Milano, 16 September 2021 - MIPEL Lab, the innovative and revolutionary project conceived by Assopellettieri, dedicated to the sourcing of Italian leather goods, makes its debut at LINEAPELLE - the world's most important exhibition for sourcing leather, materials and accessories for the fashion, luxury and design industries.
A physics, that is a new fair format in collaboration and at the same time with Lineapelle (22-24 September at pavilion 13 of Fieramilano Rho).
And a digital one, which goes beyond the 3-day presence at Lineapelle. In fact, Mipel Lab is also an "all year long" match-making platform developed by Assopellettieri in collaboration with EY and with the support of the software house DS GROUP, able to easily put the best Italian leather goods producers in contact with national and international luxury brands.
The objective of MIPEL Lab is to become the point of reference for exclusively "Made in Italy" sourcing, a link between manufacturers, brands and designers.

The President of Assopellettieri Franco Gabbrielli says: "The main objective of MIPEL Lab is to involve brands that are not present in Italy today and provide them with an innovative service to put them in contact with the most suitable producer for their needs, creating new important business alliances with national and international operators. The project meets the real need of the supply chain to join forces, because today more than ever it is essential to work as a team. Being a partner and inside LINEAPELLE is strategic, because luxury brands, designers, private labels and startups can find high profile production partners and, at the same time, discover ideal leathers and materials to create their collections. ”

This is what Lineapelle CEO Fulvia Bacchi says "We are really satisfied that Lineapelle hosts MIPEL Lab, a project that we started talking about with Assopellettieri even before the pandemic. Our fair, which has the ambition to contribute with concrete initiatives to enhance and promote the development of the entire leather industry made in Italy, is enriched and takes a further step in this direction through a high-profile synergistic operation. Italian leather goods manufacturing expresses an unparalleled quality in terms of product and service. A leadership that, by creating a system with Lineapelle's product offer and its stylistic proposal, thanks to MIPEL Lab will give rise to significant and stimulating opportunities for evolution".

MIPEL Lab is an "exclusive club" to which only Italian producers of excellence belong. The companies that will be present at MIPEL Lab during the three days of LINEAPELLE and that have firmly believed in the new project are: Bric's, Dimar Group, Mabi International, Most, Metal Studio, P&C, Pelletteria Fiorentina Montecristo, Rica, Pelletterie Sagi, Sapaf, Tigamaro, Tripel Due, Tivoli Group, to which several others will be added in the coming months.

The pandemic presents its bill: in 2020 industrial production and turnover will plummet, with decreases of more than 1/3 compared to the levels reached in 2019.

Exports are set to fall heavily, losing an estimated EUR 2.7 billion over the 12 months, cancelling out the strong expansion of the previous two years, while retail sales in Italy (-24.4%) have been hit hard by the restrictive measures. Despite the understandable increase in online purchases, household consumption fell significantly and tourist shopping collapsed.

Generalised, and almost always double-digit, declines in the main markets, with some positive signs (rare and weak) only in the Far East, where (despite a contraction in volume) South Korea grew in the first 11 months (+2.6%), becoming the third destination in value, and China limited its losses (-1.4%), thanks to a decisive recovery in the last months of the year.

The sector's trade balance declined by -28.6%.

For the Italian leather goods sector, therefore, no significant rebound after the spring lockdown. A decidedly poor end to the year and a still unfavourable start in 2021: after the Christmas shopping season, the new pandemic wave also hit the sales season hard, putting off the restart.

The selection among companies continues (almost 200 fewer than in 2019, between industry and handicrafts) and employment tensions emerge: 8 out of 10 companies surveyed resorted to shock absorbers in the fourth quarter. In the entire leather industry, 83 million of wage support hours were authorised in 2020 (+900% on 2019).

All the main sector variables showed markedly negative trends in 2020, with little improvement in the third and fourth quarters. In fact, the resurgence of contagions led to a further slowdown in activity in the autumn, further delaying the expected rebound, which will have to await the widespread introduction of vaccination campaigns.

