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