Number and Relative Position of Companies in the Rankings

The number of companies in the populations decreased significantly over time. In Spain, the drop was dramatic. In 1973, the list of the top 400 Spanish companies included fifteen fashion businesses; this number dropped to nine in 1983 and bottomed out at two in 1993. The new millennium saw a partial recovery, with four and six fashion companies ranked in the top 400 list in the years 2003 and 2013, respectively. As for the Italian companies, the bottom was reached in the 1980s when the companies in the population dropped from thirty (1973) to only eleven (1983). After a partial recovery in 1993 (fifteen) and 2003 (twenty-two), in 2013 the number of companies decreased again to nineteen. These trends might be explained by the facts that in Italy big companies were important in the age of Fordism and that some decades later, globalization made it necessary to invest huge amounts of capital in brand building and retailing.

Despite their reduced representation in the overall populations, fashion enterprises improved their positions in the rankings in both countries. While the largest fashion companies in Spain dropped several positions in the list of 400 between 1973 and 1993, and in some cases dropped out of the list, in the early twenty-first century a recovery was observed, with the largest fashion firm ranking twenty-fifth and twentieth in the lists in 2003 and 2013, respectively. The distribution by company size shows a quite similar trend: between 1973 and 2003 fashion firms in the 100 largest companies increased from 7 percent of the population in 1973 to 43 percent in 2013. In summary, big Spanish fashion companies decreased in number, but increased in size.

As to distribution by company size in the Italian rankings, the main changes that took place over 1973–2013 can be fully appreciated by comparing the first benchmark year with the last. In 1973, most of the companies were ranked between 200 and 400. While they were less numerous in 2013, they performed better in terms of revenues to the point that most of them achieved higher rankings.

In general terms, we observed a reduction in the number of fashion companies among the 400 largest firms in both countries, but also some important differences. The Spanish companies became less numerous, but at the same time they reached comparatively higher positions in the rankings; in sum, there are fewer of them, but they are now comparatively larger in the national economy than the Italian firms are in the Italian economy. Moreover, while the number of Italian companies bottomed out in 1983, reflecting the watershed in the industry during the 1970s, in Spain this happened a decade later, in 1993, following the watershed of the 1980s.

Figures 1 and 2 contrast the Italian and Spanish fashion industries in terms of turnover of companies and average rankings. A turnover of firms is clearly discernible in both countries throughout the entire period. Yet, in Italy, in each benchmark year (except 1983) the number of the firms that entered the rankings for the first time, or moved up the rankings, was greater than the number leaving. Figure 1 might lead one to conclude that Italy offered more growth opportunities to a greater number of fashion companies than Spain, but this is not the full picture. As shown in Figure 2, the average ranking of the few Spanish firms (black line) was higher than the average ranking of their Italian counterparts (gray line) throughout the entire period. The picture that emerges is of a Spanish fashion industry characterized mainly by the presence of big companies, whereas Italy features a greater number of companies with smaller differences between them in revenue terms.

Figure 1 Turnover in Italian and Spanish fashion companies, 1973–2013.

Figure 2 Average rankings of Spanish (black line) and Italian (gray line) fashion companies, 1973–2013.

Companies’ Main Activities

The evidence showed that, for the second element, the fashion companies’ main activities, Spain experienced a major transition from textiles to clothing. In 1973, the majority of the population consisted of textile companies, with cotton, wool, silk, artificial, and synthetic fibers being the main fields of activity.^{Footnote 21} During the following years, clothing became preeminent; in 1973 it was relatively marginal, but by 1993 it was the main activity in the sample. Thus, during this period, clothing replaced textiles in Spanish industry. The few companies active in the leather and footwear industry in 1973 disappeared from the top 400 population between 1973 and 1983 and were not replaced by other large firms in the same area.

In 1973 the textile industry was also the largest sector in Italy in terms of number of firms and revenues. Clothing companies were almost absent from the rankings at that time, but thereafter increased in number and, from the 1980s, became the main protagonists in the sample. The primacy of Italian clothing firms, however, has been partially eroded by the increase in the number of leather and footwear companies, such as Prada, Salvatore Ferragamo, Gucci, and Tod’s, that entered the rankings starting from the 1990s.

We can, thus, argue that in both countries textiles were replaced by other activities, particularly clothing, leather, and footwear in Italy and clothing in Spain. However, the transition from textiles to clothing in Spain happened a decade later than in Italy.

