MonteNapoleone District: Milanese luxury between crisis and rebirth

The Quadrilatero della Moda (also called Quadrilatero d'Oro) has always been one of Milan’s crown jewels and a reference worldwide in terms of luxury: a crossroad of sizzling alleys at the heart of the city, where foreign tourists could spend up to 2,400 euros in one single shopping spree, and where the average bill would reach 1,800 euros, even more so than on Avenue Montaigne in Paris (second with 1,730 euros) and the Calle de Ortega Y Gasset in Madrid (1,600 euros according to the 2017 figures of the research company Global Blue).

Then, Coronavirus changed the face of our cities and of course the Milanese luxury sector: shiny windows were replaced by closed blinds, and the inhabitants’ “chitchat” and the tourists at MonteNapoleone were replaced by a desert of silence with some masks here and there… What now? The first data on “phase 2” show the Covid-19 pandemic has inverted the multiyear growth trend of the Milanese economy. More specifically, forecasts for the end of 2020 show a decrease of 7.7% of Milan’s GDP. During the first quarter of 2020, the sales revenue recorded a decrease of 6.7% reaching -9.8% for the clothing sector (“Milano Produttiva” report, produced by the Milan Monza Brianza Lodi Chamber of Commerce statistical studies and planification department). “To this day, our territory’s economy is being dangerously held up between unprecedented damages caused by the Covid emergency and a difficult return to growth”, comments Carlo Sangalli, president of the Chamber of Commerce of Milan Monza Brianza Lodi.

Of course, it specifically hit purchasing tourism, third spending area, after hospitality and restauration, especially in a city such as Milan, the number one preferred destination for tourists with 34% of sales by foreigners in Italy (data Federmodaitalia-Confcommercio).

With regards to luxury products, the recent study "Luxury Study Spring 2020", Bain&Co and Altagamma foresees a decrease of sales revenue between 20% (in the best case scenario, the one that foresees an important recovery as of the third quarter) and 35% (if the negative effects of the pandemic go on for a long time) for “personal luxury products”. Among luxury goods, the worst impacts are estimated for jewelry (-23%), watches (-25%) and clothing “-21,5%) whereas for leather goods (-17%) and cosmetics (-13%), the drop will be weaker.

"Consumers see a world that has deeply changed and to which luxury brands will need to adapt”, comments Federica Levato, partner of Bain & Company and co-author of the study. "Protection in stores will become mandatory, always associated to the magical experience of luxury: creative means to attract consumers in stores or deliver products directly to them will always make the difference. The growth pace of this market will depend on strategic responses from brands that have to benefit consumers”.

We talked about it with Guglielmo Miani, president the the MonteNapoleone district, the organization that regroups more than 150 luxury brands of the streets of MonteNapoleon, Verri, Sant'Andrea, Santo Spirito, Borgospesso, Gesù et Bagutta – as well as the president and CEO of Larusmiani.

How did the post-summer recovery go?

We don’t have official data yet, but since the beginning of the month of September, we have noticed an improvement of sales revenue for all the brands of the MonteNapoleone compared to previous months. Between March and June, people neither needed nor wanted to shop for luxury. We are now starting to see an increase, especially among the younger clients, the 20-30s that have least suffered from the crisis.

How has your clientele evolved?

Without foreigners (during the first period of confinement, we reached -98%), our clients are mainly Italians, who are unable to travel and therefore spend more in our country. They are, for the most part, Milanese, or those who travel for business or pleasure and use the opportunity to stop in the Quadrilatero to do a bit of shopping; foreigners are mainly European, even though we are starting to see some Russians and Americans that probably arrive from other countries.

How much do Italians spend in luxury?

The average spend of an Italian client is 1,000 euros, whereas the foreigners will spend 2,117 euros in average: it’s the highest certified revenue worldwide in the fashion sector(clothing).

What are the recovery projects for the MonteNapoleone district?

For a few years, we have been talking about revamping the Quadrilatero and for many years, I have been knocking on the door of City Hall to get the authorizations. We have finally reached an agreement and a sponsor will invest 4 million euros: the works that should start asap will enlarge the surface of the sidewalk and restore the roads, change the lighting and other improvements to encourage pedestrians to walk around. Events can also be another lever for recovery: the Vendemmia di MonteNapoleone took place from October 5^th to 11^th. It’s the traditional meeting that sees the boutiques of the Quadrilatero associate with the most prestigious cellars.

How has that happened ?

As we are not able to celebrate warmth, events took place in a more private format than in the past. We created an app for guests, where you have to state the date and time of the visit in order to guarantee social distancing and security for all guests. We are currently preparing an outdoors motor show in Milan Monza, which will take place end of October and where cars will parade on MonteNapoleone. In the meantime, we are also thinking about Christmas initiatives.

How are the shops of the Quadrilatero facing the decrease of clients in the boutiques?

Big brands have used digital very much, such as social media and internet. But many have also found new ways to communicate with their clients, by contacting them by phone or whatsapp to inform them of offers and new products, by sending the goods directly to their homes and by organizing individual meetings in the shops.

Do you think ecommerce can replace the boutique experience?

Our spirit is made for socialization; therefore, I think shops will continue to exist, especially in big cities and especially in a place like Milan where luxury shopping is concentrated on one neighborhood which is unique in the world.

Any forecasts for the future?

I am convinced Italy, after the difficulty it has initially encountered, has well reacted to the crisis. We were not ready, but we have taken strong measures and have respected them. This has allowed us to surpass the highest phase by doing better than other countries, so much so that the Financial Times in a recent article has praised the Italian management of the pandemic. However, we depend on tourism, that’s a fact. The priority now is to have foreigners come back to our country.