-The Istat index of industrial production recorded a drop of -33.9% on January-December 2019. After the collapse of the March-April two-month lockdown and very reduced rates in May-June, the third quarter recorded contractions of around -30%. In the last part of the year, after an encouraging -3.3% in October, production activity suffered a new sharp downturn: -25% in November and -23% in December.

Similar indications come from the survey conducted by the Confindustria Moda Study Centre on a sample of companies associated with Assopellettieri, according to which only 8% of those interviewed reached or exceeded in 2020 the quantities produced in the previous year, compared to decreases of over 35% for more than half of the panel.

-The same survey also looked at how companies' turnover will develop in 2020. The distribution of responses was eloquent: for half of the sample (52%), the decrease was between -20% and -50%; and a further 24% experienced drops in revenues of even more than -50%.

There was a marked reduction (close to -38% in value) in flows to Switzerland, the leading destination for exports in value terms and for some time now the logistics-distribution platform for the major international luxury brands.

The European Union (from this year onwards considered to have 27 members, post Brexit) saw an overall decrease of 20% in value and 22% in KG. France lost almost 10% in value (with -6% in KG), another traditional destination for third-party production for designer labels, which became the top customer in terms of quantity for Italian operators, overtaking Germany (which lost 20% in value and -14% in KG).

Among the non-EU countries -which showed a heavier contraction in terms of value than the EU markets as a whole, equal to -28% -the Far East lost -13% in value and -19% in KG, with significant drops in several countries (Japan -15.5% in value, Hong Kong -31%, Macao -20%, Singapore -46%).

Russia and the United Arab Emirates also fell (-19% and -28% respectively in value), as did Canada (-21%) and the United Kingdom (-23.5%, with which the EU signed a trade and cooperation agreement, TCA, at the end of December, with immediate provisional application).

-Imports of leather goods, which amounted to 2.37 billion euros between January and November, were down by -21% in value and -25% in KG. China, the leading supplier in terms of volume with a share of close to 50% of the total, showed a decrease of -35.4% in value (-39% in KG).

-Although the trade balance remains largely in surplus, it is down 28.6% on the first 11 months of 2019: a surplus of €4.7 billion (almost €1.9 billion less). In spite of the sharp decline, this is still a significant result, which places leather goods in 6th place in terms of assets among the 99 goods chapters of the customs nomenclature (it was 5th at the end of 2019).

The delicate economic situation is likely to have serious consequences for the sector's production fabric, which has always been based on a network of small and very small enterprises.

-The selection of companies continued in 2020. Although it is too early to read in the Chamber of Commerce registers the effects that the current economic crisis will have on the demographics of companies, the Infocamere data on company births and deaths already show the first signs: at the end of 2020, they record a balance of -199 units in the number of active leather businesses compared to December 2019 (-4.4%) between industry and craft, with a significant worsening in the fourth quarter (-87 units).

Broken down by region, Tuscany (where about half of the companies are concentrated) shows a negative balance of -116 companies compared to 2019; Veneto -30; Abruzzo and Lombardy -20 and -17 respectively; 16 less in Emilia Romagna. The balance in Marche is smaller, but still in double figures (-12). Campania is bucking the trend (18 more units on end 2019). The remaining regions show a total of 6 fewer companies.

It is easy, however, to foresee a significant widespread worsening in the coming months, when the realities that have not been able to overcome the exceptional difficulties that operators have had to face as a result of the emergency, which is still ongoing, will begin to be counted.

-The first critical points have also begun to appear on the employment front. The processing carried out by the Confindustria Moda Study Centre on Chamber data shows -despite the freeze on redundancies imposed by government measures -a drop in the workforce of around -2% (an order of magnitude also reiterated by the member companies reached by the survey) following cessation of activity or as permitted by law (consensual terminations, retirements, non-renewal of fixed-term contracts...).

The same survey highlighted a strong recourse, also in the fourth Quarter, to wage supplementation tools (8 out of 10 companies in the sample), which is also confirmed by official INPS figures.

In fact, these figures show an unprecedented increase in the number of wage support hours authorised in 2020: 83 million hours for companies in the leather sector from January to December (8.3 million in 2019), an increase of +900%.

