Luxury Italian brand Furla is planning more flagship stores in Asia as the region delivers strong growth for the 89-year-old family-owned company.
In an exclusive interview with Inside Retail Asia, Furla CEO Eraldo Poletto explains how the company has bucked the decline in luxury spending in core markets like Hong Kong and Singapore during the past year. Furla achieved 53 per cent growth in total sales (in euro at the current exchange rate) in Asia-Pacific, where it counts 14 markets – Australia, Cambodia, China, Hong Kong, India, Indonesia, Korea, Macau, Malaysia, Singapore, Taiwan, Thailand, The Philippines and Vietnam. Japan, a stand-alone territory in Furla’s accounts, saw sales grow 24 per cent.
Even discounting sales from new stores, like-for-like growth for Furla Asia-Pacific reached 15.5 per cent last year, yet the region accounts for just 19 per cent of the company’s sales – about €64.4 million ($72.1 million) – suggesting strong growth potential ahead.
“The consistent strategy we have implemented over the past four years – positioning ourselves as the only Italian and ‘Made-in-Italy’ brand in the premium segment, without accepting compromises in terms of quality – is paying off,” says Poletto.
“We are expanding our footprint with important flagships: Singapore Marina Bay Sands opened in September; Hong Kong Miramall and Shanghai Citic, each with a 300 sqm street facade, opened in December with a luxury retail concept showcasing our full ladies’ and men’s collections.”
He says more flagships will open this year in Australia and Bangkok.
“Flagships are meant to represent every aspect of the brand in terms of image and product range; however, we are not expecting to open more than five or six flagships in the region, as we are focusing on the profitability of our retail network, and prefer to penetrate the market extensively.”
In what he terms a “capillary” approach, more standard-sized stores and points of sale will also open across the region.
For the past two years the company has opened or renovated one store a week. It now has 172 points of sale in Asia-Pacific, along with 72 monobrand stores in Japan.
“In terms of our retail format, our average store size is increasing together with Furla’s total-look collections. Malls and high-street locations complement each other, and in this period of time, rent levels in some markets have decreased substantially because of a drop in demand from luxury, watch and jewellery brands. We are always on the lookout for new opportunities to invest in,” says Poletto.
“Our retail store concept is also quite special, as it wants to deliver a 360-degree luxury shopping experience while maintaining our the value-for-money approach.”
Asians appear to be embracing Furla’s distinctive quality brand feel and shopping experience. Perhaps surprisingly, the brand has no strategy of differentiating its Asia-Pacific product range from those of other markets.
“We believe that if a product captures customers’ hearts in one market, its appeal is universal. Our price and product range have always been appealing to a large spectrum of clientele; it is not by chance that our two best-seller styles – Metropolis and Artesia – represent the most affordable and the highest offer of our collection respectively.
“In terms of branding, strong marketing investments – like our collaboration with Mario Testino and a more aggressive digital and outdoor media planning strategy – are making Furla far more visible.”
Department stores are still an integral part of the Furla sales strategy, especially in China, where that sector is still in its infancy by western standards.
“The department store culture in Greater China isn’t very strong yet, and there are very few players compared to the shopping mall retail model in western markets. There is most surely room for improvement in this region.
“The situation is much more developed in Singapore and Australia, and obviously a priority in Korea with Shinsegae, Hyundai and Lotte, where we are present with 10 domestic stores and an aggressive development plan.”
Furla is also experiencing strong growth in the travel retail sector, which is helping both top-line sales and brand awareness.
“Travel retail will continue to fuel the growth in APAC,” says Poletto. “Total sales generated by the travel retail channel were up 27 per cent for 2015, and we opened five new locations. We see blooming opportunities in this channel as Asian customers shop worldwide while they travel: it is a great showcase for the brand.”
In June, Furla will open a directly managed boutique in Hong Kong International Airport.
Southeast Asian focus
Furla’s strong growth in the region is coming not just from the established markets of Hong Kong, Singapore and Greater China.
“We have witnessed a significant double-digit growth in Southeast Asia markets including Cambodia, Malaysia, Singapore, Thailand, The Philippines and Vietnam,” says Poletto.
“In Indonesia, a fast-growing country with a population of 250 million, we have a capillary quality presence with 10 boutiques in five cities. As of today, Furla has 46 stores in Southeast Asia, and we will focus on strengthening our foothold in these markets this year.”
In India, which Furla has entered in a joint venture with Genesis Luxury, the label has three boutiques – one each in Mumbai, Delhi and Calcutta.
“They are all performing very well with a 50 per cent sales growth increase in 2015,” says Poletto. But the market has considerable challenges.
“India is a market with very high potential, but also with a huge limits when it comes to infrastructures. There are not enough qualitative shopping malls to cover Indian clients’ high demand for fashion and luxury: this is why Indian consumers represent a key nationality in markets like Dubai, London or Singapore.
“In terms of expansion, we will tap into all the new relevant real-estate projects.”
Globally, Furla has 415 monobrand stores, of which 190 are directly owned and 198 franchised. It has 27 travel retail stores and more than 1200 outlets in department stores and multibrand outlets.
Results released today show that Furla’s global turnover reached €339 million last year, up 30 per cent on 2014. The growth was driven across all Furla product categories, including the new men’s collection, women’s footwear collection and eyewear.
Poletto says that being a family-owned business – an increasingly rare phenomenon in the model luxury retail business – has its advantages.
“Being 89 years old gives us a great DNA to be around into the future: the real assets are the brand and its heritage, which are translated into equity. The Furlanetto family has very strong values – they have a long-term vision, instead of making opportunistic choices.”