Giorgio Armani SWOT and PESTLE Analysis

Strength

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Weakness

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Opportunity

1. Shifting market trends: The fashion market is witnessing massive shifts in terms of geographical locations. Asian market is growing at an exponential rate and looks highly promising in terms of the fashion segment. According to a McKinsey report published in 2018, China will overtake the US in 2019 as the most significant fashion market. India is another fragmented market with a vast potential for the fashion industry. Mature manufacturing segment, growth in disposable income, increased internet penetration seem to be the driving factors for this growth. By 2022, India is expected to have about 690 million smartphone users, which can be leveraged to the advantage. Europe will also see active spending patterns from the growing middle and upper middle-class sectors of its economy. Armani has already set up its presence in Southeast Asia with its first store in Jakarta recently. Expanding more into the parts of Greater China will provide a lucrative business for the company.

2. Rental, Resale and refurbished market: The recent years are seeing a tremendous shift in consumer behavior, mostly propelled by Millenials. Millennials, also called the youth, are the primary consumers of the fashion industry. What they seek in the present days is ‘variety.’ Research has revealed that the frequency of purchase of clothing has increased to 1.6x than compared to 2004. But, it was also observed that the consumers now use them only for about half the life span as they previously used. Prices of clothing are on the rise year on year. So for the consumers, to have a balanced expenditure, they are looking for options like refurbished, second-hand retail or rental clothing. RealReal, a company valued at around $450million, sells slightly used luxury goods at a rate of up to 10% of the original price. Established brands like Stella McCartney have also entered the market by getting into a partnership with RealReal to sell their clothes on a pre-owned or rental basis to the consumers. This allows them to widen consumer awareness thereby expanding store reach. Many consulting firms have already predicted that the majority of the new companies in the fashion industry will be shifting towards this business model. Armani should also find the right business model to enter into this, before it's too late.

3. Advent of Smart Materials: The United Nations has released SDGs (Sustainable Development Goals) in association with the Paris Climate Agreement for luxury goods. With this, the forecasted impact of the sustainability in luxury products is going to play a key role in the next ten years. For the same, venturing into smart materials will play a vital role going forward. Products like polymers that are biodegradable can be used for the same. Apart from providing the functional benefit that the usual apparels provide, it also provides additional benefits like energy efficiency and budget or economical pricing. Added to this, it is also easier to scale this material. Due to the shift in technology trends, customer expectations are also likely to change in the next 10 years in terms of what functional benefit can be for apparel. Materials like carbon fibre offer functional benefits like controlling the temperature and USB charging. Added to these benefits, they are also economical, safe and offer several health benefits.

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Threat

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Political

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Economic

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Social

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Technological

1. Online marketplaces ushering a paradigm shift in shopping habits: Technology adoption has engulfed every industry and is changing the experiences of both consumers and producers. The fashion industry has not been left alone. With e-commerce on the rise, customers love to enjoy the convenience of shopping from their homes. On the other hand, it has created a platform for many budding designers and entrepreneurs to set up online clothing store with a click of a button. Many people have used Etsy to sell homemade jewelry, clothes without any investment. GirlBoss Sohpia initially started selling vintage clothing on eBay and is currently worth over $280 million. In this way, the customers are being exposed to several diverse options. Directly or indirectly, some of them are also posing a threat to the long-established branded fashion lines like Giorgio Armani as well. Getting clothes on rent has also become a new trend from several online platforms. Suits, shirts and footwear are all available for rent. Armani has recently started to increase its presence in the mobile phone advertising where close to 40% of its interaction occurs. It can strategically focus more on the technological advancements it can incorporate in their existing e-commerce platform and stay ahead by using Artificial Intelligence and Machine Learning.

2. Digital Influencers fast gaining traction: Technology is profoundly enhancing customer decision making. Digital marketing, as we all know, is the new buzzword. But, fashion brand marketing nowadays is mostly done by fashion influencers, bloggers than by the company themselves. Instagram, WeChat, Facebook are their playgrounds. BeckyLi is a fashion blogger from China who has about 3 million followers on Weibo and 4.5 million followers on WeChat. Companies are tying up with these influencers to promote their brand forward. Some influencers are also starting their fashion lines. The consumers have become more rational these days, rather than running behind the latest trends. These influencers are acting as helpers in a customer’s decision making by increasing consumer engagement. Another influencer named Anatasia Beverly hills has posted about 60 latest clothing pictures a week to stay connected with their followers. Armani is working its way in the digital media by running marketing campaigns. FramesofYou is one such campaign where the company has tied up with VideofyMe where it encouraged users to post videos with their favorite sunglasses. #Atribute was a campaign where Armani celebrated its 40th anniversary by adding a new post every week for 40 weeks. It maintains the reach to its customers using around 25 Facebook pages, 2 Instagram accounts, and 2 Twitter handles. Solid and Striped is a US-based swimwear company that has about 316,000 followers on its Instagram page. The company which makes the most of these platforms by using the influencers in the right way will stay at the top.

Legal

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Environmental

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