For our second day in Milan, our group voyaged to the Duomo and explored the surrounding neighborhoods and shopping centers. Next to the large church was an iconic part of Milan, known as the Galleria. This shopping area has a focus on Italian luxury brands including the likes of Gucci, Prada, Versace, and Armani. Obviously, these brands are widely respected across the globe and especially in their country of origin. Our tour guide mentioned how all of the shops within the Galleria must pay incredibly high rent due to the intense amount of people that visit the Duomo area each day, making it an attractive location. It makes sense that wealthy fashion brands can afford this high priced real estate due to the price of their product bringing in a larger profit margin compared to smaller companies and the popularity amongst the citizens of Milan. Our group then voyaged out of the galleria and saw a side of Italian manufacturing that is quickly losing popularity. Particularly, this is the handmade leather working and production industry
Our group witnessed this style occurring within the Gravi Leather Store. This shop buys large pieces of leather from an upstream supplier and then uses the raw leather good to produce their own designs or customer’s designs. This level of vertical integration is impressive for a small store like Gravi. After they buy the materials, the shop owners emphasized how the rest of the work (ex: cutting, refining, gluing, and stitching the leather) is all done in-house. This approach saves Gravi money and time by not having to outsource these tasks to other companies. Furthermore, this method allows the customers to hold the shop accountable for their work as only the employees in the store are accountable for the product that is produced. The owner of the shop showed our group his unique designs which provided me with hope that his store will continue on in a competitive industry like leather goods production and especially in a crowded marketplace like Milan. These personal designs allow him to have a unique advantage over his competitors and the more expensive leather brands. This model of upstream purchasing and production also occurred with IF Bags. This brand had a emphasis on customization with their product and allowing consumers to have full control over what they want from their purchase. IF Bags are a larger leather producer in comparison to a small shop like Gravi so they are more likely to outsource their production but still produce most of their bags in-house. They sell products across the globe through their website but their brand recognition level is not nearly up to par with those in the Galleria. Their website is a unique advantage as it allows consumers to specifically pick out their ideal bag with all options available to the consumer rather than what is simply in stock in the store on any given day. Their website is user friendly and accessible, which also allows the company to reach a much higher number of consumers. The lack of a website hurts a smaller store like Gravi who must rely on strong word of mouth recommendation from their customers or using local advertisements in the papers to market their products.
These smaller leather brands in Milan differ greatly from the brands in the Galleria which have a much different approach to the supply chain production of their goods. Large Italian fashion brands like Versace, Gucci, Prada, and Armani are naturally forced to use smaller leather production since the costs of in house production and labor would be astronomical. The stores in the galleria were at the end of the supply chain and are positioned to sell the final product directly to the consumer. None of the production of the product itself was done in these retail stores and the only thing left for the store to do except focus on the positioning and promotion of the product. Though these shops in the Galleria have outstanding global reputations, their competition is fierce not just in Milan but across marketplaces in different countries. Only a very small portion of the global community can afford luxury goods at these high prices so these brands must constantly work to better themselves, their product and their marketing techniques to stay relevant in the luxury goods marketplace. Also, there is immediate competition from stores like IF Bags and Gravi who produce similar goods at a cheaper price. In closing, both small and large leather production brands face steep competition from a variety of competitors every day. They must work to capitalize in their unique advantages and streamline their respective supply chains in order to stay relevant in an already crowded marketplace.