NeroGiardini, the Italian footwear brand owned by B.A.G., is entering the North American market under the supervision of Alessandro Bracalente, the 31-year-old son of the company's founder, Enrico Brancalente.
The company has created a subsidiary in Canada, opening a showroom in Toronto. Meanwhile, NeroGiardini has hired two agents to cover the U.S. market, one following large accounts and the other one serving independent stores, shipping the goods directly from Italy. The objective is to increase the sales network in the U.S. and to open a showroom in New York in the course of next year.
Alessandro Brancalente said the company decided to attack the North American market from Canada because it is closer to Europe in terms of trends. The U.S. was a key market for B.A.G., when it was working there as a private-label manufacturer, but his father decided to pull out of the market in 1989 after his American clients unexpectedly and abruptly ended their working relationship and switched to other suppliers. The episode prompted the businessman to create his own brand, NeroGiardini, and from 1993 he has worked only for his own brand.
NeroGiardini's first products are expected to hit North American store shelves in February with the 2020 spring/summer collection. The company indicated that the initial volumes are low but encouraging. The current focus is on independent retailers. The brand is targeting the higher market segment, with shoes retailing around $200-220 a pair in the U.S. for the spring/summer season.
The company has hired a local designer, and is relying on the input of its agents, to adapt the collection to American tastes. For the time being, as with its policy in Europe, it is shunning online sales to end users to keep prices the same.
B.A.G. believes that North America could represent 10-15 percent of its revenues in about five years' time. It is considering acquiring an existing U.S. footwear company to accelerate the roll-out of the NeroGiardini brand in the market.
The new project is expected to compensate for lower-than-expected revenues in Italy and the rest of Europe. In 2018, B.A.G. suffered a drop of about 12 percent in revenues to around €175 million due to the weakness of the Italian market, which represents about 75 percent of its top line. Sales in other European markets were stable and exports to Russia went up.
The company stressed that many footwear stores are closing down in Italy. A first wave of closures hit small domestic retailers in 2012/13, and, since 2018, large retailers have also been going under, it noted.
The company is hoping that foreign sales will represent half of its revenues in five to seven years' time. Italian orders for the 2020 spring/summer collection registered a fairly positive uptick, but the management could not gauge whether the trend was due to an improvement in general market conditions or the products or the result of its own commercial efforts.
As part of this internationalization program, NeroGiardini returned to the Micam trade show at the edition held in Milan on Sept 15-18 at the request of its foreign sales team. Previously, the company relied on its Milanese showroom to host clients visiting the city during Micam. NeroGiardini said that it made a lot of contacts and had excellent feedback from the show, and that the experience was satisfactory.
NeroGiardini is also seeking to develop its handbags business, which represented 3.5 percent of sales in 2018. It has a dedicated designer for the collection and is considering creating a separate sales force to cover leathergoods stores. The brand also intends to bolster its kids footwear business, which currently accounts for about 4.5 percent of sales.
This month, the company will start running its new 10,000-square-meter logistics platform with a selected group of clients. The site, located in Fermo, in the Marche region, is scheduled to become fully operational in January. B.A.G. invested €12 million to build the facility, on top of the €6 million spent to buy the land. The building, which will serve 1,400 clients in Italy and 1,200 abroad, adjoins the existing 12,000-square-meter warehouse, which will continue to be used for storage.
The forthcoming 2020 spring/summer collection will also mark the full-scale launch of the company's new and younger NG line, targeting 25 to 30 year olds. The first tests of the NG range started with the current autumn/winter collection. NG has different designers for the line, which retail at about €10-20 a pair above the NeroGiardini line due to the materials used. In Italy, NeroGiardini retails at €120-130 a pair on average. The company uses the same Italian suppliers for both NG and NeroGiardini.