Beyond ‘quiet luxury’: Brunello Cucinelli’s billion-dollar growth formula

| Interview

“I’m not worried about who’s going to buy the product, but I’m worried about who’s going to produce the product,” the Italian entrepreneur and creative director Brunello Cucinelli often says, according to his eponymous brand’s North American president and CEO Massimo Caronna. It’s this long-term perspective that informed the luxury label’s decision to take a joint-minority stake in one of its cashmere yarn producers in May.

While Brunello Cucinelli seemed to be perfectly positioned for the “quiet luxury” trend—an equal-and-opposite reaction to a decade of logo-mania—the decision to invest in one of its key suppliers is one that the 45-year-old brand hopes will ensure its longevity. The company is also embracing its roots by creating a budding microeconomy in the Italian town of Solomeo—where Brunello Cucinelli has restored much of the village’s 14th-century structures—and transitioning from a founder-led business to a multigenerational, family-run enterprise.

That legacy building also comes in the form of category expansion. Over the past decade, Brunello Cucinelli has broadened its offerings to include home goods and accessories. Most recently, it’s been expanding into fragrances and wine. Ready-to-wear still makes up 85 percent of the company’s business, which reported revenues of €919.5 million in 2022, a 29 percent increase from 2021.

In an interview with McKinsey’s Theodora Koullias and Roger Roberts, Caronna—who joined Brunello Cucinelli in 1997—shares the company’s perspective on growth, succession planning, and “humanistic capitalism.”

This interview has been edited for clarity and length.

McKinsey: Let’s start with the news that Brunello Cucinelli, along with Chanel, took a minority stake in Cariaggi, one of its Italian cashmere-manufacturing partners. What prompted this decision?

Massimo Caronna: It’s important to us that our products are made in Italy. We have about 2,000 employees, but there are also about 7,000 workers in about 400 laboratories making our products, and 70 percent of those laboratories produce exclusively for us. Bringing in artisans to become the central focus of the company is important. Brunello often says, “I’m not worried about who’s going to buy the product, but I’m worried about who’s going to produce the product.” He feels responsible for every single item that the company produces, so he is protective of the people who create all of our luxury items. He wants to protect the artisans and the laboratories.

Related to that, for the first time in history, Brunello Cucinelli has purchased part of the supply chain: as you mentioned, we partnered with Chanel to buy part of Cariaggi. Chanel and Cucinelli own 24.5 percent each. The reason we did that is to protect the raw material and the production for the next 50 to 100 years. One of the biggest concerns in Italy today is securing production.

A contrarian approach to growth

McKinsey: You oversee the North American business for Brunello Cucinelli. How did you and Mr. Cucinelli think strategically about how to grow this market?

Massimo Caronna: We started as a wholesale brand and grew from there, slowly and season by season. We listened to both our customers and wholesale partners in North America to achieve this growth. In 2006, we decided to open our first store in the West Village [in New York City]. Other brands were deciding to open stores on Madison Avenue or Fifth Avenue, but I said, “We need to go downtown.” Little by little, we grew our retail business.

For years, everybody was talking about New York, San Francisco, Los Angeles, but I noticed there was something happening in areas like East Hampton, Aspen, Vail, Palm Beach. So 15 years ago, we opened a store in East Hampton. We also opened our first store in a five-star hotel at Rosewood Miramar Beach in Montecito, California. All these resort locations have been important for us—sometimes more important than our city locations.

But we still very much believe in the multibrand business, even if we now have 125 retail stores around the world. Multibrand retailers are the guardians of the brands. Who’s better than them to tell you if your brand is on trend or not? A lot of times, you bring your own managers from your stores, but it may be harder for them to tell you that something is not right. The multibrand retailers will tell you, so I think we learn a lot from them.

At the same time, from a distribution perspective, multibrand retailers haven’t evolved as much as brands have evolved. We still believe in and invest in them, but we’re also having conversations with them about how to create different partnerships that will grow over the next 10 to 15 years.

McKinsey: When companies were moving online during COVID-19, why did you double down on opening stores? That was also a contrarian move.

Massimo Caronna: COVID-19 set the tone as far as who we are as people, as a brand. Soon after the COVID-19 outbreak, Brunello gets on a video call to all our employees worldwide and says, “We have money for another three to five years. I don’t want you to worry about money. Nobody’s going to be furloughed. Nobody’s going to lose their job. Nothing’s going to change. I want you to take care of yourself and your family, and hopefully we see each other very, very soon.”

The second thing that he decided was that we weren’t going to ask landlords to give us a discount on rents. The third thing that was important—for me, personally, and for the company—was to take the surplus from our stores and create a new label called “Brunello Cucinelli for Humanity,” whereby we donate surplus product to people in need.

Those three decisions—which were made during probably the most difficult moment of my life—made that lesson I learned 25 years ago, about taking a humanistic approach to business, a reality. It was humanistic capitalism in action. Brunello has been talking about this for the last 25 years, so it’s nothing new for us: putting people first, respecting each other, being transparent with each other.

