While some luxury companies have been holding back on full-scale expansion into China’s second- and third-tier cities, Italian luxury goods company Salvatore Ferragamo sees them as a main source of growth.
In a new interview with BBC, Ferragamo CEO Michele Norsa states that brands are doing themselves a disservice when they only focus on the first tier: “Beijing and Shanghai have probably been overestimated in terms of potential. Every brand has four or five stores; the competition between different brands, new brands is very high,” he says. Sales may be slowing down in these cities because “the local consumers have the opportunity to travel more abroad.”
But for travel from second- and third-tier cities, he believes that growth potential is high because “it’s more difficult for them to get a visa.” In his view, “Our strategy to cover the whole Chinese territory has been a very good one.”
In addition, the company is focusing on social media marketing and e-commerce, and is launching a made-to-order program for Greater China market in order to respond to Chinese consumers’ growing interest in individualized and personalized products. Watch the video above to hear more about the company’s China strategy.