Company Life Span and Survival

The third trend we observed was a drastic effect on the oldest of the bigger corporations, which were largely replaced by relatively recently established companies. In Spain, almost all the large “old” textile companies established before World War I disappeared from the sample between 1973 and 1983. Other textile companies (especially cotton fabrics) created in the 1940s and 1950s were also unable to maintain their positions in the ranking in the early 1980s; in some cases, they did not even survive and went bankrupt in the late 1970s and the 1980s.^{Footnote 22} Corporations established in the interwar years remained in the sample until the benchmark year of 1993, along with other companies, established in the late 1960s and early 1970s, engaged in the production of artificial fibers.^{Footnote 23} Only two companies, both in clothing, survived long term: Industrias y Confecciones, controlled by the big department store El Corte Inglés, and Cortefiel, established in 1880.^{Footnote 24}

The 1990s, thus, represented a watershed in the history of the Spanish fashion industry, as our company population confirms. In 1993, the rankings included only two fashion companies: Industrias y Confecciones, the only survivor of the large Spanish companies of the “old generation”; and Inditex, a representative of a “new generation” of Spanish fashion firms established in the 1980s and 1990s that includes PuntoFa (Mango) and Abasic (Desigual).

The analysis of company life span in Italy shows that the period 1973–1983, which started with the “oil shock,” was a watershed in the history of the Italian fashion industry in many respects. During those years all the companies established before World War I dropped out of the top 400 ranking. Some of them reappeared in the benchmark year 1993. With two exceptions, Ermenegildo Zegna and Prada, they exited again from the rankings a few years later. The energy crisis of the 1970s also decimated the companies that had been established in the interwar period. As a result, the number of top Italian fashion companies decreased greatly between 1973 and 1983.

The Italian companies that remained in the rankings were mainly established after World War II. Those that survived the 1970s crisis were strongly innovative both in terms of product and in their production processes. Among them, Carrera is synonymous with jeans, Ellesse with sportswear, Benetton with multicolor knitwear, Miroglio with new dyeing techniques, and Gruppo Finanziario Tessile with ready-to-wear clothing produced in collaboration with fashion designers. Finally, all the companies that entered the rankings in the new millennium were established after the mid-1970s. Despite a decrease in their number between 2003 and 2013, their presence has significantly changed the composition of the population of Italian firms ranked among the top 400. As a result, by the last benchmark year, the rankings had polarized into “young,” well-known fashion brands—such as Giorgio Armani, Dolce e Gabbana, Valentino, OTB (Diesel), Tod’s, and LIR (Geox)—and well-established brands—such as Gucci, Ferragamo, Ermenegildo Zegna, and Prada. Therefore, in the 1970s the older Italian companies tended to go into decline, as happened later in Spain.

Company Ownership Structures

All companies, in both countries, had a relatively concentrated form of ownership and were controlled by two kinds of shareholders: locally based private investors, families for the most part, and foreign investors, in some cases in partnership with local shareholders. We have categorized as “foreign companies” those firms in which a foreign shareholder held 50 percent or more of the voting stock.

Using this criterion, we found that family firms were more common than foreign-owned companies in every benchmark year in Spain; in 1993, indeed, none of the companies were in foreign hands. The main family firms listed in the early benchmark years produced cotton, wool, and silk textiles, leather and footwear, and clothing, while the foreign-owned companies concentrated on the production of artificial fiber textiles.^{Footnote 25} The discontinuity, which emerged in the 1990s, changed the names of the main protagonists, but not their nature. Essentially, new Spanish family firms and foreign-owned firms replaced the previous family and foreign-owned companies. In the last benchmark year, 50 percent of the companies in the industry were in foreign hands, being basically local branches of foreign companies, and 50 percent were in the hands of Spanish shareholders.

In the benchmark years, the Italian landscape was dominated by privately owned fashion companies. The vast majority were family-owned and were, fully or in part, family-run businesses. Since the 1990s, foreign competitors have either taken over, or taken substantial holdings in, an increasing number of Italian fashion companies. Just few—Gucci, Valentino Fashion Group, and Loro Piana—are listed in our database. Gucci was acquired by the French group Kering (formerly PPR) in 1999. The Valentino Fashion Group has been owned by Qatari Mayhoola for Investments since 2012. Loro Piana passed into the hands of the French group LVMH at the end of 2013. In the last benchmark year, foreign companies represented only 21 percent of the population. Thus, we can conclude that mergers and acquisitions (M&A) activity did not significantly affect big Italian fashion companies up to 2013.

