Yes, the Italian Market Is on the Rise Again!

Milan’s CityLife Project, dm’s expansion to the Italian retail market and Starbucks’ Reserve Roastery plans indicate a revival of the Italian retail market.

A few months ago, I wrote about an apparent increase in attractiveness of the Italian market for foreign brands and asked, Is the Italian Market on the Rise Again? Meanwhile, Milan has seen a couple of important retail milestones and I would like to give you an update on the Italian retail market.

Milan’s CityLife Project

Project City Life, Italian Retail Market

Project CityLife, Milan (Photo: CityLife S.p.A)

Milan is already known as Italy’s economic powerhouse and as the country’s most innovative and international metropolitan city. CityLife now sets an additional landmark in Milan and forms part of a major European project to regenerate entire city areas. It transforms the historic quarter of the ‘Fiera Milano’ into a new prosperous neighbourhood in the northwest of Milan. Designed by the well-known architects Zaha Hadid, Arata Isozaki and Daniel Libeskind, CityLife consists of a residential, a commercial and a business district (still under construction) that cover an area of 366.000 sqm.

CityLife Shopping District: Milan’s New Iconic Shopping Mall

CityLife Shopping District, Italian Retail Market

(Photo: Generali)

CityLife’s commercial district was inaugurated in November 2017 with the opening of Europe’s largest urban shopping center, the CityLife Shopping District. This high-end shopping center offers a surface of 32.000sqm, 80 stores and a mix of restaurants, entertainment and services.

Real estate company Sonae Serrae, which has coordinated the marketing of the shopping center and is in charge of its operation, has chosen a mix of premium yet affordable brands. Around a third of the brands in this mix are either new entrants to the Italian retail market, new to Milan or new to shopping centers in general. Such newcomers include Chinese giant Huawei opening its first door in Europe, French group Habitat and German drugstore chain dm, which has returned to Italy after a long absence.

But even though the CityLife Shopping District has a different/niche positioning, it is in competition with other important shopping malls in Milan. Piazza Portello is geographically closest and only a few minutes away. Another big competitor is Europe’s largest shopping mall, Il Centro, which was opened in 2016 and has seen 13mn visitors and a turnover of 600mn € in its first year.

Sonae Serrae gives priority to quality over quantity of shoppers and expects around 7mn visitors by the 3rd year after opening. These will include residents of the newly built luxury apartments, the approximately 6.000 employees from the office area with its 3 iconic towers, as well as all a wide range of visitors reaching the CityLife Shopping District easily on the Metro.

German Drugstore Chain dm Rediscovers Italy

Italian retail market

(Photo: dm)

German drugstore giant dm has chosen Milan’s CityLife Shopping District to kick off its massive and ambitious retail strategy for Italy. It is the company’s second attempt at conquering the Italian retail market. The first expansion came to a halt in 2005, when dm withdrew from the peninsula to focus on other markets that seemed more promising at the time.

So, why Italy now? Because the economic conditions are more promising. The consumers’ confidence index is rising, unemployment is in decline, and above all, there has been a more general positive consumer trend in favor of drugstore chains. Furthermore, several political reforms in Italy facilitate new investments and workplaces.

dm’s Italian Expansion Plans

How does the drugstore chain intend to convince the Italian consumers this time around?

The expansion focus for the coming three years is the Northern part of Italy, with Tuscany as the southernmost border of dm’s presence on the peninsula. The company’s eager plan is to surpass 100 stores after 3 years, of which 40 stores should be inaugurated by the end of 2018. At the time of writing, four stores are already open: Milan (Lombardy), Laifers  (Trentino Alto Adige) and two stores in Udine (Friuli-Venezia Giulia).

Furthermore, dm’s company strategy is to strictly maintain all branches as own or operated stores in order to keep the service quality on the same high level overall.

What Else is New on the Italian Retail Market?

Italian Retail Market

Milan’s Palazzo Delle Poste (Photo: Starbucks)

By end of 2018 also Starbucks is planning to open its first European flagship roastery location in Milan. Set to open in late 2018, the Milan Reserve Roastery will be the first Starbucks Roastery to open in Europe. Starbucks kicked off the remodel with a dramatic unveiling of its building of choice. Located in the historic Palazzo Delle Poste building, this one-of-a-kind 2.320sqm retail space will feature the company’s premium coffees served in a beautiful and iconic environment.

Once the new Roastery is up and running, Starbucks’ Italian licensee Percassi will open a small number of further Starbucks stores in Milan. Starbucks’ strategy on the Italian market is a strong focus on taking a respectful and measured approach to expansion to cater to the local context and community.

A few months back, both the strategist and the consumer in me were looking forward to seeing the impact of the promising changes on the Italian market that I wrote about at the time. Now, it looks like my optimism in Italian retail was well-founded, as Milan’s CityLife Project, dm’s expansion to the Italy and Starbucks’ Reserve Roastery plans illustrate. Yes, the Italian market is indeed back on the rise!

About the Author:

Isabell Guidastri has worked with brands on their local and global brand distribution strategies, including many well-known global retail and branding powerhouses. She supports brands in their expansion and helps them find their footing in new markets. Traditional wholesale in Germany, brand distribution New Zealand and Australia, or franchise in Turkey are just a few of her recent virtual project travels. But above all, Italy and the challenges of Italian market expansion are her great love, since marrying an Italian and now commuting between Germany and Modena, Italy – home of fast cars and slow food. You can best reach her via email or read more of her work here.

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