashion front

Rome

THE billionaire founder of Diesel jeans is on a mission to convince Italy's many small fashion players that their survival depends on working together.

Some small companies "won't be able to sustain the costs of digital development, won't get a deal with big online platforms", Renzo Rosso, Diesel's 65-year-old founder, said in an interview. "Some fashion companies will need to accept partnerships, and these alliances will give them the visibility they never had before."

Mr Rosso was recently appointed as a delegate of business lobby Confindustria with a mandate to shore up the Made in Italy brand, the backbone of the country's luxury industry. The challenge will be to convince Italy's maverick fashion entrepreneurs to work together and create a more united front.

Though it boasts an impressive array of famous brands, Italy lacks a national luxury-sector champion, unlike France, which has dominant companies like LVMH Moet Hennessy Louis Vuitton and Kering.

That has led to iconic brands being snapped up by foreign players, including Micheal Kors buying designer Gianni Versace in 2018.

Deals involving remaining independents like Giorgio Armani and Salvatore Ferragamo have been rumoured for years, though Mr Rosso says he's optimistic that steps taken now could help keep some of these companies in Italian hands.

The French model could be helpful, where "entrepreneurs act together, the government is involved", Mr Rosso said. In the past, the Italian industry "was a disaster, people were unfriendly to each other". Now there's a cordial atmosphere, he said. "Ermenegildo Zegna, Moncler's Remo Ruffini, Patrizio Bertelli and Luigi Maramotti and myself make strategic decisions together." Mr Bertelli is Prada's co-founder and Mr Maramotti is Max Mara's chairman.

Prime Minister Mario Draghi's government may also be more open than past administrations to providing support to the industry. Economic Development Minister Giancarlo Giorgetti has said Rome could extend so-called Golden Power protection - state measures to block or manage foreign ownership of strategic businesses - to the automotive and steel sectors, fuelling speculation that branded goods companies could be next.

LVMH last month raised its stake in Tod's to 10 per cent, sparking talk that the troubled Italian shoemaker may become a takeover target. The French fashion house already owns the Bulgari and Fendi labels.

Armani founder Giorgio Armani isn't ruling out a deal for his company, though he wants to keep it in Italy. Continuing as an independent company is "not so strictly necessary", Mr Armani told Vogue magazine in March. "One could think of a liaison with an important Italian company," he said.

Mr Armani may be seeing things the same way Mr Rosso does. In the Diesel founder's view, grouping Italian branded goods businesses together makes them more competitive and will be essential to their technological growth and ability to develop sustainable products.

"Consumers increasingly want sustainable products," Mr Rosso said. "Business partnerships, mergers can help. A lot of tiny companies won't be able to afford that transition."

Building digital platforms will also be costly. Luca Solca, senior luxury goods analyst at Bernstein Research, said in a recent report that a lack of scale compared with international rivals has left Italian companies far behind in the digital transformation.

Mr Rosso's Only the Brave holding company, or OTB, has already acquired a collection of fashion brands - including Maison Margiela, Vik-tor&Rolf, Marni and Jil Sander - and Mr Rosso isn't ruling out buying more brands. "We won't say no if something interesting comes along," he said. BLOOMBERG