Although the Italian case is characterized by a recent trend in foreign acquisitions of former “national champions” in the fashion industry, our data show that foreign companies in this field are more common in Spain than in Italy.

Geographic Distribution

As for the geographic location of the largest fashion companies in Spain, we observed a persistent concentration of fashion companies in the Madrid area and in Catalonia, with some large companies emerging in other regions. Madrid hosts the two most enduring Spanish clothing companies, Industrias y Confecciones and Cortefiel, whose presence is detected in almost all benchmark years. More recently, Madrid has also become the location of the Spanish headquarters of foreign fashion multinationals with presences in Spain. Catalonia was the main Spanish textile region par excellence and was the cradle of the Spanish industrial revolution in the sector.^{Footnote 26} The decline in traditional textile activities is reflected in the decline of Catalonia as a home for companies in this field, although Barcelona has been able to rebuild its competitive advantage in this sector and today hosts the headquarters of large clothing companies such as Mango and Desigual. Other areas hosted big companies in some benchmark years, but these later disappeared. The textile companies Hytasa and Intelhorce were established in Andalusia in 1941 and 1957, respectively, but their performance increasingly declined during the 1970s, and they were not included in the 1983 population.^{Footnote 27} In 1973 the Valencia area hosted the main Spanish shoemaker and the first Spanish denim clothing manufacturer.^{Footnote 28} In recent years Andalusia and Valencia have been replaced in the rankings by Galicia, which today hosts the headquarters of Inditex, the largest Spanish corporation.^{Footnote 29}

The changes that took place in Italy between 1973 and 1983 also affected the geographic locations of the largest fashion companies. Some, mainly the youngest, were established in Milan, which emerged as a fashion hub in the 1980s. As a result, the northern Italian regions of Piedmont, Lombardy, Veneto, and Emilia Romagna, which already hosted the majority of firms before the 1970s, further increased their preeminence in this sector. Among the fashion companies located in other regions, just a few—Manifatture Cotoniere Meridionali (1973), Calzaturifici Filanto (1993), and It Holding (2003)—were in the south. The remaining firms—such as Ferragamo and Tod’s—are located in regions that boast long manufacturing traditions, Tuscany and Marche. Thus, far from being scattered throughout the country, the fashion industry is deeply rooted in the areas where Italian industrialization first took place. In terms of geographic distribution, continuity prevailed over change in both countries, with few exceptions.

In synthesis, the Italian and Spanish fashion companies ranked among the top 400 by revenue in the period 1973–2013 have strong similarities as well as interesting differences. The shift from textiles to clothing stands out as the main structural change that has affected the fashion industry in both countries, along with a generational change that, according to our database, occurred in the 1980s. Among the notable differences is the increase in the number of Italian leather and footwear companies in the new millennium. This trend, which is clearly discernible in the Italian fashion industry from the 1980s, has not been seen in Spain. Furthermore, the Spanish fashion industry experienced its major transition from textiles to clothing later than its Italian counterpart, and diversified into the textile, clothing, leather, and footwear industries to a lesser extent. Finally, over the last decades, Italian companies have increasingly fallen into foreign hands.

The main findings of the comparison between the fashion industries in the two countries allow us to put forward some conclusions. At a country level, as previously discussed, the main finding is that similar changes affected the largest Spanish and Italian corporations, but not at the same times and rates or to the same degree. Our comparative analysis therefore corroborates the claim that, in the textile and clothing industries, “country distinctiveness has become less apparent.”^{Footnote 30} Furthermore, it shows that the first intimations of this converging trend date back to the 1970s, the years when imports from newly industrialized countries began to penetrate western markets. The increasing competition faced by European textile and clothing manufacturers since the 1990s, following the signing of the World Trade Organization Agreement on Textile and Clothing (1994), consolidated the earlier tendency. The comparison between Italy and Spain thus provides evidence that globalization is changing the nature of competitive advantage itself, which is not country based to the same extent as hitherto.

Second, at the industry level, a divergent trend has affected textiles and clothing. More specifically, the textile industry in both countries has proved to be more vulnerable to international competition than the clothing industry. As it is more capital intensive than the clothing industry, the textile industry has experienced greater reconfiguration difficulties. More labor intensive, and consequently more flexible in adapting to change, the clothing industry instead introduced high value-added activities.

