If there's one clear example of “accessible luxury” making strides in China's retail industry, it's Furla. The Italian fashion house has been in the midst of a rapid evolution, going from being known globally as a playful, youthful handbag brand to capturing China's growing middle class with a new lifestyle-centric range of products. They're doing something right—Furla, which recently announced it will go public in 2017, posted a 126 percent global sales increase in the past five years up to 2015, the highest since its founding in 1927. Sales were up 30 percent at 339 million euros and net profit was up 41 percent last year from 2014. China sales grew 75 percent in the same five-year period, and outgoing CEO Eraldo Poletto, who will be leaving in June for Ferragamo, says he expects China to soon become Furla's main market.
To capitalize on this opportunity, Furla has major plans for China in 2016. Currently, there are 44 Furla boutiques in 18 cities in China, including two new flagship openings in Hong Kong and Macau last year, but the focus for the next couple of years is expansion in “fast-developing” first- and second-tier cities in the mainland, such as Chengdu, Hangzhou, Chongqing, Shenyang, and Tianjin. Of particular note, the company is preparing to reveal its flagship store in Shanghai CITIC Square this month. Creating an e-commerce platform in China is another huge priority for the company before the year ends.
Still, Poletto says Furla is keeping in mind the need to remain exclusive in order to remain appealing to their customer in China. Tighter household budgets may be making affordable luxury more appealing to middle-class consumers, but according Poletto, the key to Furla's success is more complicated than the brand's price point.
“The definition of luxury is not to be expensive, but to be unique,” he says. “Over-expansion violates this rule, this is why many brands currently are facing difficulties and have to downsize their boutique quantity.”
Furla’s impressive performance for 2015 was also driven by the company's new product categories, and it's their delivery of these as part of an Italian lifestyle brand that helps them “be successful and outstanding in the worldwide downturn,” Poletto says. This year, Furla introduced a menswear collection and women's shoes, and continued its eyewear collaboration with De Rigo. Furla is also now partnering with Ratti for textiles, and Morellato for watches, as part of a well-rounded lifestyle selection with the modern Chinese consumer in mind that “brings Furla to a new era.”
“The Chinese customer will always be our first priority in all global projects,” Poletto says. “We consider China to be the biggest market in the next five years, so what we're doing now is finding an easier and more comfortable way for the Chinese customer to experience the typical Italian lifestyle, which is one of the most high-quality ways of life.”
Furla is also catering to the Chinese consumers' interest in acquiring bespoke goods. It will soon be offering a made-to-order service at Shanghai CITIC Square, where customers can design their “exclusive Furla dream bag.” Already, Furla fans around the world can choose from a colorfully designed selection of leather covers to dress up their bag in tune with their personality, but now, in China, customers can also customize the stitching, edges, hardware, and custom tags on the Metropolis or the IT BAG Artesia—still at accessible price points, although this varies depending on the materials. In keeping with their Italy-focused philosophy, Chinese consumers get their bags in 12 weeks—they're made in Italy, after all.