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Domenico de Soleil is chairman of
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tomforde international the menswear
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brand that now includes beauty
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accessories fragrance and footwear he is
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a lawyer by training but made the
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transition to the fashion business when
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Gucci one of the clients he did legal
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work for hired him to join the company
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that was in 1984 over the next 20 years
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he engineered a remarkable turnaround
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saving Gucci from hostile suitors and
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acquiring such key brands as Eve sailor
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ah and Alexander McQueen indeed in the
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fashion world the standard phrase from
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managing a successful turnaround has
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become quote doing a Gucci
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we asked Domenico de Soleil to talk
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about the fashion business in a down
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economy the current consumer mentality
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temperamental designers leadership and
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how he has managed to be so successful
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in what might be considered a turbulent
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industry thank you for joining us you
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welcome my questions to you a year ago
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would have been very different than they
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are today I'm sure given what's going on
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in the economy in general in the fashion
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business in particular house business
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and what strategies are you adopting to
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minimize the downturn okay business and
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Taliban in general is very difficult for
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all I would say all the luxury company
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the old luxury industry I said really a
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difficult time I think there are several
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factors did intervene obviously huge
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crisis of last fall that is continuing
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and I've been in the business for a long
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time I never seen anything that was so
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deep and and on such a worldwide basis
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from the way I looked here but the
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industry when I've seen from results
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from several companies Asia is still
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working reasonably well China is still
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growing Hong Kong is still growing but
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every other countries had very very
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strong
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very difficult times this has been very
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very weak and there are a lot of factors
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of the general economic situation Japan
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economy's been very difficult for a long
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time now in this years particularly
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difficult I was in Japan last week and
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was all over the press that exports in
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Japan had declined 46% in the last
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quarter so you can imagine a
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difficulties for the economy in the
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United States I think is a combination
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of factor that is impacting on the
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luxury industry I think the first one
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waa is certainly is the general economic
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situation the the financial meltdown of
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this fall but on top of that there is
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another fact that occur in United States
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at at some point last year you may
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remember one department store in
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particular that carries a lot of luxury
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brands sadly at the beginning of
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November went on sale a very radical
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approach you know marquee everything
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down 70% so this certainly create a very
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complex situation because a lot of
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business all the fashion business and
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all the great larger company of stores
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in New York so we really confronted a
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very complicated situation and some
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followed the lead and markdown products
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you know in a way they was really
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unprecedented and obviously he's very
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difficult to tell your consumers now
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that in the spring season products are
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full price they're supposed to buy full
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price something they were giving away
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three months ago so I think in the
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United States is it an added factor that
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I believe is creating a difficult time
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for luxury brands but it B says
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difficult everywhere as I said with the
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exception of China and Congress things
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seems to be holding Korea actually doing
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reasonably well because the one has has
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depreciated so there a lot of tourists
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to go to Korea to buy luxury goods but
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by and large it is a very difficult
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climber I sense and I should I believe
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that mm honey is gonna be the last year
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for the industry it's gonna be very very
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difficult here I dad it's gonna be
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recovery and I think that probably will
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continue difficult times in 2010 with
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situation improving in
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I think toward the end of 2010-2011 so
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I've arrived realistic I haven't saved
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the semester view long term however
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there are really a lot of lot of schools
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of thoughts about the long term my
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experience I've been around for a long
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time given my age and I always heard
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that you know after great horrible
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situation economic depressions or
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difficult events like 9/11 are always
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heard now things have changed forever I
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just happen I don't believe it I think
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that consumers say you know people
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forget this is a human nature people are
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optimistic most of them by nature so I
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am convinced that obviously we will do
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quite well you know the luxury industry
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will come back I think but the real
