The lifting of UN sanctions on Iran came as a boon to the fashion industry in Italy, which has now become the first European country to take advantage of the changing political scenario for the benefit of its multinational luxury fashion industry.
With an aim to establishing a strong presence in the Iranian markets, increase trade between the two nations and reinforce industrial cooperation, Italy signed an agreement with the former earlier this week. This took place during the Italian Prime Minister Matteo Renzi’s two-day visit to the country. He was accompanied by a delegation of 60 business leaders from different sectors, including energy, railways and defense.
The deal was signed by the National Textiles and Fashion Association Sistema Moda Italia (SMI), which represents a sector worth more than €52 billion ($59 billion) in revenue, and its Iranian counterpart the Tehran Garment Union (TGU). As per this deal, there will be smoother, a more seamless trade relations between the two countries, making it easier for the Italian companies to obtain the TGU license required to operate in Iran.
According to some analysts, the oil-rich country, with a population of nearly 80 million, has over 3 million people who are regular buyers of luxury goods, something that will be of much value to the Italian luxury brands, like Versace, Prada, Armani and Dolce & Gabbana.
“Iran could be an interesting expansion market, probably worth about 2 per cent of the global luxury market, once developed,” Exane BNP Paribas analyst Luca Solca said.
“Iran represents a market with great opportunities, and I am certain that Italian companies will be able to grasp them,” SMI Chairman Claudio Marenzi said.
This turn of events comes around 2 months after senior diplomats in Vienna formally announced the lifting of sanctions against the country following confirmations from the UN that Tehran had fulfilled its obligations under last year’s nuclear accord. A final report from the International Atomic Energy Agency (IAEA) was released late on January 16, putting Iran back on global economy map.
Although the UN sanctions on Iran over the past decade was not applicable for cosmetics and several other consumer goods, European companies in this sector could still not set up their own stores in Iran.
While there are several challenges in setting up business in Iran, including competition from counterfeits, lack of appropriate retail infrastructure, high tariffs and banking restrictions, the Italian luxury and fashion brands are determined to make the most of the situation in every way possible. Whereas their French counterparts, including Chanel, Gucci owner Kering (PRTP.PA) and LVMH’s (LVMH.PA), are playing the ‘wait-and-watch’ game, until Iran’s international relations became clearer,
Versace is due to open a flagship boutique in Tehran soon, in franchise with a local commercial partner. A couple of months ago, Roberto Cavalli opened its first shop in Iran, on the footsteps of leather goods maker Piquadro and men’s shirt company Camicissima.