Third, within this general framework, the main differences between the Spanish and Italian fashion industries—such as the greater drop in the number of large Spanish firms, when compared with Italy, between 1973 and 1993, and the bigger size of the Spanish firms—can be better understood at the company level. Spanish firms diverged from the historical path that searched for lower production costs at a later date, and thus suffered from changes in international competition to a greater extent than did their Italian counterparts. The very few that moved away from that obsolete paradigm focused on technological developments and capitalized on the retailer’s search for smaller quantities of more varied goods and for shorter throughput times, both of which were more in line with increasingly volatile consumer purchasing behavior. As explained in the following section, the Italian companies initially targeted sophisticated and demanding consumers. Their smaller sizes were therefore better suited to niche markets than to the mass market exploited by the biggest Spanish companies.

Top Spanish Fashion Companies in the Last Benchmark Year, 2013

The story of large companies in Spanish fashion between the last quarter of the twentieth century and the first fifteen years or so of the twenty-first century is a history of business concentration. In the first of the benchmark years, the list was generally made up of a significant number of relatively big companies focused on a single business (in most cases, textile production) and oriented to the domestic market. Nearly forty years later, we find a completely different situation. Only six companies are listed among the 400 largest corporations, but distinct from their 1973 homologues, they are now big companies, sometimes of impressive size, such as Inditex.^{Footnote 31} These firms are substantially different from the largest corporations in 1973 and, to varying degrees, are largely diversified and have global presences.

If we look at the identity and historical origins of these companies, two facts immediately stand out. The first is that half of the largest firms, three out of six, in the Spanish fashion industry belong to foreign investors; the Swedish Hennes & Mauritz, the Dutch C&A, and Cortefiel, a onetime Spanish family business that was bought by the British investment fund CVC in the early 2000s. The second is that, despite the large number of Spanish companies listed in 1973, none of the three top Spanish companies has a long history. Inditex, Punto Fa (Mango), and Abasic (Desigual) are all relatively new firms and, interestingly, also have quite different origins and features.

Inditex, currently the premier global fashion retailer, is the oldest group. Its history and business model have been investigated extensively.^{Footnote 32} Amancio Ortega, the founder, was the son of a railway worker, who decided to learn how to produce handmade clothing and founded his textile and clothing manufacturing company in the early 1960s. In the 1980s, production capacity increased sufficiently to cover the national market, garment sewing was outsourced to independent workshops, and the holding company Inditex was established. While its first steps toward internationalization were taken in the 1980s, it was at the end of the twentieth century that Inditex became a global company.^{Footnote 33} In 2015, Inditex had 7,013 stores and was present in 88 physical markets,^{Footnote 34} with highly flexible production of products ranging from clothes, through shoes, to accessories.^{Footnote 35} Inditex’s flexibility is made possible by the use of advanced technology in their logistics and production processes (which have been largely robotized since the 1990s) and by an efficient combination of vertical integration and outsourcing (located near and far from their headquarter facilities).^{Footnote 36} This flexibility allows Inditex to respond to the needs and tastes of consumers in accordance with the imperatives of fast fashion.^{Footnote 37} Amancio Ortega has always been media-shy, but existing biographies describe his business ideas.^{Footnote 38} Although the beginnings of his company are rooted in traditional clothing production, Ortega’s success is based on his ability to take advantage of new technologies in the field, which made him a pioneer in the emerging fast-fashion industry. In synthesis, he is an entrepreneur from an old sector who revolutionized the sector from a production perspective.

The second large Spanish protagonist has a very different, and shorter, history. Punto Fa, better known as Mango, was founded in 1984 by two brothers, Isak and Nahman Andic, whose family had migrated to Barcelona from Turkey some fifteen years previously. The first Mango shop imported and sold ladies’ clothes. During the 1980s and early 1990s, the company consolidated its business model based on a just-in-time system and a retail network. It started its internationalization process in the 1990s.^{Footnote 39} Although its strategy may seem similar to that of Inditex, some important differences are evident. First, Mango is still much smaller than Inditex^{Footnote 40} and it has only ever designed and distributed its products; production has always been outsourced. Second, Inditex collaborates with several European suppliers, but most of Mango’s production is based in the Far East. Consequently, whereas Inditex constantly changes its collections, Mango is not able to change them more than four times a year, which means that its fast fashion is not as fast.^{Footnote 41} Third, Mango focuses on a single brand.^{Footnote 42} Fourth, the companies have different advertising strategies, Inditex being quite conservative, and Mango much more active. Behind the different business models are different kinds of entrepreneur. Isak Andic, Mango’s main shareholder, is not experienced in textiles or clothing design or production. Since its very beginnings he has focused on commerce and developing the main competitive advantages of his company in the field.

