World Fabric Outlook

Paccanelli: “New customer profiles to revitalize exports”

Taking stock of the market situation in our sector, thinking about what actions to carry out and plan in order to be competitive internationally, tackling the challenges of the near future that affect all industrial systems. Issues that make hands tremble and that, if you wanted to dive in deeper, would require a sort of “reflective retreat” that could last several days. We don’t have all that free time and space but we couldn’t resist the temptation to seek out a summary, to establish some set points, from which then to start a comparison and elicit a reflection. Who better then to involve than the manager who represents Italy in the most important European textile forum? So we picked up the phone and called Alberto Paccanelli, CEO of Gruppo Martinelli Ginetto Spa and, most importantly, president of Euratex, or rather the European confederation into which all the national associations of our continent that deal with textile-clothing and home/furnishing textile converge. Being the president of such a body means defending the interests of the sector against the European Union and international organizations; coordinating a team of specialists in the stipulation of international free trade treaties, taking on innovation and training in the sector, planning the future with regard to the sustainability of manufacturing processes and final products. In a nutshell, understanding perfectly the issues that relate to the global textile supply chain, in every detail. We wanted to ask him “everything”, but we started with a few questions to take stock of a delicate situation and of its future: that of furnishing and home textiles.

Q. – A few days ago Claudio Marenzi, president of Confindustria Moda, presented the sector’s numbers for the first half of 2019. All in all positive: exports are growing 7.2% compared to an internal demand that dropped by a couple of points. Obviously the pull effect of the fashion giant is dominant in the good export trend. And the current state of textile arts and furnishing curtains, in the first six months of this year, both in terms of numbers and in terms of effectiveness and consolidation in international markets, from the unparalleled vantage point of Euratex, is what?

A. – I would like to point out an important aspect first of all: the export numbers to which you refer are “pulled” by the clothing/knitwear sector. If we look at the cotton supply chain, in reality the entire textile sector is suffering. In the first seven months of this year the export of furnishing/home textiles decreased by 4.7% overall. But if we read the data in depth we find that the Bed and Bathroom/Kitchen segments are suffering a lot, while there is slight growth in the Table and Furniture segments – in this last “item” there are highly varied products, curtains, rugs/tapestries, carpets, various articles – so, once again, there is no general reason to rejoice but our sector, small compared to our older cousin clothing, is experiencing softer and slower dynamics. It is clear that the situation is not rosy: textiles produce and distribute durable goods, and like all these kinds of products, when there is uncertainty and insecurity in the markets, consumption slows down or even stops. But keep in mind that the particular structure of the downstream supply for the manufacturing of furnishing fabrics and curtains – so articulated and complex – somehow slows down the trends compared to those who, for example, work on the finished product like sheets and directly interact with distribution and consumption. As far as Italy is concerned though, the problem is always the same: competitiveness. The battle, at the level of international markets, plays out increasingly around price and our manufacturers pay for delays in terms of cost competitiveness. I’m not saying anything new but the issue is becoming, as price becomes the most important distinction, urgent because it erodes the essence of the good performance of any company, the right profit margin. Then, in reality, we still have plenty of cards to play: our creativity sustains us, the value chain of our products holds up because they are still coveted and recognized, but the high consumption ranges are a bit squashed and this can’t help but be reflected in the total numbers. Of course, a little more peace and tranquillity on the international stage would certainly help. However, to finish the summary, we can say that the first half of 2019 was not positive but we have the tools to withstand the economic situation.

Q. – Competition on the global market is an indispensable necessity for all companies in the home textile supply chain: what, in your opinion, are the actions that still need to be carried out by the Italian and European industry, to strengthen themselves worldwide?

A. – Placement at the medium/high-high ranges of consumption is increasingly ours, there are no alternatives. We cannot budge from there. As a textile supply chain we must stand our ground in rich markets because that is where we can find our reference clientele and do business with the most adequate earnings possible (even though price is an increasingly important variable, as I said before, and the question of margins must be handled with particular attention) and be present in expanding markets to stand our ground in them and gain new ground. I realize that saying it like that may seem like a simplification, but that is what macro-strategies are. More specifically, I would like to state that as an Italian and European home/furnishing textiles supply chain we must multiply our efforts to expand the type of clientele we reach, find new outlets, make our services and efficiency even better. We must realize that the profiles of the users of our products change constantly, are renewed and diversify. We must be hyper-aware of these developments: more than facing the markets in territorial and geographical terms, I believe they should analyze the types of customers and of opportunities and behave accordingly.

