Companies with strong financial strength are those that are facing the pandemic in Italy, despite a decade of slow growth has failed to bring profitability back to pre-financial crisis levels. Unfortunately, this will not be enough to withstand the impact of this health emergency, which has economic implications never seen before. The Cerved PMI Report 2020 estimates that the turnover of small and medium-sized enterprises will decrease in 2020 by 11 percentage points (up to 16, 3% in the event of further lockdowns) and gross profitability by 19%. A simulation conducted by Cerved, a well-known commercial information agency, on the total number of private companies and therefore not only on SMEs, also predicts that, at the end of 2021, 1.4 million jobs will be lost with a capital reduction of 47 billion euro (5.3% of the value of fixed assets) if, once the current support measures have ceased, there are no prospects for recovery. With new closures, the unemployed would rise to 1.9 million, with 68 billion less capital (7.7%).

Andrea Mignanelli

So far, the impacts of the pandemic have been mitigated by emergency measures, such as the extension of the redundancy fund and interventions on public guarantees: in 2020, therefore, despite the extremely difficult conditions, most Italian SMEs will close the year in balance or in profit and the profitability ratios, although falling compared to 2019, will on average still be positive. But when these measures end, the effects of the crisis could manifest in a much more significant way: without prospects for a recovery, many entrepreneurs could lay off employees or have to close their businesses. Therefore, among other support measures, the NextGenerationEU, the funding plan for the recovery of Europe (750 billion euro, 209 of which will be allocated to Italy), which has focused on sustainability and the digitalisation of companies, will be decisive.

“The effects will be highly asymmetrical – comments Andrea Mignanelli, CEO of Cerved -. Some sectors will suffer devastating consequences, while others (a few) may even benefit. More than half of employment will be lost in the 10 most affected sectors, vice versa in the anti-cyclical ones the increase will be very limited. Also, the fashion sector, which could lay-off 14.7% to 20.5% of its workers, is among these”.

Carlo Capasa

The discouraging data were highlighted also by Carlo Capasa, president of the National Chamber of Italian Fashion, during the Milan Fashion Global Summit 2020: “China is recovering very well right now, as is Korea. Japan holds, while the USA, while in difficulty, resist thanks to the digital. Europe is in a very bad crisis, and even if we expect a good rebound in 2021, with losses of around 12%, and then return to normal in 2022, we must still ask ourselves a question: are we sure that Italy is the country of fashion? Are we truly considered strategic? We are first in Europe with 41% of production and 1,200,000 workers connected to production, trade and services. But we are not considered by the Government and Associations. If in 2020 fashion will drop by about 30% (29 billion), it should be noted that the entire furniture design sector is cubing less compared to what we will lose”.
Also, Capasa identifies some possible initiatives to be implemented: “More than half of the turnover of Italian fashion is made by large brands that drive the supply chain and small/medium manufacturing companies. These big names were not helped by the government at all. Their difficulties should be considered too.
The ATECO codes are medieval. It may also be right to close shops, but why close showrooms where you work with and for digital, trying to sell to those distant markets that are still buying.
Greater flexibility in the management of the Redundancy Fund may also be right. Preparing the samples, the model makers should be allowed to work overtime, for example.
We will not give up and we will continue to submit strong proposals to the institutions with a view to digitisation and training”.

Diego Della Valle

But, in addition to the change of pace requested by politics, even entrepreneurs will have to think about changing their business model.
Tod’s were thinking about it even before Covid-19, as stated by Diego Della Valle: “Even before this very difficult year 2020 began, we started changing skin. Our idea is to transform ourselves into a company that no longer speaks only to the typical consumer of our group, who buys the most beautiful and Italian things. We also want to involve a young consumer – in this precise moment Chinese, but international in future –, who communicates with a different, fast and digital language.
We will certainly not abandon the heritage that distinguishes us, but now we can no longer be just a manufacturing company. We will remain half of it, the other half of the company will be dedicated to communicating. We want to remain what we are, but much better and not being forgotten by the market. We imagine our brands as super niche, special and specialised, characterised by excellent, unconventional and effective communication skills. Creativity, made in Italy, heritage, special projects and capsule collections, these are our keywords of tomorrow. I don’t want to think of us as the biggest group or the most trendy one, but as the most special one”.
Changes that some would call epochal. I don’t know how many would have ever imagined that a shoe factory would change to become an entertainment company.
But changes do not just involve communication, they also affect the distribution structure: “We are increasingly structuring ourselves as omnichannel company. It is a new profession that we must learn better. It is providing us with excellent feedback and, for me, it is like a dream come true: when at the beginning I had to queue in front of the merchants to convince them to buy my product, I fantasised about being able to directly speak with the final consumer. Now it is happening, even if shops will never completely die out”.
Changes in sight also for the markets? “The Chinese market has saved our lives right now. It is the youngest and most promising market in terms of development. It will undoubtedly become the first market to look to. But I would like to rebalance our sales in Asia and the United States as well. The US market is undoubtedly the most difficult one, but it could also be well penetrated thanks to e-commerce and an excellent work of brand awareness”.

Renzo Rosso

“Luckily fashion is changing – said Renzo Rosso. It had become too much of everything. I was almost out of love with it and was about to give up. This terrible situation makes us much more sensible, concrete, practical and not excessive. At the beginning of the pandemic, after securing all, we cut costs, eliminated the superfluous. This is how fashion can go back to being more fun and interesting”.
For Only The Brave it was not just about reducing, but also about investing in innovation: “We have digitised our workflow as much as possible, creating, for example, an avatar for each brand on which to develop the collections. We have thus become more efficient and sustainable”.
Then we get to digital in sales: “Our omnichannel project has also landed in Europe. An example: we can make a product change even in 2 hours, regardless of where it was purchased (in one of our stores, in a department store, or online). The sales centre of the future is an increasingly accurate CRM where direct salespeople will work, each one with 200 customers, of whom we will know life, death and miracles, and to whom we can propose news in an absolutely personalised way”.
As for the markets, Rosso sees it as Della Valle: “China is undoubtedly the future, while Japan represents 25% of our current turnover. In short, Asia is our salvation. Europe should not be forgotten, but probably downsized and maintained as a showcase and testing ground for new experiential initiatives to be then proposed elsewhere”.
When asked what Italy would need at this moment, he answers in a decisive way: “Seriousness, good, concrete and visionary people leading the country. And then focus on sustainability. A highly complex issue, which before looking at products has to do with a way of living with a strong social impact. Focusing on this theme could profoundly change the country”.