The third large Spanish company followed another growth path. Abasic, better known as Desigual, is the smallest and most recently formed of the three groups. Desigual was founded in 1984 in Ibiza by the Swiss brothers Christian and Thomas Meyer. Thomas, who today owns almost all of the company’s shares,^{Footnote 43} began as a fashion designer. The young company went bankrupt in 1988. However, it moved to Barcelona and slowly started to consolidate. The impressive growth of the company started only in 2002, when Manel Adell, a manager with no experience in the fashion industry, entered the company. The combination of Meyer’s creativity and Adell’s managerial skills proved successful.^{Footnote 44} Unlike its main competitors, Inditex and Mango, Desigual did not aim to retail huge quantities of items to its customers prior to the early 2010s. Desigual is smaller than Inditex and Mango, but it expanded tenfold from 2007 to 2014. In 2014 it had outlets in 109 countries, but around 90 percent of its sales were still in Europe.^{Footnote 45} If Inditex’s and Mango’s success are based, respectively, on production and retail, Desigual’s is based on design and fashion creation.

Top Italian Fashion Companies in the Last Benchmark Year, 2013

A detailed analysis of the origins and development of the twenty-two largest Italian fashion companies would not significantly improve our knowledge of the Italian fashion industry as a whole. As they are all engaged, to a different degree, in the design, production, and distribution of clothing and accessories under well-known brands, they can be grouped according to various criteria on the basis of their business orientations.

Some—Ferragamo, Prada, Gucci, Zegna, Loro Piana, Max Mara, and Tod’s—are mainly product oriented. These companies have decades-long histories, boast solid industrial foundations, and rely on proven knowledge and experience in product and process innovation that are deeply rooted in the specific industrial sector—textiles, leather, or footwear—where the founders took their first steps. Keeping these sectors as their main fields of activity, the founders entered the clothing business, pursued brand expansion strategies, and invested in retailing to get closer to the final consumer. Lir and Miroglio can also be considered product-oriented companies, but as we will show, the market segment in which they operate and, consequently, their brand strategies, make them quite different.

Other companies are mainly brand oriented. Among them are those established by well-known fashion designers, such as Giorgio Armani and Valentino, who in the 1970s collaborated as consultants with industrial clothing companies that marketed their fashion collections in foreign markets. The industrial capabilities, royalties, and organizational skills provided by their industrial partners allowed those fashion designers to become financially and managerially independent, to the point that they established their own companies. Soon, their brands gained foreign recognition that paved the way for the global success of a new generation of fashion designers. Other companies—the Benetton Group, T&M Holding, Calzedonia, and Engifin—are strongly retail-oriented firms and their success, in general, is due to their franchise networks.

Italian fashion companies can also be grouped based on market segment. Most are listed among the top 100 luxury companies in the world,^{Footnote 46} that is, they are among the companies that produce expensive, exclusive items aimed at high net worth individuals, mostly sold through selective channels.^{Footnote 47} The remaining companies—Benetton Group, T&M Holding, Calzedonia, Engifin, Lir, and Miroglio—are positioned at lower levels of the fashion scale.

Finally, the Italian fashion companies can be grouped on the basis of brand strategy. In this respect, there are mono- and multibrand companies. They manage in-house brands or, alternatively, a mix of in-house and licensed brands. Brand strategies can be mainly focused on core business or diversified into a variety of sectors. Most of the Italian fashion companies pursue diversification by managing a portfolio of mostly in-house brands, which allows them to leverage their know-how in product sectors related to their core businesses, to reach customers with different purchasing power, and to obtain financial resources by exploiting synergies with perfumery and cosmetics.

This analysis of the reconfiguration of the large Spanish and Italian corporations between the last quarter of the twentieth century and the beginning of the twenty-first century is summarized in Table 3.

Table 3 Comparison of top Italian and Spanish fashion companies, 2013