McKinsey: Speaking of transparency, Mr. Cucinelli has been vocal and transparent about his succession plan. He’s priming his family to take over the business. Why now?

Massimo Caronna: Brunello feels he is a custodian; he has built a company that, hopefully, will be around for another 200 years. He has been talking about his succession plan for quite some time. This year he’s turning 70, but he’s as active and passionate as ever. He’s there to coach and guide our two global CEOs, Luca Lisandroni in Milan and Brunello’s son-in-law Riccardo Stefanelli based in Solomeo. You might ask, “Why two CEOs?” Riccardo manages production, pricing, and product in Solomeo; Luca manages markets worldwide from Milan. You cannot be an Italian company today without having an office in Milan.

And then there are his two daughters: Camilla is the co-creative director of womenswear with Carolina, who is also co-president. And he has two sons-in-law: Alessio Piastrelli, who is the co-creative director of menswear, and Riccardo. When I think of longevity, I think about the impact that the daughters and sons-in-law are having on the business. Longevity is not an easy word, but it’s something that is more tangible for us today than ever before.

Building the Cucinelli culture

McKinsey: It’s clear that Mr. Cucinelli has a deep commitment to Solomeo, perhaps because it is a physical manifestation of the company’s values. But how does the company help create that same connection to Solomeo—and therefore the company’s values—with its employees?

Massimo Caronna: In May, we brought about 600 people to Solomeo. These were managers of our stores and sales associates from department stores throughout the world. The theme of the week was “Solomeo Insieme” or “Solomeo Togetherness.” It was a time to meet, talk, and hug each other, especially after what we went through with the pandemic.

Mr. Cucinelli, our two global CEOs, and I have all been present in our stores to—I don’t like the word “training” or even “educating”—have a conversation with our store associates about what it means to work for Brunello Cucinelli. What are the values of the company? I’d say 90 percent of our associates—especially the youth—come to work with us not just because of the fashion component but because of what they read about us: our humanistic approach to the business.

We also talk about the kinds of relationships we want them to have with their clients. We prioritize the idea that privacy is the new luxury. So our associates spend time with our clients to give them an experience beyond just the fashion. They get to know each other, which helps our associates understand what our clients’ needs are.

McKinsey: It sounds like the in-store experience is still so important for the brand. But how does Brunello Cucinelli leverage digital platforms?

Massimo Caronna: In 2017, we took back our digital platform from YOOX, from our very good friend Federico Marchetti. The idea was to take the platform in-house to let customers know who we really are as a brand. The digital platform allows us to speak more broadly to the world—especially to young people. Young people today are curious about where the product is made and who made it; then, eventually they come to the store to purchase or to learn even more about our brand.

But there’s a balance between digital and brick-and-mortar. Of course, you can have an experience online with us, but the magic happens in our stores.

As soon as the COVID-19 lockdowns ended, people couldn’t wait to come back to our stores, hug our employees, and have a cup of coffee with them. In the stores, we host lunches, dinners, and other events. The average time our clients spend in the store went from 10 minutes to 35 minutes today. That’s due to a few changes we made. One is that we expanded the dressing rooms. That gives the customer that level of privacy they value. We created mini-libraries and we hid the registers. The most successful thing we’ve done is add bars to some of our stores. What the bar and the seating area allowed us to do was keep the customer there and create a relationship with the client. I always tell everyone, “It’s easy to start a relationship. It’s harder to maintain a relationship.”

Growing into the future

McKinsey: How is Brunello Cucinelli thinking about attracting the next generation of consumers?

Massimo Caronna: The family—Carolina, Camilla, Riccardo, and Alessio—is starting to have a very strong impact on a younger customer base. Campaigns like “Be your change,” whereby we’ve partnered with unique individuals [such as young athletes and artists] and they talk about what they’ve done to change the world—you’re starting to see some of this video content on our social platform. That’s helping, too. Our eyewear partnership with Oliver Peoples is, for sure, attracting a younger customer to our brand. Men’s and women’s fragrances, shoes, and bags are also attracting younger customers.

I also think our store windows—which showcase our brand in a modern, youthful, contemporary way—are attracting younger customers. We have worked diligently to be unique in visual merchandising.

McKinsey: Nearly 30 percent growth in 2021 and 2022 is impressive, even with a booming global luxury market. How does the company think about building on this momentum going forward?

Massimo Caronna: Right before we went public, Brunello invited all our investors to Solomeo to introduce himself and the company. He told all of them, “If you feel that I’m going to grow this company 30 to 40 percent per year, please do not buy any shares. But if you trust me and my family and trust that we can grow the business 8 to 10 percent per year—we call it ‘gracious growth’—then I hope you buy shares in our company.”

As far as where we see our business is going, we’ve created great relationships with not only our investors but also our multibrand partners and, most importantly, our clients. We can continue to grow if we listen to them and evolve for the future.

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