Q. – What can Euratex do, and possibly already does do, to promote and support the Italian and European furnishing fabric supply chain?

A. – Let’s do an introduction. Euratex is the synthesis of all the national European textile-clothing associations. It cannot therefore deal with the particular national issues that are the purview of the associations of each country. Sistema Moda Italia is the Italian association associated with Euratex that represents bodies in Italy, which has the most important textile-clothing sector in Europe. The work of Euratex is necessarily European and global and this means that its job is, in the world market, to “lobby” and thus facilitate international trade and thus worldwide consumption of our products; supporting the European Union in the stipulation of free trade agreements with nations and aggregates of nations in every part of the world – an example is surely Canada with which we signed an agreement that cancelled the existing duties. In general, there are three main headings we work under: free trade agreements and the creation of a “free and fair” global market, then there is the topic of innovation that we develop through the European Technology Platform for Textile and Clothing and the third heading concerns sustainability. A team of ten people works on these issues in Brussels, so we do a lot on topics that are crucial but which, perhaps, are not perceived as immediate by individual companies. Yet in reality they are decisive for the future in the short, medium and long term.

Q. – We live in an age of social media and extreme exposure and visibility. Lots of communication, marketing and product promotion takes place through these channels. How up-to-date are the companies in our supply chain and how much work do they still need to do on this topic?

A. – This question is now vital and there are no alternatives. On social media and on the web either you’re there or “you’re nothing”. Having a presence on the web is now no longer a question, it is not even conceivable not to have a website, but equally clear and indispensable is being present on social media. Companies of all sizes must realize that the new communication channels continue to be “new” only to us, in Italy in particular. In the world they are now well established and refined systems. In China, for example, people almost don’t use emails anymore, everything happens on “We Chat” the equivalent in that country of “Whatsapp”. And I’m not just talking about personal contacts, I’m think of marketing and business promotion. It’s clear that planning and carrying out a precise strategy that, obviously, then leads to e-commerce, is not easy and involves investments of time, money and human resources. But there is no alternative. The Italian production chain in our sector is quite late to the game and must act. Above all it must change its cultural attitude towards this topic: this is not a painful, annoying but necessary cost, but one of the most important investments in the future of a company. If that’s not your starting point, you won’t go far.

Q. – And also on this issue, what is the current role of sector trade fairs?

A. – Let’s start by saying that the role of a fair is still crucial, I would say fundamental. The world changes and evolves, but a moment of collective engagement like a fair is currently irreplaceable. Obviously the event must act in an unequivocal sense to promote research and the opening up of business opportunities. It is the same strategy that I mentioned before for companies: it’s not a question of a geographical vision in dealing with international markets, but of opportunities and chances, searching for different and new profiles of hypothetical customers. What Proposte did with the calendar shift towards the Salone de Mobile is perfectly consistent with this idea of a fair. Find new potential stakeholders. If the fair behaves like this it offers an indispensable service to the sector.

Q. – At the beginning of October Sistema Moda Italia organized a conference in Milan that talked about “sustainability” and about measurement systems suitable for tracing and showcasing the quality of textile apparel processes and products (PEF and EOF). Where does the furnishing fabric and curtain supply chain stand on this issue, in your opinion? And how much does this issue matter in our sector?

A. – The issue is fundamental but also undervalued. I don’t believe that the furniture/home textile supply chain has particular problems, at least in terms of process, since the national and European legislation on the subject is already very stringent. From this it follows that it could tackle the measuring procedures mentioned by SMI without any particular difficulty. The real question is another one, in other words the forest of certifications that is upstream of our work starting from yarns, semi-finished and raw materials. There is a complete confusion that is really difficult to untangle and this generates difficulties and often also scams and fakes. Finding order in this becomes indispensable, but our little supply chain does not have the strength to impose such important actions. I therefore believe that home textiles should follow the lead of their older cousin, clothing, in this case. However, the fact remains that the issue is essential and represents an opportunity for distinction and quality assurance that can offer us further opportunities on an international level.

FOREIGN TRADE OF THE TEXTILE-FASHION INDUSTRY (file .PDF)