World of Fashion
Italy’s Fashion Industry Keeps Flourishing: Investment Trend Indicates Industry 4.0 and Sustainability
By Yvonne Heinen-Foudeh, Senior International Correspondent
Italian fashion design enjoys a global reputation. With high export quotas, the Southern European state remains competitive as a production location. “Made in Italy” is an established mark of quality that is recognized internationally. Milan Fashion Week and the Pitti Immagine trade fairs in Florence are business hotspots for brand manufacturers.
Mid of January, over our round trip through the North of Italy to investigate The Needle’s Eye on this feature bi-annual menswear fair, the Pitti Uomo menswear fair showed a busy and confident atmosphere amid all economic uncertainties impacting international marketplaces. Strong export orientation, competitive production costs, and regional networks ensure the importance of the Italian fashion market, also for international suppliers.
According to the report “The Italian Textile Industry” by the foreign trade agency ITA, the Italian textile and fashion sector recorded a production value of € 54.6 billion (~ US$ 61 bn) in 2024. Of this, 41 percent was attributable to the clothing sector. The Italian fashion industry achieved a trade surplus of € 12 billion (~ US$ 13.8 bn). The gross value added of the textile, clothing, and leather industry was around € 26.8 billion (~ US$ 30.9 bn).Fashion ranks third among economic factors.
In the clothing, leather goods, textiles, and accessories divisions, the Italian clothing industry is one of the country's most important industrial sectors. With around 47,000 companies, 461,000 employees, and annual sales of over €96 billion (~ US$111 bn), the Italian clothing industry is one of the country's largest industrial sectors, ranking third after mechanical engineering and food and above the country’s strong automotive sector. (Source: GTAI, Germany Trade & Invest). For 2025 and 2026, the analysis institute Cerved forecasts real sales growth of 1.1 percent and 1.3 percent, respectively.
The sector is strongly export-oriented. Overall volume amounted to €43.7 billion (~US$50.4 billion) in 2024. The most important sales markets include France (14.8 percent), Germany (9.5 percent), the US (9.3 percent), China (6.6 percent), Spain (5.5 percent), and Switzerland (4.6 percent). As a result of potential trade barriers, such as US tariffs, companies are considering focusing more strongly on markets in Southeast Asia and the Middle East. “In 2024, the clothing industry lost 6 percent of its sales. In addition to global crises, the Chinese middle class's loss of purchasing power is also leading to painful cuts. As a result, companies are increasingly targeting the Middle East, the rest of Asia, and Latin America for exports,” explains GTAI analyst Torsten Pauly to The Needle’s Eye.
Italy's apparel imports amounted to € 28.9 billion (~US$ 33.7 bn) in 2024, mainly from China (13.9 percent), Spain (10.2 percent), France (8.4 percent), the Netherlands (7.5 percent), and Germany (7 percent). France is also an important production hub for Italian brands owned by international corporations, such as Kering (which owns Gucci, Brioni, and Bottega Veneta). "After China, which is also the largest importer into Italy, countries such as Spain, France, Germany, and the Netherlands, as the destination port for international trade routes, follow as trading partners whose products are more expensive than those from the Far East. Conversely, France and Germany are among the largest export markets in Europe. However, “the US, which is the third-largest export country, is causing a lot of uncertainty under the Trump administration, and it is not entirely clear where this is heading," Pauly further emphasizes.
Moderate wages, abundant expertise, and well-trained professionals
Italy remains relevant for international suppliers – both as a sales market and as a production location. The combination of craftsmanship, brand awareness, and export strength remains the foundation of the Italian clothing industry.
The main production regions include Tuscany, Veneto, the Marche, and Piemont. Regional clusters, such as those in Prato and Treviso, strengthen competitiveness. For comparison, let's take a look at wage levels in industry: gross hourly wages are about 28 percent below those in Germany, Europe's largest economy.
The industry is predominantly characterized by SMEs. Many businesses boast long-standing experience and stable supply structures. Production relocations are rare, as flexibility and short distances are considered location advantages. Unlike in other countries, numerous companies have been able to assert themselves.
Among the most established medium-sized companies are Herno, Manas, and Peuterey. Herno recently generated sales of around €153 million (~ US$178 million). Internationally active family businesses such as Calzedonia, Max Mara, Moncler, and Lardini also shape the structure. Andrea Lardini, chairman of Lardini srl over our visit in Filottrano, Ancona Province, shares the secret of success for their fashion house, founded by three siblings in 1978: «The sartorial garment should not cover but dress».
Solid sector resilience…Confindustria Moda also reports an increase in fashion design sales to €111.7 billion (~ US$130.8 billion, up 3.2 percent) for 2023, albeit with declining margins. President Ercole Botto Poala, for the period, speaks of the “resilience of the industry” despite global uncertainties. Annarita Pilotti, president for 2024, warns of declining demand and calls for government support in tax and training issues, as well as sustainability.
