The surging growth of Furla over the past three years – a period in which the company has doubled turnover – represents a great modern-day luxury goods story. But as CEO Alberto Camerlengo acknowledges – he was appointed to the post earlier this year after six years as General Manager – that level of expansion brings its own challenges. Principally, these involve managing distribution, protecting brand equity and becoming more selective about which markets – and with which partners – the company chooses for the next wave of growth.
As reported, company turnover hit €238 million in H1 2017, a leap of +23.5% year-on-year. This wasn’t only driven by new store openings: organic growth was a major factor, with like-for-like sales in directly operated stores registering a double-digit increase across all channels. Travel retail was a key contributor, with a growth rate of +47%.
Speaking to The Moodie Davitt Report, Camerlengo says: “It will be challenging to maintain the base growth rates we have achieved in recent years. Look at the first half: we grew at +23.5%. The market is strong and we are happy. Growth also adds energy to our team. When you are opening new channels or markets you bring new ideas and excitement.”
Underlining the point that organic growth is contributing handsomely to the business, he adds: “As in the first six months we have 444 stores and we want to continue to qualify and fine-tune our network. That means being in the right place to engage the customer. We will have some fantastic openings coming soon, for example Beijing downtown. These and others big openings will represent new landmarks. Now more than ever, in the phase of growth, we want to be selective.”
The company has focused heavily on developing its own distribution network, and operating stores directly where appropriate. That drive will continue, he says.
“We want to have the same 360-degree brand strategy across all channels. That means being selective about where we open today and which partners we work with. Having this growth and acceptance by customers and our partners means we have the opportunity to choose. If you look at our results, in the USA we grew by just +3%. That was deliberate. We didn’t want to have partners marking down our products. You can only do that in a growth phase where you are confident of your brand. We know that what you do in one region has an impact in others in this inter-connected world. You have to be consistent; the customer knows instantly what you are doing.”
That brings us to travel retail, a core strategic channel for Furla, led by the dynamic and highly experienced Gerry Munday as Global Travel Retail Director. Among the most recent in a wave of openings include Philadelphia Airport (with DFASS), Lyon Airport (Lagardère Travel Retail), Da Nang Airport (Lotte Duty Free), KLIA2 (Heinemann) and London Gatwick Airport (Harrods), with more to come.
Camerlengo says: “What we need is that our travel retail partners understand who we are and what our brand values stand for. Then with this alignment, we can talk space and so on. If they offer us limited space it doesn’t always show the brand identity as we want it. Furla is made up of so many bags and styles that we need space to showcase these. We have bags that appeal to women of 15 years up to 80 years sold. Unless you have space, can you really show the brand off in the optimum way? That can be at times frustrating. But we have many good partners in travel retail and they have helped us reach the level we are at today, from almost zero six years ago.
“We want to grow through these partners. We are committed to investing in these partnerships, to invest in training, helping the partners to be successful. We just want them to transfer the DNA of the company to the end consumer.
“That also means travel retail is part of our 360-degree strategy. It is bricks and mortar mainly but it is synchronistic with the rest of the company, aligned with domestic markets.”
And in this channel, some big opportunities still exist. In the USA and wider Americas market there is an opportunity to grow, he says. “In 2018 we will exhibit at the IAADFS show for the first time. For us the Americas is an important market that we want to approach well. In Europe and Asia we are pretty happy but we are still trying to get into better locations within the airports where we are present.”
On travel retail’s role as a showcase or profit driver, Camerlengo is clear: “We want to share risk and reward. We always ask this of our partners in good faith. We want to ensure they care about the brand and that we can both be successful.”
On the challenges to the growth of the business in this channel, he notes one uncontrollable aspect that has an undoubted impact. “The biggest issue is the terror threat and its impact on travel. If people spend too much time in security and less time in the stores, that has a downside for our business, though of course we cannot affect it.”
Milestone moment
Furla is now in its 90th year, though the most recent decade has seen it revitalised, as the figures above demonstrate. For Camerlengo, what matters now is retaining the ‘DNA’ of the company even amid its rapid growth trajectory.
“Our strategy does not waver. Put simply, we provide good quality bags at the right price to our customers, no matter what their age or status. It’s just the same as when we began in 1927. We offer Italian craftsmanship, quality bags, and we don’t do compromise. This year at Cannes we have had the chance to pause, only for a moment, and recognise what we have done during these years.”
Translating that simple strategy message across a growing company is not always so easy, he admits.
“The people who work with us every day just need to be sure to follow the path that we began 90 years ago. Even if the strategy does not change, you still need to ensure the plan is consistent across a multi-cultural environment. Today, 86% of our sales are outside Italy and so we are a multinational, multi-ethnic company. What we need is that our people present Furla in their own language and own style in their own country, meaning a Japanese person in Japan, or a US person in the USA. And that is key for travel retail too, whether that is through Gerry in travel retail, or other senior roles from across the nationalities. It’s a challenge to communicate that sometimes, but it’s essential that we are today an international and an Italian company.”
Innovation, while maintaining the DNA of 90 years, is also a constant, he says.
“We have a great Creative Director in Fabio Fusi, who adds edge to each new collection. Because of this we are always new and we aim to be brave, innovate and different each time. We cannot allow our customer to become bored or indifferent. Our customers follow us as they see something new every time from Furla.”
Standing out in such a competitive market as accessible luxury is no easy task, though. “Yes it’s competitive but that makes it fun and the satisfaction is higher when you are in a highly competitive market.
“I also think that the momentum is still there behind not only our brand but also the accessories market, which is growing. It’s a great way to satisfy women’s need for something they can wear every day but that also represents luxury. The potential remains strong: look at the rise of the middle classes in Asia.”
As if to underline that point, Asia Pacific turnover (group-wide) leapt by +63% in the first half, driven by strong gains in China as well as South Korea and Australia.
The new frontier for the brand is to execute a well-rounded digital strategy, on which is has been working in recent years. For Camerlengo, “everything begins with digital”.
He says: “Our approach has changed. We have rethought our marketing model and now we begin all our marketing from the digital side and then go to trade marketing, advertising and so on. That has benefits for travel retail too because the brand is accessible everywhere in every channel. And when the customer is at the airport or on a cruise ship then they know the brand through digital and are engaged in those channels.
“We are also investing in e-commerce to make it easier for the customer to shop. If they go into a shop and don’t find a colour or size why lose the sale? That will be part of the future.”
As Furla turns 90, the challenge is a very different one from a decade ago, when it was an established Italian label but one with limited international appeal. Today the task is to harness its expansion in a selective, tailored manner and to maintain the brand identity in the digital world.
Camerlengo says: “We react fast to the changing world around us, and we must constantly continue to innovate. We want to grow organically in our various product categories and in our geographic footprint.
“The opportunity is that Furla is in a ‘magic moment’ as a result of all our investment and with the category enjoying strong growth. We are having fun and want to take advantage of the momentum that we enjoy in this business.”
