An Audience with Ermenegildo Zegna

What do you do when the CEO of a £1.2bn luxury menswear empire, with 7,000 employees and 500 stores decides to have a fireside chat in North London? You listen.

In the newly built JW3 building, a talk organized by The Alan Howard Foundation, with the congenial, immaculately dressed, Ermenegildo Zegna (EZ) interviewed by Tanya Bryer was about to brighten my Monday evening.

One instantly surmised, he could never tire telling the story of the family business, set up by his great grandfather, a hundred and five years ago. “A man of great vision. I got a lot from him, his values, the sense of unity within a united family and a strong team spirit.”

Who is the EZ man? he was asked. Without any preamble, “He’s an international globetrotter, owns several residences, a man that is quite understated – more being than having. And knows what he wants. And he comes back.” Gold threaded words seaming the other-worldly lives of his high-end clientele together for us to mentally montage. He references early on an acknowledgment with; “The hardest challenge? Digital,” while at the same time declaring, “we are strategically moving from wholesale to retail to get closer to the customer.”

So where did it all start? In 1910, in Trivero, west of Milan (a region important for the production of wool), the business was started by his great grandfather Angelo, with a dream to make sure he could promote his brand domestically and internationally. “In those days, the British were iconic in textiles. He wanted to emulate that, by adding Italian style and creativity. He used quality cloth, with existing Italian designers to help break his brand into the US market.” Angelo was clearly no small-minded, entrepreneur, but someone who was philanthropic in nature, both to his employees and surrounding community, creating an arena for productive work that included re-forestation.

Life and a legacy begin at 40.

At the tender age of 40, Angelo switches from watches into tailoring and signed up to a design school to be able to innovate in product design. His watchwords were ‘I want to create a Chester Barry of Italy’ (quintessential British Savile Row tailor founded in 1935), “but with lighter weight fabrics for tran-seasonal weather,” adds EZ. The provenance of the brand owes a lot to this pioneering spirit, in tune with the “high performance traveller.” The right product for the right time: lightweight suits perfect for (then) new age travelling.

EZ, volunteers the wisdom that governs the business; “Firstly, feel your roots, come back to your roots. We return as a family twice a year to where it all started – it’s these values. Secondly, love what you do. And thirdly, respect the people you work with.”

If there’s a discernible difference within a family-legacy business and a global corporation with its own generic culture, one would imagine it’s the more personable, humanistic qualities one would see. “We employ second and third generations from the same families. Heritage and authenticity are values we try to transfer to the younger generation.” All part of the legacy instilled from the great grandfather down to the present pater familias. Imbued within EZ is a sense of overriding respect for everything that the people before him created and how they achieved it.

EZ had invested in rich learning experiences on his way to the top of the family tree, working with Hugo Boss and Bloomingdales amongst others. “If you are not a good merchandiser, you are not a good retailer.”  Great sound bite. I’m guessing he probably was a pretty fantastic merchandiser creative.

It’s clear that a business this size did not come about by taking baby steps and playing it safe. Back in 1991, they made their play in China – his father’s idea, EZ says. Pioneering and bold at a time when few foreign companies could succeed without losing their silk shirts first. In response to a question on how the downturn in the Chinese economy had affected luxury business, we are treated to an object lesson in globalization and the behavioral dynamics underpinning it today. “120 million Chinese go shopping globally. Soon it will be 150 million. Only a third spend their money on luxury good inside China. The other two thirds spend it abroad. Nurture the brand in the early stages of customer development, wherever they travel, so that you can make the Chinese happy around the world.” This is a brand that thinks about the big picture and then decides how much of that picture they want to own. “We became focused on vertical integration – sheep to store.” They truly support the commodity wool in Australia, celebrating the crop and ensuring the quality of the commodity is high – one of their brand usp’s – fabric linked to finesse. This is achieved uniquely by their selection of much longer, quality fibre, well above average that gives flexibility to the finished product. Not just about high microns for comfort for them. And if there was a sense of contributory timing to perpetuate this great family legacy, EZ describes it in his matter-of-fact way, as “It was time to buy a sheep farm of 50,000 sheep. To take the best raw material to the best store.”

It turns out, the EZ brand is the only menswear brand that takes the raw material, spins and weaves it all the way through to the finished garment. In the fickle fashion world, this amounts to a lot of control. Quality control and delivery. It’s this surety that has allowed them to produce for Tom Ford for the last eight years, and for the latest Bond movie, Spectre and many other film productions over the years. Had they ever been tempted to go public, remaining as they do, as one of the few private businesses? “Providing you seek organic growth, I would rather spend time with the customer than with the analyst.” Interestingly, EZ reveals they may be a family run company, but it’s run a lot like a public company, “Ethically with strong governance – 4 of the 8 of our board are independent.”

As a brand that is 85% export driven, in hundreds of countries, have they ever put a foot wrong? “We went into India too early, with an emerging market. Two of the BRIC countries have not worked very well – Brazil is pretty miserable for us, India doesn’t care about luxury – there’s no luxury infrastructure in India.” But the other BRIC markets just happen to include China and Russia – doing very nicely thank you.

With so much exposure to so many markets, (some turbulent), EZ stated a lot of accountability is required because the repercussions come through the business for many months to come. He commented briefly on the climate of terrorism still raw in the air; “Each of us is a consumer. Our first reaction is to stay home, the cocoon effect to regain energy and move on.”

What is uppermost in this leader’s mind for 2016? In a way that only a CEO can deliver, it’s simple and to the point. “Lower the break even point. Without cutting R&D, Omnichannel and travel.” Easier said than done, even for a luxury brand chasing the margins. EZ sums up their challenge, set by their own high standards. “It’s one thing to sail in a lake, another to sail in an ocean. Executives can be good in good times, not necessarily in bad.” Luxury doesn’t mean an easy ride in EZ. But there’s an ingrained sense of equanimity to prepare the business for the future.“We have more millennials on board, we need to keep them, they are our resource, and let them make mistakes.”

Encounting adversity is something that businesses deal with as part of life. How they respond when the storm comes is what we get to read about, sometimes in the obituary columns of the business pages. “Good companies come out of tough times. In 2008, in the wake of the recession, I gave myself one goal  – preserve cash. We pooled our cash, cash assets went up 50%.” It sounds easy when you hear it, but the wisdom was to go after only one goal. And for it to be the right goal.

The discussion touched on some interesting collaborations, including Maserati  – creating luxury car interiors with silk upholstered fabric. But the concluding focus was on the same theme that EZ alluded to at the beginning: Digital. Events took a charming twist when midway through expounding on the changing focus of the company… “When it used to be everything was physical, now the thread of contact is found somewhere between old touch points – when who we are, what we do is enabled through digital. We are much more digital than you think,” EZ then points to his son Edo in the audience and says, “It’s up to you son to tackle this area.” Fittingly perhaps, it’s a digitally attuned point to conclude an illuminating discussion, where even a big, hugely successful global brand has some new lessons to learn. It would be great to get Edo’s perspective on the digital strategies required for future success of a brand, that will take its own evolution, drawn from a strong design aesthetic and a globally successful level-headed family-orientated management ethos. No pressure, Edo.

By Paul Markevicius

Images by Alan Pitchforth