As Italian sportswear label Diadora celebrates its 70th anniversary, Drapers meets chairman and chief executive Enrico Moretti Polegato to talk about reinvention and reshoring.
A Guinness World Record for the most people simultaneously doing a keepie-uppie hangs proudly in the reception of sportswear brand Diadora’s Italian headquarters. A grand total of 1,406 local amateur footballers descended on its headquarters in Caerano di San Marco in Treviso, northern Italy, to take part in the attempt last year. The resulting record says a lot about the 70-year-old business, and its obsession with sport, focus on teamwork and an eagerness to celebrate community.
Diadora – the name comes from the Greek word for “sharing gifts” – was founded in 1948 by Italian entrepreneur Marcello Danieli. It started life creating mountain boots designed to be worn in the many peaks and hills surrounding Treviso, before moving into sport shoes. By the 1970s and 1980s it was the brand of choice for the sporting superstars of the day, such as tennis champions Björn Borg and Pat Cash, Brazilian racing car driver Ayrton Senna and footballer Roy Keane, among others.
However, Diadora’s fortunes in the competitive sportswear market faltered over the intervening decades and the brand entered administration in 2009.
It was bought by the billionaire Moretti Polegato family, known for making wine and for founding Italian footwear giant Geox, for an undisclosed sum through their investment arm, LIR, the same year. Enrico Moretti Polegato, son of Geox founder Mario Moretti Polegato, took the helm as Diadora’s chairman and chief executive.
As Diadora celebrates its 70th anniversary this year, it is drawing on its long heritage and enjoying a revival, thanks to demand for retro-sportswear from a new generation of shoppers.
Sporting a pair of B.Elite trainers, a tennis style first popularised by Borg and still one of the brand’s bestsellers, Polegato is softly spoken but friendly when Drapers meet him at the Treviso headquarters. The Diadora brand, he says, was “dusty but not scratched” when he first took over. Its long history and sporting pedigree meant he was confident it could make a comeback. The turnaround strategy appears to be bearing fruit. Although Diadora will not reveal exact figures, it says it has a “positive” net profit margin of 2.1%, and turnover grew by 7% to €162m (£143m) in 2017 year on year.
“The attraction to Diadora was, in part, the long history of the brand,” the 37-year-old father of two explains from his sustainable office, where the furniture is made from corrugated cardboard and his daughter’s school work lies on the desk. “But it was also all that brand represented for this part of Italy, which was one of the first regions in the country to start making sports shoes.”
If you want to know where you have to go, first you have to know where you are
Concentrating on Diadora’s roots was central to reinvigorating the brand during Polegato’s first 12 months in the top job.
“If you want to know where you have to go, first you have to know where you are,” he argues. “The first challenge was to understand the real brand identity. Yes, we understood from the outside that we were the brand of Björn Borg and the others, but we needed to understand our place in the market.
“We went back to our brand values and rebuilt the business on those – on being a sports company first and foremost, on being true to ourselves, on innovation and on being able to pour Italian craftsmanship on to our products.”
Footwear makes up 80% of Diadora’s business, and clothing the remaining 20%. Clothing, particularly womenswear, has been earmarked as an area of focus. Key products for autumn 18 include a midnight-blue version of the B.Elite trainers with Swarovski crystals for women, and men’s retro-inspired tracksuits with logo tape detailing and black zip-up jackets with bright lettering.
Retail prices for footwear range from £20 for unisex pool sliders to £225 for premium trainers, clothing from £12 for men’s tank tops to £120 for a waterproof jacket.
In 2015, Diadora embarked on a programme of reshoring in a bid to drive home its Italian heritage. It dusted off the production line at its head office, which today makes higher-end pieces, including brand collaborations, for its active, sportswear and heritage lines. Between 5% and 10% of Diadora products are made in Italy, 25% elsewhere in Europe and the remainder in Asia.
We went back to our brand values and rebuilt the business on those
“It was a natural choice,” Polegato explains. “We took the company over with the dream of not letting the know-how of making sports shoes in this area of Italy die. It would have been a shame to lose it, because that kind of knowledge cannot be bought, it cannot be invented, it takes time. It was nothing more than investing in ourselves and reinforcing our image and our identity, because now we are able to have product not only designed but partly made in Italy.”
The Treviso production line, he admits, takes things “relatively easy”. It employs 10 people who produce 160 pieces per day and focus an artisanal product rather than on volume manufacturing.
