Presentation on theme: "The economic value of creativity"— Presentation transcript:
1The economic value of creativity Hermes lab srlBangkok, december 29, 2003The economic value of creativityThe business model of the italian fashion clustersMarco Ricchetti, CEO, Hermes lab, Italy
2The economic value of creativity: outline of the presentation Brief summary ofthe Italian fashion industryThe Fashion businessFashion clusters, advantages andnew challenges
3The italian fashion industry in figures Textiles, clothing, leather goods, footwear20022003 (fcst)Turnover (mln Euros)71,09770,031Trade balance (mln Euros)+19,146+16,781Employment925,000Share in World exports (%)9.8%
4Fashion industry vs. TC industry (1) What we mean when we use the term fashion industryFashion is, by definition, change.Success in fashion comes with the ability to grasp and recreate in clothes and accessories the ethereal spirit of the time and voluble desires of customers.Fashion adds an important design dimension to textiles or leather artifacts, which is capable of providing a continual and varied flow of new products
5Fashion industry vs. TC industry (2) The factories manufacture clothes,but consumers buyemotions, hope and dreamsThe failure of marketing.Competition focus on immaterial (intangible) factors
6APPAREL MARKET BY PRICE-SEGMENT Fashion vs Luxury (1)A fashionable good can be a luxury good,but not necessarily is so. Very often it is not !LUXURYThe high-endluxury market,accounts fora very small shareof the marketBRIDGE+BETTERMODERATEBUDGETAPPAREL MARKET BY PRICE-SEGMENT
7fashion and variety matter. Fashion vs Luxury (2)holds a strong position in luxury (designers), bridge and better segmentsAnd, most of all, wherefashion and variety matter.Italy
8Fashion and Risk RISK Variety and the low predictability Increasing of factors that makea new producta best seller or a worst-sellergenerates a risk far greaterin fashionthan in other industriesIncreasinguncertaintyand riskvery highWhen fashion comes into play, a garment’s commercial lifeshortens frequently to less than four months. On the otherhand, that same garment is the fruit of investment intostylistic research and development along the whole of theproduction chain - from the yarn to the finished garment -,about two years work.highMedium to high
9The fashion pipeline A reduction of risk can be BUREAU DE STYLEFIBERS MANUFACTURERSFASHION TREND FORECASTSThe fashion pipelinePROTOTYPESYARNMAKERSA reduction of risk can beacheived trough a complexinteraction of goods andinformation flows.PROTOTYPES, SAMPLES, TRADE FAIRSFABRICMAKERSDESIGNERSPROTOTYPES, SAMPLES, TRADE FAIRSKey competences are:Strong ralationshipsalong the pipelineCombined withflexibilityMastering ofinnovation routinesGARMENTMAKERSPROTOTYPES, SAMPLES, TRADE FAIRSRUNAWAY SHOWSSPECIALIZEDPRESSADVERTISINGCULTURALINDUSTRYOPINION MAKERSRETAILERSSALES POINTSFLOWSINFORMATIONGOODSCONSUMERS
10The advantage of clusters Strong tiesWithin a cluster the whole pipelineis often reproduced,sometimes it extendsto the manufacturers of specialized machinery.The close relationship betweenusers and providersof machinery and intermediatesis decisivein the introduction of new products,and new processes.
11The advantage of clusters Know-HowThe concentration of professional skillsapplied to all phases of the pipelineis powerfuland marked bya great variety of operators.Knowledge and informationcirculate easier insidethan outside the cluster.
12The advantage of clusters Innovation machineMerging of advanced technicaland organizational solutionswith the craft traditionsbuild a remarkable platformfor creativity and innovation(rapid development of prototypes,short run series, great array of variants).
13The advantage of clusters Entrepeneurial competenceThe small to medium size of the companiesdoes not prevent the worldto be considered by entrepeneursas their reference market.Company structures are lean and flexible.Family ownership is very common,providing quick decision making,long-term planning and commitment.
14A critical weakness of clusters Industrial cluster heavily focus on manufacturing know-howwhilein fashion industryspecialized services(design, communication, cultural industry etc….)Are of crucial importanceActually, main fashion clusters developed around twourban centres that played the role of services providers:MILANO and FIRENZE
15A map of italian fashion clusters Most of fashion clusters in Northern ItalyAre within a radius o 200Km around MilanoMost of fashion clusters in Central ItalyAre within a radius o 150Km around Firenze
16Challenges for the future The fashion business in the ‘80CommunicationDesignIn the past, fashion clusters built their succes focusingon manufacturing buyingon the market the necessary specialized services(including retailing).CultureSocietyConsumptionRetailingManufacturingThe core competence of fashion clusters
17Challenges for the future The fashion business in the new decadeCompetition in fashion goodsurges companies to approachthe market in an integratedway.Manufacturing Know-How becomes less important.Brand image, communication, control of distributionchannels are the challengesfor success.CultureSocietyConsumptionDesignCommunicationMulti-competencecompanyManufacturingRetailingWill the cluster companies be able to expand theircore competence ?
18Marco Ricchetti, CEO, Hermes lab, Italy Hermes lab srlBangkok, december 29, 2003End of presentationMarco Ricchetti, CEO, Hermes lab, Italy