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issue that nobody knows is how long it's
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gonna take and that's really when nobody
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knows when and I think you know my guess
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is gonna take some time but long term
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I'm quite optimistic what would you what
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kind of strategy would you suggest
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eléctricas I think that the important
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strategy for all the luxury goods and I
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think that all the you know the
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excellent manager they are there they
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understand this rather sadly should be
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the traditional set of managing for cash
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in difficult times you know what your
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cost very aggressively but the same time
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stay the course with the brand I think
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that sadly start counting prices really
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doesn't make a lot of sense I think at
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the end of the day I think was
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imperative for luxury companies deliver
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good value it doesn't mean the price
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have to be lower just make sure that
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whatever is delivered as a great quality
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great fashion great trend depend from
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brand to brand but I think that the the
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savviest people we know the number one
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is to stay the course all right I know
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that attorneys are often hired by the
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people they represent but to go from a
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job handling tax matters for Washington
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DC law firm to be coming eventually CEO
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of Gucci that's quite a switch why did
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you make that move and why do you think
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it works so well over that 20 years span
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I would tell you the first word the more
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was really by chance I was I was
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representing a Gucci family once I would
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and the company ran a huge tax problem
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at some point back in the eighties early
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eighties and so side of the family asked
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me to become pres a butch America to to
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really help them resolve the tax issues
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which I did in the meantime the company
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American company had a lot of problems
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so I fixed the problems and in and stay
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there and the company did quite well
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actually
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and then when the last family member
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took over the company unfortunately it
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was not the best manager in 1994
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basically the old group went bankrupt
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stopped paying stop paying employees so
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the then shareholders at the time which
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is a private equity company that
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purchased the share of Mauricio Gucci
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and other members of the family asked me
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in 1994 to move from the United States
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to Italy and then I became where I
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became the CEO of the old group and so
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that's really something that really
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happened to me there was no planning
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there I in fact when the company we
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learned to travel in 1994 93 94 . i
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considered to go back to to be a lawyer
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until i got a phone call and i was asked
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to move to alias if i could fix the
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campaign you're credited with saving
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gucci from bankruptcy making it
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profitable prestigious once again by
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using what one newspaper calls american
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style management practices I mean what
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those practices were and how you
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implemented I would say that's done has
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been defined very very simply as I will
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tell the students here today but I tell
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the story of the company what what I did
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the company was broke in 1994 when I
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came back went back and I I tried to
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look at a business in a very in a
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rational analytical way we were a most
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important type it was I am a very driven
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person and and I think we are very clear
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ideas at that time because I already
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served for several years as the price at
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which America so at a pretty good
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understanding of the problems of the
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company the strength of the brand
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and and I just parachuted in a situation
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which was catastrophic
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but by the same token I recognized that
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there were a lot of very competent
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people and and I thought that turned out
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that to be a good leader
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did I really rally them and make sure
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that everybody understood the direction
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we were going I always been able to deal
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with people well I came from a culture
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also in which I recognized talent so I'm
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not afraid of surrounding myself with
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competent people and most important I
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was very lucky because I the other
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survivor there was there at that point
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as the company collapsed was Tom Ford
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and I really felt they want to fire Tom
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for that actually but I thought it was
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really stupid I good actually so this
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guy's great
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so I Tom I convinced him to stay to
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become creative director of the company
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and I tell you that was a brilliant
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decision because Tom turn out to be
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probably the great designer of the last
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50 years and and so we worked well
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together and but not only with him you
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know we had a great team you know I was
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able to get everybody on the same page
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everybody and we had a very clear
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strategy everybody understood we were
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going and we made decisions very quickly
