Giorgio Armani thriving by making what people want

Giorgio Armani has upgraded his yacht. His new vessel is 213 feet long (a 27 percent upgrade) and, while his old yacht is having a little trouble selling, he doesn't seem too upset. His company, Giorgio Armani S.p.A., just opened a brand-new 43,000-square foot flagship store on Fifth Avenue in Manhattan. And his latest line of clothing evokes the go-go eighties, complete with shoulder pads and pinstripes.

Want more? Armani's latest spokesmodel is none other than the Queen of Conspicuous Consumption herself, Victoria Beckham (who has probably spent more on her three sons' birthday parties than the entire sum of Rick Wagoner's pension). I know. You're asking, what gives? How does this guy keep getting rich-and-more-rich even though, by all appearances, people selling luxury to the masses should totally be running for the exits right now? Hunkering down, at least. Wearing jeans.

Maybe this is the answer: Armani makes jeans. He started making them in (bingo) the 80s, back when everyone pooh-poohed his bourgeoisie and his yacht was only a twinkle in his eye. He makes jeans, and he sells his signature collection of t-shirts and evening gowns to people who want them.

No one needs an Armani suit, nor a pair of Armani eyeglasses. And in this may be his success. We look at the industries falling into nothing but rubble and recriminations around us; the auto industry, the banking industry, the housing industry; these are things that people need (or think they do); these are things that government won't let fail. Instead of failing, they scramble and scruff and beg for mercy, all the while sucking down every last drop of taxpayer money we dribble toward them.

The only stakeholder in Armani's empire is Armani. Analysts are not hanging on his profit predictions; no dysfunctional board of directors sits ignoring reality while they collect their I'll-scratch-your-back-you-scratch-mine retainers; no employees scramble over each others' backs, hoping their stock options will vest before the market falls. Without a publicly-traded currency, without any need for complicated financial hedges, without any sensitive talent save Armani himself, there is only the product.

And people want Armani's product. While the fortunes of the world have risen, fallen, risen again, and fallen (yet again), these past 30 years, people have wanted Armani clothes. There will always be those who can afford luxury; there will always be a customer for Armani's product. And, unlike the auto industry, Armani doesn't have an enormous infrastructure of unions and pensions to service in the years when the customer is buying less than expected.

But, though the veneer seems un-scratchable, a disconnect skews the Armani image. It could be his age; at 74 and without heirs, the fashion icon has no clear successor, and the pressure as rapidly-aging sole shareholder and design figurehead could be crushing. It could be the economy itself. Something has been unsettling Armani, enough so that his latest yacht looks very much like a battle cruiser (all Army drab-green and, frankly, scary). He included fur in his 2009 lines, even though he promised PETA in 2007 he was discontinuing it. And in a strange diatribe at the opening of his Manhattan store last month, he railed against the very customer he'd expect to buy a t-shirt and gown that evoke "easy elegance and luxury" (what's easier than buying luxury on your credit card?), saying, "Today's youth, which has suffered neither deprivation nor war, does not value sacrifice. Today, having the newest watch is what people care about. Freedom and sacrifice are seen as pathetic sentimentality... Today everyone is given over to rampant and desperate consumerism. Fashion's about winning and being ahead."

What's more, no one likeshis Fall 2009 line.

What does all this mean? Where is Armani headed? Is this strange voice of economy and reason, still partying 'til 4 a.m. and selling dresses that cost more than an autoworker's annual salary, making Valentine's Day windows even though he hates the commercialism, mixing navy blue and black, crazy or the smartest kind of smart you can imagine? I don't have an answer but asking the question is a lot of fun.

Sarah Gilbert is fairly broke, disavows commercialism in favor of shopping at thrift stores and grows her own food, but still loves Armani's clothes and will wear them at every opportunity.

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