Never had such a number of hours been granted, not even in 2009 (23.1 million) or 2010 (29.7 million) at the height of the global recession.

All the main district areas of the leather industry show considerable increases: Tuscany is the first region for authorised hours (24.3 million, +3954% on 2019, of which 11.5 million for the province of Florence, +5193%), followed by Veneto (14.9 million, +934%), Marche (12.9 million, +370%), Campania (11 million, +685%) and Lombardy (+797%).

These figures testify to the exceptional reduction in activity levels during the year and the seriousness of the current situation.

-There is great concern about the situation in the coming months. The indications of the entrepreneurs, collected at the end of January, interviewed about the turnover expected in the first quarter of 2021 seem to replicate, with a very slight improvement, those expressed for the last 3 months of the year: the average drop within the sample is equal to a heavy -23.6%.

Only 3% of respondents expect a start to recovery in the first half of this year; for 52%, it will be necessary to wait until the second half of 2021; for the remaining 45%, the entire year will be characterised by an unfavourable trend. The time frame for a real recovery conditioned by an efficient vaccination plan and a gradual return to normality still seems uncertain and in any case not immediate.

Milano, March 9th 2021

The Italian leather goods sector
First half of 2020
Economic note drawn up by the
“Confindustria Moda Research Centre”

Sector performance in the first 6 months of 2020

Leather goods: first semester black. The restrictions imposed by the health emergency and the setback in demand, both domestic and foreign, caused turnover to fall (-43.2%). Exports (-31% in value) returned below the levels of three years ago, breaking the recent growth trend. The trade balance surplus fell by 35%.

Restart with the brake pulled after the lockdown: in the two-month period May/June exports -35% in value, retail sales -24%, and production rhythms still strongly slowed down (-44%). Orders cancelled and high percentage of outstanding orders; liquidity crisis risk.

9 out of 10 companies forced to resort to social shock absorbers and to revise their investment plan due to the pandemic.

The leather goods sector tried to restart after a markedly negative first half of the year, which saw the Fashion Textile sector, one of the Italian accessories sectors, among the most exposed to the effects of the crisis induced by Covid-19.

The data processed by the Confindustria Moda Research Centre for Assopellettieri show strongly penalising trends for all the main variables, which are putting a strain on a sector that in recent years has distinguished itself for double-digit growth rates in exports (+58% in value over the three-year period 2016-2019) and assets in the trade balance.

The entrepreneurs surveyed indicated a drastic reduction in turnover in the second quarter (-49.2%, with decreases of more than 50% for 6 out of 10 companies in the sample), which followed -37.1% in the first part of the year.

Overall, therefore, it is estimated, with reference to the first 6 months, a contraction of -43.2%, with a loss of sector turnover of around 1.9 billion Euros in January-June 2019.

Orders also fell sharply, falling by -54.2% on April-June last year: a dynamic that casts many shadows on the production rhythms of the following months.

ISTAT's survey of industrial production confirms the sample figures relating to turnover: after the understandable collapse in the two-month period March-April due to the interruption, or at least the severe limitation, of work activities, in May, with the reopening of factories, the index for travel and leather goods recorded a further sharp decline (-50.7%), followed by -37.3% in June. The decline was close to -45% if the entire half-year is considered.

The health emergency has profoundly affected the levels of demand, both international and domestic. On the foreign front, restrictive measures and different ways/times of spreading the coronavirus in the main reference markets make the current scenario very complex and varied, impacting on world trade; on the domestic side, purchases, even after the reopening of shops, are held back by uncertainty and loss of purchasing power of many families.

Exports in the first six months of the year fell sharply, both in value (-30.6% on the same period in 2019) and in KG (-24.8%), abruptly ending the expansionary trend of recent years: leather goods were exported for 3.6 billion Euros (5.1 billion in the first half of 2019), corresponding to 23.7 million KG. The average price at KG fell by 7.6%, an unequivocal sign that the setback affected not only the mid-range but also luxury sales, which are generally more resilient to economic fluctuations.

In terms of value, exports returned below the levels of the first 6 months of 2017, abruptly "burning" the considerable growth of the last three years. In KG, the current result is only higher than the heavily penalizing quantities of the first half of 2009.

