The Italian luxury menswear institution, founded in 1910, acquired 85 percent of avant-garde American suit specialist Thom Browne, catching almost everyone by surprise. According to Ermenegildo Zegna, who spoke at the BoF China Summit in Shanghai last week, the desire to acquire a brand like Thom Browne had been brewing for quite some time.
“It has been a number of years that we were looking for a target [but] either it was too expensive, or they weren’t good enough. And I must say that [when we got to] Thom, I said, ‘Gosh, this is the way to do it’. And we did it in an exceptional short time over [the] summer, when we got the financial people out of the way and we did it privately,” Zegna explained.
“It has a great opportunity, in women and in accessories and in many other products. It is fresh. It’s millennial. And last but not least, the supply chain. Most of the product is made in Italy, with some made in America. And [there can be] incredible integration with our supply chain.”
Thom Browne, which had a reported valuation of $500 million at the time of the deal, is not the only investment that the Ermenegildo Zegna Group made in recent months. In June, it announced that it had picked up a minority stake in Indian designer menswear brand Raghavendra Rathore Jodhpur for an undisclosed sum as part of a joint investment with the retail arm of Indian conglomerate Reliance Industries.
If you don't watch who your competition is and how it moves, you are out of this market in a matter of two seasons.
Though Mr Zegna denies the presumption that these investments are a signal of the brand wishing to build a global luxury menswear empire, saying no further major acquisitions or investments are planned for the near future, he does acknowledge that an interest in Thom Browne helps Zegna more broadly pivot to a younger, more casual market.
This evolution has already been in process since 2016 and has involved increasing the visibility of those product lines more appealing to younger consumers — sneakers, caps, wash-and-wear suits — as well as the hiring of Alessandro Sartori as artistic director, and the introduction of a fully integrated digital strategy.
All of these elements are particularly vital in China, according to Zegna, where the brand has had a presence since 1991. Over 27 years, the country has grown to account for the largest piece of Zegna’s €1.5 billion ($1.7 billion) annual revenue pie.
“Speed is what makes this market different… The speed of change. It's unbelievable. Every time I come [to China] I learn something and I see something different,” he said. “And the wealthy millennial is what makes growth happen for a brand investing and believing in this market.”
“I like to make the example of the competition [here]. I'm a competition freak,” he adds. “If you don't watch who your competition is and how it moves, you are out of this market in a matter of two seasons.”
Though Ermenegildo Zegna has been active in the Chinese market for close to three decades, it is showing no signs of complacency. Earlier this month, the brand announced its partnership with China’s second-largest e-commerce giant JD.com’s luxury platform Toplife in a bid to expand its online presence. In September, the brand unveiled two new global brand ambassadors along with the launch of a capsule collection — Chinese singer and actor William Chan and Korean pop star Sehun — both of whom have legions of fans in China.
Additionally, the brand partnered with the China men’s national soccer team in May by sponsoring their “Rising Star” training program, and the team have sported off-field formal and leisurewear designed by the brand since 2016.
“I wish I spoke Chinese,” he lamented. “I tried to push one of my sons to learn Chinese [but] I was not successful [at that].”
However, the chief executive is cautious about the future, citing consumer uncertainty around trade conflict with the US as a concern, but firmly believes the millennial consumer market, so key in China as well as around the world, is key to growth moving forward.
“Zegna wishes to have more of a millennial customer. This is one of the other reasons why we acquired Thom Browne, because we wanted to invest in a brand for the next generation. I'm old. We need to think of succession planning, not now, but you know — tomorrow,” Zegna said, predicting casualwear, accessories and personalisation will be the pillars of menswear growth moving forward.
Questions remain about how the brand can attract a new millennial customer without alienating its traditional customer base, but 63-year-old Gildo Zegna claims being “millennial” is about more than just a number.
“I'm one of [the traditional Zegna customers] and I try not to be alienated,” he says.
“I like to talk about the millennial mind-set, not only age. Because if you talk only about age [then] if you're not 30 years old, you're cut out [but] that’s total bullshit.”
The Savannah College of Art and Design (SCAD) is a Partner of the BoF China Summit.
Shanghai Fashion Week is the Strategic Partner of the BoF China Summit.
HKRI Taikoo Hui is the Venue Partner of the BoF China Summit.
Yu Holdings is the Principal Partner of the BoF China Prize.