“The machinery we use dates back to the 1980s and 1990s, although obviously it has been adapted for safety,” says Polegato. “That’s not because we are backward looking – it was because it is a way to keep the shoes more artisanal, and to make them look different from other products.”
Hikmet Sugoer, designer, footwear expert and co-founder of Berlin sneaker store Solebox, argues that Diadora’s reshoring programme gives the brand a vital point of difference: “One of the most important things Diadora is doing is producing certain items in Italy. The sneaker market is competitive – it’s saturated, and people are looking for something that not everybody has on their radar. Diadora has heritage and people like to see good craftsmanship, so it’s great to see a brand supporting local production.”
Focusing on a few key markets, including the UK, the US, Japan, Germany and the domestic Italian market, has also been part of Diadora’s turnaround strategy. Re-establishing the brand’s presence in the domestic Italian market was Polegato’s first concern, before turning his attention to international expansion in trend-driven markets overseas. The brand sold in 110 shops and etailers in the UK, including Footpatrol, End Clothing, Size?, sneaker specialist Hanon, Urban Outfitters and Asos.
The UK is one of the focus markets for the future and it is one of the foreign markets we are betting on
“The UK is one of the focus markets for the future, and it is one of the foreign markets we are betting on to drive the growth of the brand,” Polegato explains. “It is very competitive but it also one of the markets that leads the trends for sports and sportswear, as well as being an international window.”
Diadora has no own-brand stores and has no plans to open any at home or abroad.
“Our strategy is to work with wholesale partners and etailers. We are not opening mono-brand stores, in Italy or in any other markets. I think that you have to be able to compete on a [multi-brand] floor. Then, if you can emerge on that floor, it means that you’re desirable and then you can look at mono-brand stores.”
Online is another area of focus. Polegato would like to grow the percentage of Diadora’s sales coming from online to double digits over the next 12 months by improving its ecommerce offer.
Wider trends shaping the fashion industry have also played into Diadora’s revival. Once-neglected heritage sportswear labels are enjoying a resurgence in popularity as their product and brash branding finds favour with a new, millennial customer. Fellow Italian sports brands Ellesse, Kappa and Fila are stocked by Asos. Urban Outfitters and Topshop are selling US sportswear label Champion. The sportswear boom has also gone hand in hand with a craze for trainers, which have rapidly become one of footwear’s best-performing categories.
Our strategy is also work with wholesale partners and etailers. We are not opening stores, in Italy or in any other markets
“Sportswear is easy to understand for guys,” explains Nick Paget, senior menswear editor at trend forecaster WGSN. “Men tend to have fewer forms of expression, so the idea that wearing sportswear is acceptable is very welcome to most men and it also plays into the trend for comfort, which is king.”
Polegato is confident Diadora can draw on its 70 years of history to attract fans both old and new, describing millennials as the “natural” consumer for sportswear brands: “We have a class of aficionados who were waiting to see the brand back and would rush to the shop to get a fresh new pair of Diadora trainers, but then there’s also a share of new fans who come from a generation that cannot remember what Diadora was in the past.
“They want something new but they also want something authentic – one of the worst insults that can be traded on social networks is that someone or something is fake. We have the opportunity to be authentic, but new.”
Before life at Diadora, Polegato studied to become a lawyer. He graduated from the University of Padua and trained at a Treviso law firm, passing the Italian equivalent of the Bar exam in 2008.
“I studied law because I realised it could be a help for my future – Diadora was out of sight at the time, but even considering Geox, I knew that a legal background helps you to have a horizontal view of things,” he says. “You don’t see company departments separately – you cut through all of them. I wanted to see the world from that point of view.”
We have a class of aficionados who were waiting to see the brand back and would rush to the shop to get a fresh new pair of Diadora trainers
Building a democratic, close-knit company culture at Diadora has been a particular highlight of Polegato’s tenure as chief executive. It employs 200 people at its head office, almost all of whom are wearing Diadora trainers on the day of Drapers’ visit. The average age of its employees is 37, which Polegato explains is relatively young for Italy.
“It is a very horizontal structure. It’s very young and I’m on first-name terms with almost everyone here, which is unusual by Italian standards. We go running together, we plays sports together. I wanted to create that kind of atmosphere because that’s how I am naturally and I couldn’t play a part for 12 hours a day. I couldn’t work in company with a culture of aggression.”
Going back to its roots has proved a successful strategy so far for Diadora. The current vogue for heritage sportswear is an opportunity for the brand, and its logo-heavy autumn 18 collection should prove a hit with customers, but it will need to continue to evolve its product and offer if it is to emerge head and shoulders above the competition.