From Suits to Underwear to Furniture: Armani Does It All!

The fashion industry today is dominated largely by publicly traded companies and large conglomerates. LVMH owns Louis Vuitton, Kenzo, Celine, Fendi, Marc Jacobs, Pucci, and Givenchy. PPR owns Gucci, Bottega Veneta, Balenciaga, Alexander McQueen, Stella McCartney, and Yves Saint Laurent. Hermès and Burberry are publicly traded. With the heavy emphasis on profits, many family-owned fashion houses, such as Prada and Versace, have been tempted into giving up complete control over their companies and doing the same thing. One man, however, has never even considered taking his fashion company public or allowing ownership to fall into someone else’s hands; that man is Giorgio Armani.
Giorgio Armani and his business partner and boyfriend, Sergio Galeotti, founded the fashion company in 1975 with only $10,000 dollars of start-up capital, which they used to buy materials and rent a small office on Corso Venezia in Milan. He started off by creating unstructured suits for men and then later applied the same design tactics to his women’s wear line. Armani’s clothing quickly gained popularity by appearing in various films and magazines, and by 1982, Armani’s designs were being sold all over Europe and the United States with global sales hovering around $40 million.
Instead of going public or trying to acquire other fashion brands in the attempt to create another luxury group, Armani decided to use a business model called intra-brand expansion, where a company uses one name to sell a wide variety of products in separate lines. Giorgio Armani remained the signature label, which produced the most expensive and high-quality pieces of clothing geared towards adults, but other clothing lines were quickly added. Armani Collezioni provides classic pieces at a slightly less expensive price while Emporio Armani (the most largely distributed Armani line) offers more youthful, trend-inspired pieces geared towards young adults. Furthermore, the brand now includes Armani Privé, the haute couture line which only produces made-to-wear clothing; Armani Exchange, an affordable line of urban wear for younger customers; Armani Jeans, a denim line sold only in department stores; and Armani Junior, a collection of clothing for young children. In addition to his clothing lines, Armani has also created a high-end home furnishings line named Armani Casa and a line of make-up, perfumes, and cologne under Armani Cosmetics. More recently, Armani has associated his name with the construction of several hotels, vacation resorts, and restaurants. Some worry that overusing a name may result in a brand’s loss of status, but Armani’s unique business model allowed it to generate revenue upward of $2 billion in 2008 and the company continues to grow throughout its many brands.
Giorgio Armani’s brands have also done extremely well during the current economic crisis. Women’s Wear Daily reported in early May 2009 that Armani has shown resilience in the face of a tough economy, the result “propelled by growth across all brands and regions.” While recession and heavy investment depleted profits, Giorgio Armani SpA was still able to increase sales by 1.5 percent in 2008. At constant exchange, the sales increase rested at 2.4 percent, with revenues in Greater China rising over thirty percent, which offset the brand’s four percent drop in Japan. “There is no doubt that 2008 has been a difficult year for the fashion and luxury market,” said Giorgio Armani, but he continued to publicize his brand’s strength and the “solidity” of his company’s “successful business model.” Armani also said that he maintains his beliefs in the company’s vision, goals, strategic choices, and that “this belief encourages us to maintain a long-term view in any initiative we undertake.”
Today, there is much rumor and speculation about what will happen to the Armani brand in the future. Armani is almost 75 years old, and has been approached several times by fashion reporters with one question, “When are you going to retire?” There were rumors in July 2004 that Narciso Rodriguez was asked to take over upon Armani’s departure, but officially, the designer says he has no plans to leave anytime soon. He just opened up a beautiful Manhattan flagship store in the fall, and he recently showed his 2009 Resort Collection, which received rave reviews. Nothing is certain about where the label will be in ten years from now, but for the time being, Armani lovers have nothing to worry about! Keep impressing us Giorgio!