Fenomenale Ferragamo
How do you get from zero to a turnover of €50m in just 5 years?
Working like crazy. I am convinced that it is people who make the difference. Of course, you have the name, which is very important, but it wasn’t enough when we established a joint venture with Bvlgari. There you have the example where the same name with one person produced disappointing results, and with another team produced good results. I always say the same thing: the team makes the difference.
Personally, I am very proud of what we have been able to build together.
And, of course, the product.
Of course, but the product is created by people. We are responsible for product development, and in this case, it has been coherent with the Ferragamo image: sophisticated, elegant, with attention to detail on one side, and on the other side we have taken on a niche market – which isn’t really niche because the market is quite large – represented by the Young Collection with Incanto Dreams and Incanto Charms. I believe I can say – and I don’t think anyone could contradict me – that we have created a trend with this. Nowadays, everywhere you go you will see a pink product, because they were specifically made for Asia. But then, someone understands that you can expand it and instead of making it for Asia, you call it Young Collection and target the young. There is an enormous market there. In Japan, young 15 year old girls buy Ferragamo Charms. The aim is to start with the 15 year old girl buying the perfume and then, one day, she will buy the shoes, the bags, etc. This is our approach.
How important is travel retail for your company?
Travel retail represents 7% of our turnover. It is not yet an area well developed. Usually, travel retail comes once you have consolidated your position in the domestic markets. Then you can concentrate on travel retail. As I mentioned earlier, our business started five years ago, so travel retail wasn’t our priority number one – and rightly so! It would have been wrong to do it any other way.
Now, however, we are starting to look into travel retail in a structured and organic way. We have set up someone in Singapore who deals solely with travel retail in Asia. We also have a privileged direct contact with DFS, our number one client. We work directly with DFS San Francisco and Hong Kong. As for Europe, to be honest, we haven’t yet started. We have a strategy for Asia, not for Europe.
What is your strategy to develop your activity in travel retail going forward?
The aim is to have travel retail reach a 15% share of our turnover. Today, it is 93% domestic and 7% duty free. I think a good balance would be 85% domestic and 15% travel retail. And I believe we can reach this in the next three years. We are wasting an opportunity with duty free at the moment, and we will need at least three years to double the share in this sector too. But I think we’re on the right path. In Asia we are listed on many airlines, from Singapore Airlines to Malaysian Airlines, Thai Airways, Korean Air and China Airlines.
What are your reasons for getting into travel retail? Is it to develop the turnover or to further build the brand’s image?
There are several motivations. That of the turnover is a consequence. There are millions of people travelling and buying, and it usually is impulse buying in duty free because it is a quick buy, less thought about than in domestic, therefore it is a very useful type of sale. Ferragamo is a well-known brand and we produce very nice things, which means that it could definitely be part of this impulse buying. The direct result of this is that we would increase our turnover. But it has never been the initial objective. In fact, it is all about reaching a market that you don’t yet have; and we decide to go after it through duty free channels such as airlines. Airlines are actually another objective. People like me never have any time to go shopping, and we buy things in duty free and on the planes. The market is huge and I truly believe in it.
Will products always be launched first in domestic markets before being rolled out to travel retail, or will there be travel retail exclusives?
Our position is very clear. We are always ready to create specially-made products for our partners and duty free operators, although I have to admit that it is not a very common practice anymore. Domestic and duty free almost always have the same products. From time to time you have a small difference, such as smaller sizes and references – because of travelling limitations – or even gift and miniature sets. These are all things that we do. But I am not necessarily in favour of a fragrance specific to travel retail.
How do you develop a successful fragrance?
It is extremely difficult to find a fragrance that pleases everybody. Even if you divide the world into three – Americas, Europe and Asia – the tastes and lifestyles are completely different, and therefore fragrances are also different. To find a fragrance that is successful around the world is very, very difficult. Of course, it is our responsibility to find something that will suit the whole world. Usually, when we develop a fragrance, we make a distinction between institutional fragrances and the Young Collection fragrances. When thinking about the former, the brief is Europe and America. Therefore, the objective is to satisfy as much as possible the most mature side of the market. When we talk about the Young Collection, on the other hand, the brief is different: we are going for Asia. We try to understand their needs, the trends as well as their tastes. Then, if everything goes well, the fragrances developed for Asia move into Europe and America and vice versa. It doesn’t always happen, but as I said, to think of a universal fragrance is very difficult.
What is the most important element for success?
The fragrance is very important, of course. It is the main element. Then you have the impact of
communications, the strength of the brand, which are fundamental elements. At the end of the day, we sell a dream. If you do something beautiful, it’s good. If you create an excellent fragrance, better. But the name is not enough, therefore you need to do a good job. That’s why we’re very proud. Our name isn’t yet as big as, say, Chanel, but it looks like we’ve been doing a good job. Overall, I want to send a positive message; we are very happy with everything we have achieved so far. Four years ago, no one wanted to talk to us, but today people are queuing up and looking for us.
What is your vision of the future?
These are extraordinary times for the company because we’re about to be listed on the stock exchange. We will be listed in 2008 – probably in the second half of the year. The Ferragamo family will keep a majority stake in the company, but effectively, we go from being a ‘family’ company to a public one. This is our future and it is a huge challenge. We hope that it will all go well, and if it does, everything will increase: visibility, money, investments. Everything will grow. n
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