The Future of 'Made in Italy'

Italy's luxury manufacturing sector is at a crossroads. With over 2,000 factories shutting down in 2024, rising costs, regulatory pressures, and declining orders threaten the 'Made in Italy' label. As small ateliers struggle with shrinking margins and talent shortages, the industry faces a pressing question: Can Italian craftsmanship survive in an era of digital transformation and global market shifts?

The Crisis in Italian Manufacturing

Italy's luxury sector is undergoing a profound transformation. Over 2,000 textile, leather, and apparel factories closed in the first three quarters of 2024, highlighting the challenges facing small and mid-sized suppliers (Business of Fashion, 2025). Rising production costs and shrinking orders from major luxury brands have pushed many ateliers to the brink. This growing imbalance threatens Italy's artisanal expertise, potentially eroding its global competitive edge.

The Role of Supply Chain Resilience

As market volatility and regulatory pressures persist, luxury brands are adapting to ensure supply chain resilience and operational efficiency. Between 2022 and 2024, the luxury supply chain saw a 20-25% decline in order volumes, forcing brands to adopt digital traceability tools and co-invest in key suppliers to stabilize production (Bain & Company, 2024). Stricter ESG regulations, such as the EU's Corporate Sustainability Due Diligence Directive (CSDDD), are further pushing brands to prioritize transparency and compliance. Those that succeed will not only preserve craftsmanship but also build more sustainable and adaptable supply networks.

Craftsmanship and Collaboration: The Importance of Italian Manufacturing

The Italian textile and fashion industry is a significant economic pillar, and small and medium-sized enterprises (SMEs) are the backbone of this sector, comprising 95% of Italian businesses and contributing to 66.9% of Italy's GDP. In the textile and fashion sector alone, there are about 45,000 companies, with 82% having fewer than 10 employees and 16% being medium-sized (ITMA, 2022). This highlights the critical role SMEs play in maintaining the 'Made in Italy' label and preserving traditional craftsmanship.

Large luxury brands such as Gucci, Prada, and Valentino rely heavily on these SMEs for their production needs. These collaborations allow SMEs to access resources and markets that would otherwise be out of reach, while large brands benefit from the agility and specialized skills of smaller ateliers (CDP, 2024). This collaborative approach not only strengthens the supply chain but also ensures the preservation of traditional craftsmanship. By working together, SMEs and large brands can create synergies that benefit both parties, ensuring the sustainability and growth of the Italian luxury manufacturing sector.

Innovation Meets Tradition: Digital Product Passports and the New Luxury Mindset

Luxury is evolving beyond exclusivity and high price points. Today's consumers demand authenticity, transparency, and sustainability, challenging brands to rethink how they create and communicate value. This shift offers Italian artisans a chance to reinforce 'Made in Italy' while embracing innovation.

A key tool in this evolution is the Digital Product Passport (DPP), which provides detailed transparency of a product's materials, sourcing, craftsmanship, and end-of-life options. More than a regulatory requirement, DPPs help brands tell the full story behind their products, strengthening consumer trust and appreciation for heritage and artisanal skill. Implementing DPPs is smart and efficient, as most of the necessary information is already available from manufacturers. What is needed is a flexible transparency platform to collect all data and present it in a way that aligns with their values and goals.

Beyond transparency, DPPs also support circular business models, enabling resale, repair, and rental in line with consumer demand for longevity and responsible consumption. By combining digital transparency, compelling storytelling, and exceptional craftsmanship, Italian luxury brands can stay relevant in a market that increasingly values meaning over materialism.

The Path Forward

As Italy's artisans navigate these challenges, technology and strategic investment will be essential in preserving heritage while modernizing the industry. The implementation of Digital Product Passports is a smart, agile solution that leverages existing information and provides a flexible platform for transparency. This approach not only enhances consumer trust but also supports sustainable practices. The question remains: Will the industry embrace transformation while staying true to its roots?

Contattaci

Sei interessato a saperne di più sui DPP e su come possono aiutare la tua azienda? Contatta direttamente Elisabetta Moretti all'indirizzo elisabetta@repasdo.com

Sources

Luxury Report 2024: Rebuilding the Foundations of Luxury

The Future of 'Made in Italy': 'Many Factories Will Disappear'

The Italian Textile Industry (PDF)

Challenges and Opportunities of the Fashion Sector (PDF)