…challenged by severe supply chain issues Not addressed in the association’s report. In the course of July 2024, due to official investigations at a series of Italian luxury houses several luxury brands have been placed under Milan court administration for allegedly facilitating the exploitation of workers by subcontractors abroad: Among them: Armani Group, Italian fashion house Loro Piana, Dior Manufactures SRL producing the brand’s handbags, both owned by French giant LVMH, leather goods maker Alviero Martini, famous for its geographical map prints.
…challenged by severe supply chain issues Not addressed in the association’s report. In the course of July 2024, due to official investigations at a series of Italian luxury houses several luxury brands have been placed under Milan court administration for allegedly facilitating the exploitation of workers by subcontractors abroad: Among them: Armani Group, Italian fashion house Loro Piana, Dior Manufactures SRL producing the brand’s handbags, both owned by French giant LVMH, leather goods maker Alviero Martini, famous for its geographical map prints.
Domestic sales of clothing remain steady
“Italy is one of the few Western European countries where clothing is as important as it was many decades ago,” emphasizes Torsten Pauly from the foreign trade agency GTAI in Berlin.
There are several reasons for this. Firstly, many luxury brands, such as Gucci and Kiton, are emerging in the country. Likewise, the so-called Alta Moda, from the Olympus of Italian tailoring, made from exquisite materials, is produced domestically and is traveling here at the highest international level. In addition, a glance at the aforementioned import statistics shows that Italians simply spend more money on clothing, much like they do on food.
The average net income per capita in Italy in 2023 was around US$29,431 or €26,400. Eurostat puts the average gross monthly income at €3,529 (~ US$4,100). The population at the end of 2024 was around 58 million. There are around 25 million households, of which 75.9 percent own their own homes, according to TRADING ECONOMICS.
There are significant regional differences in income distribution: while the average annual income in Milan is around €34,885 (~ US$40,770), in Foggia in Apulia in southern Italy, for example, it is only €14,554 (~US$17,023) [source: daily newspaper “Il Sole 24 ORE”].
Then again, in December last year, Italian police visited the headquarters of 13 high-end fashion firms, demanding documents on governance and supply-chain controls as part of an investigation into alleged exploitation of workers at subcontractors in China, judicial papers show, Reuters reported. Suspicion alone can bring a company into the investigators' crosshairs. Under EU law, companies can be held legally responsible for crimes committed by their suppliers.
Strict transparency – also in the interest of consumers
Clear statement here too regarding the consequences of ESG compliance violations within the EU: The terms imposed, along with the court’s findings, give affected companies time to reorganize their systems of checks on external suppliers to ensure future compliance with existing labor laws. This gives end consumers more certainty that their purchasing decisions will in no way support the criminal exploitation of workers.
Warning shots heard
for companies to invest in transparency and compliance with environmental, social, and governance (ESG) regulations throughout their procurement processes. According to a recent report by the Italian Textile Industry (ITA), 72 percent of fashion companies have implemented targeted measures to promote environmental and social sustainability.
The Fashion Pact, a coalition of major brands including Kering, Prada, Moncler, and Chanel, has launched a European Accelerator pilot to improve supplier data collection. Developed with Camera Nazionale della Moda Italiana and supported by environmental sustainability consulting firm Quantis (part of Boston Consulting Group since 2022), the project tested a shared questionnaire with 74 Italian suppliers to standardize reporting on energy, water, and waste. That initiative aligns with updated SBTi guidance calling for higher-quality supplier data in Scope 3 reporting. Standardization across brands and suppliers aims to reduce duplication, improve comparability, and strengthen the accuracy of emissions modelling across the fashion value chain.
The northern Italian region of Lombardy, with its capital Milan, has its own funding scheme to promote environmentally friendly textile and apparel manufacturing as part of its Smart Specialization Strategy. To support corresponding investments in the fashion industry, Italy is also using €150 million (~ US$175 million) in funding from the European Union's Recovery and Resilience Facility (launched in 2021 during the coronavirus crisis to stimulate the economy, running until 2027).
Despite the expertise that still exists in the country, the challenges cited include a shortage of skilled workers, an aging workforce, and the costly transition to sustainable processes. In addition, 85 percent of the companies surveyed describe innovation as a key factor in their competitiveness, particularly in terms of materials and processing methods.
In any event, according to the ITA, Italian fashion designers of all shades are continuously investing in product development and design. 68 percent of manufacturers see this as a decisive competitive advantage. Success factors include craftsmanship, short delivery times, and flexible structures.
Networked production is key
An essential transformation trend in the Italian fashion industry is the adoption of production networking enabled by 5G and artificial intelligence. In Prato, near Florence, the first Italian Industry 4.0 cluster in textile and clothing manufacturing has been established: PRISMA (Prato Industrial Smart Accelerator). A total of 3,500 companies in the industry operate in Prato and the surrounding area.