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it was this great sense of urgency and
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and so everything really worked out well
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in fact when I arrived in Florence from
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the United States after leaving which
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America to take over the company the the
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CFO of invest group which was the owner
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of Gucci at the time welcoming in
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Florence we were in the cafeteria and he
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said well he said I hope you can do
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something here because Gucci is an
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albatross around our neck less than two
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years later they sold the company made
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two billion dollars in profit so you
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know there are stories about
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high-profile high-powered businessmen
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executives starting out together in a
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business relationship and then for some
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reason coming to blows but I know that
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you and Tom Ford bring different
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strengths to this to the
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partnership and Tom Ford international
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what makes the relationship between the
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two of you work so well but first of all
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this is a great relationship of trust
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and since I trust Tom 1,000% and I think
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he trusts me 1,000% the second thing I
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think that we have very deep respect I
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think tom is a creative genius and also
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I really do believe that in life to be
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successful you have to have two great
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knowledge as one would you know and two
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what you don't know and I'm totally
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aware that that I'm not the creative
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person so I understand a collection I
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can tell you if it's gonna sell this
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time I sell I think I do very well with
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that but I'm not a community person I
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wouldn't know how to do it okay so I
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have a great immense respect for Tom and
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he's a expertise and I don't pretend to
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be a creative person myself so I think
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there's a very clear definition of roles
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and and and and also I have to tell you
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that I really have an extraordinary
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admiration for Tom you know because you
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see as I'll be talking about today
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here Wharton that see as a business man
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okay and you can learn about merchandise
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you can learn about stores I you can
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learn about understand it was a good
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products a bad product you can learn how
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to to understand what products sellable
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or the product will not sell what is a
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good fashion show but it's not gonna for
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sure
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however being creative it's a totally
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different universe I think creative
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people can see things the normal human
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being cannot so and always most
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important three three Tom win immense
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respect I think he has a quality which
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is very very extraordinary I remember it
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mister when I was fighting with LVMH we
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were fighting every day in the press and
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I know mr. I know what he said and I
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basically I said usually don't agree
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with everything he says but one thing I
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agree with the business spans are a dime
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a dozen it's true creative people are
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truly extraordinary do you have a sense
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of how social networking sites viral
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marketing buzz marketing you know
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product placement all these new
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marketing technique
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how they how they are changing the way
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we perceive and by fashion I think that
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obviously all the the there are a lot of
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ways these days to make your you know
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story around I would say the think that
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over the last year I've seen really
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become very very important I think that
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there is been it was started really long
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time ago to this really
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celebrities being dressed by designers
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some time ago that has become really
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very popular and and and actually now
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he's also spread by all sorts of
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magazines about who's wearing what when
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so all of that is because in a way much
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more important the kind of PR with
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celebrities then you know he's already
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start a long time ago but it's become
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now much more prominent because I think
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the widespread development a lot of in a
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new I was called gossip type magazines
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so that's been obviously were the map
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with the internet and you know a lot of
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forms so it's become much more more
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prominent and important by the same
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token I really do believe that excellent
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PR and you know you know the ability
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really to project the image of the brand
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consistently it's still very very
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important that's one of the real great
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strengths of Tom not only to be a great
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designer that can design beautiful
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clothes and wonderful accessory also tom
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is an amazing eye and amazing marketing
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ability he's done some of the greatest
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campaign I still buy old fashion mags
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you just look at the ads and he's
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amazing to me how many people now
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they're redoing what Tom that we were
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doing with Tom like you know the 18 1994
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and 1995 Tom was really really an
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avant-garde this really changed that you
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know very successful given all these new