After a not particularly rewarding start to the year but nevertheless on positive ground (up 1.6% in value in the first two months of the year), in the March-April two-months lockdown period there was a decline in foreign sales of -57.6% in value and -45.4% in quantities (expressed in KG) compared to the same period in 2019.

But the unfavourable trend also continued with the reopening of the factories, both in May (-49.7% in value) and June (-20%), making hopes of a rapid return to normality fade thanks to an immediate "rebound". Overall, in the two-month period following the forced closure, outflows were significantly reduced: -35%, both in value and in KG.

The emergency situation still in progress in all the main outlet markets (in some cases worsening with new outbreaks) certainly does not facilitate the restart of international trade.

All the main product types show significant decreases. Handbags (by far the most exported item, accounting for 65% of foreign sales) show decreases of -26% in value; suitcases around -30%; even more unsatisfactory trends in belts (-42%) and small leather goods (-40%), i.e. wallets, purses, key rings and pocket or handbag items. Equally unfavourable trends (double-digit declines) were also recorded in terms of quantity.

Looking at the items by material, on the whole, leather products - typical of Made in Italy production, which represent almost 3/4 of the total in value - show heavier contractions (in the order of -33%, both in KG and value) compared to those in substitutes, whose exports fell by about -20%.

The analysis by destination also shows decreases in quantity and value for almost all markets. There are very few exceptions: in the ranking by value, only South Korea (+1.1%) and Poland (+6.8%) among the top 25 outlet countries show an increase compared to January-June 2019 (accompanied, however, by significant decreases in KG). Thanks to this result, South Korea (which grew by 77% in value over the last three years) rose to third place in the ranking, surpassing the USA (which, on the other hand, recorded decreases of -38% in value and -36% in volume in the first 6 months of 2020).

A marked reduction (about -40%) in direct flows to Switzerland, the first export destination and longstanding logistics-distribution platform for major international luxury brands.

The European Union (now considered to be 27 countries, post Brexit) shows an overall decrease of -18% in value and -20.5% in KG: France lost 9% in value, another traditional destination for third-party production for brands; reductions of around -13% for Belgium and Holland (the latter stable in volume) and -23% for Germany, which is still the leading market in terms of quantity for Italian operators (with 3.5 million KG, down 14.8%); losses were even more marked in Spain (-38% in value) and Austria (-43.3%).

Among the non-EU countries - which overall show heavier contractions than the EU markets, -34% in value and -30% in KG - there was a significant decline in the Far East (-27.4% in value and -31% in KG as a whole), with significant falls in all major clients, excluding South Korea: China (-30% in value), Hong Kong (-47%), Japan (-30%), Taiwan (-20%), Thailand (-41%), Macao (-36%) and Singapore (exports almost halved, -48%).

Russia and the United Arab Emirates (-30.5% and -39% respectively in terms of value), as well as Canada (-29%). The United Kingdom, finally, contains a decrease in value of -13.4% (but with -25.4% in KG).

Imports of leather goods, which amounted to 1.3 billion Euros in the first 6 months of 2020, declined by 20% both in value and KG (average prices -0.2%). China, the leading supplier in terms of volumes with a share of just under 55% of the total, showed a fall of -29.3% in value (-31.2% in KGs). Less signs in value for all top 10 suppliers; France, Germany and the UK are growing in KGs.

Although the trade balance remained largely in surplus (for 2.3 billion Euros), it decreased by -35.5% compared to the first half of 2019. In the first half of the year, chapter "42" of leather goods was in sixth place for the positive balance among the 99 product chapters of which the customs nomenclature is composed; it therefore lost a position compared to 2019, overtaken by the item relating to pharmaceutical products, which jumped to third place, the balance of which increased by 51%.

The health emergency has had, and still has, profound repercussions on the confidence and spending decisions of families, first and foremost curbing those for the purchase of luxury goods (and in particular luxury goods). It has also changed habits/modality, favouring in the months of lockdown an obvious and often obligatory recourse to e-commerce, which has thus conquered new users.

