Furla weaves China dream amid affordable luxury boom
Italian fashion house sets its sights on making China its largest market within the next five years
It is a family brand that has sought to infuse Italian passion, elegance and heritage into its leather handbags and stilettos.
Now, it has its sights set on making China its largest market within the next five years.
Furla, founded by accessories trader Aldo Furlanetto in 1927, launched its first retail store in Hong Kong a year ago and has since opened 10 more, in addition to two in Macau and 30 in 15 cities on the mainland. It plans to open at least 100 stores in four years.
With an Italian Sinophile chief executive at the helm and a partnership with Hong Kong-based manufacturing giant Li & Fung, Furla aims to satisfy Chinese consumers' appetite for accessible fashion brands.
Eraldo Poletto, who has been travelling extensively in China and studying consumer trends there since 1996, says the company's partnership with the Fung Group, the private investment arm of Li & Fung, is a "perfect combination".
"They have the know-how about bringing international brands into the Chinese market. We take care of the branding and the product. We both have long-term vision. It is so important to work with a partner with true knowledge of the market," said Poletto, who became chief executive in 2010 after working as an executive at Brooks Brothers, the oldest menswear chain in the United States. He now works alongside Furla president Giovanna Furlanetto.
Poletto believes the Chinese government's continuing austerity and anti-corruption drive has boosted the brand's appeal.
"I think what the government is doing is logical. It makes sense to try to distribute wealth from the top of society. At the same time, the middle class is growing very fast so we are well located to have a wide range of consumers who are attracted by our products," he said.
"The premium market, with premium referring to 'affordable luxury', is where the big numbers are going to be. It's not just because the government is discouraging extravagant spending. People tend to want value for money and great, authentic products at affordable price points."
Although China's luxury market has been reeling from cooling economic growth and the anti-corruption drive, the country continues to be one of the world's strongest consumers of branded products. Furla reported earnings of €212 million (HK$2.2 billion) last year, with 76 per cent of its turnover from outside Italy.
The Bologna-based firm, which has lower brand recognition in China compared with the top luxury Italian retailers, may have benefited from the shift of emphasis away from logos.
"We're seeing logo fatigue overall around the world, and particularly in China, where in the past logos were very important. If we do a bad job, that's our fault. We can't rely on our 'made in Italy' label," Poletto told the South China Morning Post.
How have you seen Chinese consumers' tastes change in recent years?
The speed with which fashion and tastes are changing in China is happening at a pace unknown for Europe. It's becoming more and more elegant. People seem to have a curiosity to understand fashion, food wine, interior design, and that's not just limited to a certain sector of society but pretty much everyone. Women, especially, are paying a lot more attention to the details and trying to push the envelope and be creative.
How do you think the internet changed the shopping habits of the Chinese, and what is your company's online marketing strategy?
Social media and the internet have become an amazing tool for consumers. Chinese shoppers are using their smartphones, and when they come to our shops in Europe or Japan, they already know exactly what they want to buy. Furla has 150,000 fans on our Weibo microblog. It's very different from two years ago.
We already have online shopping options in Europe, the United States and Japan, and our new team in China will launch an e-commerce platform next autumn. They are working with WeChat and Weibo. The Chinese government has also recently improved legal protection for online transactions, and we welcome the enhanced protection for consumers.
It's not an easy market at all. With all the time I've spent travelling there, it just makes me aware of all that I don't understand. China is a continent, and from Harbin to Shanghai to Beijing, it's completely different. Customers have different body types, the climate is different, the customer base is different. And on top of that, we must keep in mind the needs of the millions of Chinese customers each year who travel abroad to shop at our stores.
I would say the top challenge in China is real estate. It's not easy to get the right location. We often have to compete with top luxury brands for the same location in a mall. We have to share our unique vision with the landlords to convince them to give us the space. It's really the key to success. We are now looking to open a flagship store in China, and it's very important to choose the right location.
How will you try to meet those challenges?
First of all, I think a strong sense of curiosity about trying to understand China is a must. The main challenge in first-tier cities is to find the best location, and the main challenge in secondary cities is to build proper connections with landlords, and in both cases it's very important to work with good local partners. And once we open our stores, one of our great assets is that we surprise customers with amazing experiences. For Chinese tourists shopping abroad, we have Chinese salespeople in many shops to take care of them. We aim to be consistent across the globe.
Does Furla have plans to list the company? Would the firm consider listing in Hong Kong, as recent rumours have suggested?
It is something we have to be ready for and decide on. Considering whether to go public is a very serious matter as Furla has been a wholly family-owned business for over 80 years.
If we choose to list, it would be important to continue to prioritise, being an international brand. Securing China is at the top of mind. The US has become an important market and should become more important. Our focus will be to become more aggressive and bigger as a company because size does matter. We need to create a critical mass to compete with the top luxury brands in retail.