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marketing techniques so do you feel that
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it's more difficult to control the brand
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image if yes and no yes but at the end
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of the day is very very important to be
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very disciplined with
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you do so I think that that can always
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be control I think he's up to the
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management or any brand to make sure
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that the image of the brand is always
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controlled in what ways do you think
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that the financial downturn has changed
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the consumer as you mentioned this you
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started out talking about this a little
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bit but you know consumers now are
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pushing back on price they're much more
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sale cut and discount conscious will
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this be a long-term change or is this as
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you said earlier a little bit this they
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might revert back to their old ways once
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the the recession is over that again you
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know they're different this nobody knows
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the real answer but my instinct tell me
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that this is obviously I recognize a
00:16:06
very difficult time I think it's gonna
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last this out it's not gonna be fixed in
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a few months and I think that people are
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very very concerned but my my experience
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is that is that at the end of the day
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the consumer they forget and you know
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people it'll you know if they love
00:16:27
luxury brand historically if you think
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about it I was a stone age people were
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buying bracelets and hearings you know
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it made of stone so it's something part
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of human nature and the painful kind of
00:16:39
stones yes but the bottom line is that
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part of human nature so I really do at
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least my sense it is that the things
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will come back to be to be good by the
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same token the real issue is that at
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least in my view that's gonna last some
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time and how long is gonna last I mean I
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really believe that nobody knows I think
00:17:00
it's gonna be a year or two or three
00:17:03
nobody's aware of it nobody knows but I
00:17:06
think that things will go back can you
00:17:09
name two or three leadership qualities
00:17:11
that you think an executive needs to
00:17:13
have to manage successfully I'd yes
00:17:18
first of all I really do believe that
00:17:20
the most important thing is to be able
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to communicate effectively some people
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see one thing in Gucci were very good
00:17:26
was it was a really communicate as a guy
00:17:28
Tony was a communication power we talked
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all the time people really knew I had
00:17:33
these
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habit from day one that I would go in
00:17:36
the cafeteria the company in Florence
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and I continue that throughout my career
00:17:40
and and and in every two or three weeks
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I talked to people meaning that
00:17:46
everybody clear cleaning people
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everybody I was just telling how the
00:17:50
company was doing what we was trying to
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do I think it's very important and said
00:17:54
there's that everybody in the company
00:17:56
understand what's our mission what we're
00:17:59
trying to do and everybody's trying to
00:18:01
be on the same page that I think is
00:18:02
incredibly important that's one thing
00:18:06
that the second so that's I think that
00:18:09
is the most important thing in
00:18:11
leadership obviously in the second thing
00:18:14
it would be to hire very competent
00:18:16
people just not to be to be open to
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debate
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also I came from it a little bit natural
00:18:25
for me because it's understand I came
00:18:27
from legal background so if you're in a
00:18:30
law firm it's not very hierarchical and
00:18:33
somebody was number one in his class at
00:18:35
Harvard for example law school it
00:18:38
doesn't matter that he is she's young
00:18:40
you know there's respect for
00:18:41
intellectual ability so I always grew up
00:18:43
with that background so I always wanted
00:18:45
to hire competent people and I want to
00:18:47
hear what they had to say basically I
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think it's very important for a leader
00:18:51
to be open-minded and invite debate and
00:18:54
people to talk about issues they openly
00:18:57
and so that obviously it's very
00:18:59
important and also I try or you know
00:19:03
before I took over the company our the
00:19:05
person run last family member and the
00:19:07
company was doing a lot of things that I
00:19:09
thought me to make any sense so in part
00:19:12
to learning a negative way just looking
00:19:14
what was going on and you can learn and
00:19:19
I remember this one example always
00:19:21
talked about it that that every time
00:19:24
there was a problem this gentle will
00:19:27
really be it was really try to find out
00:19:32
who dunnit
00:19:32
who was and I really noticed there was
00:19:36
very recently in a company was an issue
00:19:39
a processor so if a mistake is made up I
00:19:43
don't care it's done it we were trying
00:19:45
to say why we made the mistake
00:19:46
and just make sure that we look forward
00:19:48
and repeat the same mistake but this is
00:19:50
sort of the hunt for the for the culprit
00:19:53
I thought was very silly so I had we had
00:19:56
a great management team we became really
00:19:59
stars in industry because a phenomenal
00:20:01
management team and we hired all the
00:20:03
best people was very open a management
00:20:06
style my daughter was always open I
00:20:08
would talk to anybody and and I tried to
00:20:12
hire great people let them do their job
00:20:14
and so what what do you explain
00:20:18
expansion plans going forward for Tom
00:20:20
Ford international just we is a very
00:20:24
very young company and we open would
00:20:28
really meant successful first tour in
00:20:30
New York just a year ago and a half ago
00:20:33
and then the last year we open New York
00:20:36
we are now present in some of the best
00:20:39
location but for Goodman Neiman Marcus
00:20:42
in the United States Harrods in London
00:20:45
and we are open a beautiful store in
00:20:49
Milan last year so the plan for the next
00:20:51
year and a half is to open in the United
00:20:53
States in Beverly Hills and in probably
00:20:57
Vegas we're looking at a project there
00:20:59
and then obviously the most important
00:21:02
step in undertaking would be to expand
00:21:04
in Asia
00:21:06
exactly we will be opening this fall in
00:21:10
a certain in Tokyo and in in gallery and
00:21:14
Korea which is like the perfect manner
00:21:16
Korea and then obviously looking at
00:21:18
China and Hong Kong so that would be the
00:21:21
next thing
00:21:21
my last question is what advice would
00:21:23
you give to any man or woman who has
00:21:25
just been named head of a fashion house
00:21:27
I would just I said because of the
00:21:30
difficult times to do you know to manage
00:21:32
for cash obviously but the most
00:21:34
important thing is some who say you know
00:21:37
just stay the course you understand what
00:21:39
what your brand is all about that you
00:21:41
can't really start changing everything
00:21:43
there would be the worst thing to do
00:21:44
stay the course and one thing that I
00:21:47
also found it was very very important
00:21:49
our I spend enormous amount of
00:21:51
time visiting stores I used to talk to
00:21:53
store people all the time because that
00:21:55
if you really what is going on in the
00:21:57
retail
00:21:58
you should go and talk to sell people
00:22:00
they are there they see the customers
00:22:02
every day they know what is working they
00:22:04
know what needs to be done
00:22:05
so my biggest advice is just the vote
00:22:08
time the stores are very important at
00:22:10
the end of the day the stories the way
00:22:13
you know if the soul of the brand you
00:22:15
know and for most people they are not
00:22:18
sophisticated about fashion brand is
00:22:20
your store you know if you mention say
00:22:22
Chanel to people they think Amelia buy
00:22:24
the Chanel store so being the store
00:22:26
understand store make sure the brand is
00:22:28
properly presented I think it's very
00:22:30
important and therefore if you want to
00:22:32
be an effect you see a brand the voting
00:22:35
time in the store
00:22:36
traveling seeing the store understanding
00:22:39
your market that is very important
00:22:46
you