Domestic demand is very weak. In Italy, retail sales of "Leather goods and footwear" - after a setback in the two-months period March-April due to the closure of shops imposed by the restrictive measures contained in the Prime Minister's Decree - showed that physical sales were still very unsatisfactory when physical sales resumed: -35.1% in May and -12.8% in June, according to the index published by Istat. The cumulative figure for the first 6 months showed a decline of -32.7%.

The impact on the sales trend in Italy, especially for high-end products, is compounded by the collapse in tourism, given the not insignificant percentage of foreigners who also visit our country for shopping.

There is a strong concern for the tightness of the production fabric: that network of companies, mostly small in size (70% of them have no more than 5 employees) that constitutes the backbone of Made in Italy leather goods.

The extensive use of wage integration tools, combined with the block on redundancies, has so far mitigated the impact of the crisis on the workforce.

The survey carried out by Confindustria Moda highlighted how, in July, 15% of the companies surveyed still had staff in smart working and how more than 88% of leather goods manufacturers have made use of the CIG, or similar instruments, since the beginning of the pandemic (with an average percentage of employees involved, among those who benefited from it, around 72%).

The data released by INPS relating to the hours of temporary lay-off fund authorised in the first 6 months (referring to the entire leather sector) confirm an unprecedented increase, starting in April (+2871% on the same month in 2019). May and June showed equally exceptional increases (+1633 and +651% respectively).

In the first 6 months of 2020, 39 million hours were authorised (4 million in the first half of last year), equal to +878%: almost 5 times the hours (8.3 million) granted in 2019.

Never had such a number of hours been authorised, not even in 2009 (23.1 million) or 2010 (29.7 million) at the height of the global economic crisis.

All the main district areas of the leather supply chain show considerable increases: Tuscany is the first region for authorised hours (about 10 million, +3080% on the first half of 2019, of which 5.1 million for the province of Florence, +3607%), followed by Veneto (8 million, +1085%) and Marche (6.1 million, +413%).

The figures for business birth-mortality in the first half of the year still obviously do not reflect the consequences of the fall in activity levels: Infocamere Movimprese's figures at the end of June recorded a balance of -69 units in the number of active leather goods companies compared to the end of December, between industry and crafts (-1.5%).
Breakdown by region, Tuscany lost 25 companies in the first 6 months; 18 in Veneto; 17 in Lombardy; 14 in Abruzzo. The negative balances of Marche (-6) and Emilia Romagna (-5) were smaller. Campania bucked the trend (15 units more than at the end of 2019). The remaining regions show 1 more company overall.

These data, not particularly alarming so far, are unfortunately destined to worsen considerably in the coming months, when the realities that have not managed to overcome the exceptional difficulties that companies have had to (and still have to) face as a result of the emergency will begin to be counted in the Chamber registers.

The cancellation of orders and non-payment (4 out of 10 participants in the Confindustria Moda survey complain of over 40% of outstanding payments) have significantly reduced the income of most companies, while the number of departures has remained virtually unchanged (for staff, suppliers, tax authorities and banks), causing liquidity crises.
Almost 90% of entrepreneurs had to revise their planned investment plan due to Covid.

Uncertainty about the duration, course and geographical extent of the pandemic obviously makes it difficult to make predictions about the short-term evolution and the time frame for the return to more profitable levels of activity.

The year 2020 is expected to close with markedly negative results. In need of a forecast of annual turnover, 44% of leather entrepreneurs indicated a drop of between 20 and 50%. On average, weighting the responses with the company size, it is estimated that there will be a decrease of around 40%, which would imply only a slight improvement in the sector's economic situation in the second half of 2020. A sample data, provided 5 months after the end of the year and subject to various variables, but still very significant.

The absence of new shocks and a gradual overcoming of the pandemic emergency in the various areas of the planet should favour a progressive recovery in demand in 2021, which could be completed in 2022.

However, we need policies, instruments and support measures that will enable companies to overcome the long and delicate phase of the current emergency to reach that point.

Milan, September 16th 2020

Financial support and digitalization
Assopellettieri solutions to support the Italian leather goods sector