Riding the “accessible luxury” wave at the right time for the Chinese market, Italian leather goods brand Furla, one of Italy’s most successful brands in the affordable luxury segment, has its sights set on making China its biggest market within five years. During Milan Fashion Week, Jing Daily interviewed the company’s CEO Eraldo Poletto about his thoughts on the growing popularity of affordable luxury in China, the importance of the Chinese travel market, and how he thinks Furla stacks up to similar American brands in the eyes of China’s discerning consumers.
Furla has benefited from China’s “accessible luxury” boom. What factors are driving growth in this category even as China’s luxury market slows overall?
We are having great results; 2014 has been a great year and 2015 is forecasted as being highly promising as well. I think premium luxury will become a phenomenal opportunity and China a phenomenal market for us; people are starting to appreciate more the quality, craftsmanship, “made in Italy” [heritage], and the product/brand aesthetics, while we are also making this available to a broader range of people.
I think everyone was pushed to the extreme luxury, thinking of increased prices with no limits, where it has reached a point of saturation. At the same time, the society is evolving so fast. The middle class and upper middle class have also expanded and evolved. The true volume in terms of people and spending will be there.
How important is the Chinese traveler market compared to the Chinese domestic market for your brand?
The Chinese travelers are making a significant difference in the retail environment worldwide. For example, during Chinese New Year, we could see an incredible amount of Chinese coming to Europe, Japan, and the U.S. All over Europe, we can see the amount of Chinese travelers increasing dramatically, and their appetite for the product as well as their curiosity and their buying power creates a very interesting phenomenon that’s currently happening. For instance, Chinese New Year has been very positive as we have our shops in the airports, duty -free [stores], and downtown cities as well.
Your company has been expanding in China with plans to make it your biggest market within five years. Does China’s luxury slowdown pose any challenges to this plan?
I personally think that in Europe, we’re speaking about a Chinese economic slowdown with regard to a 7.5 percent increase in GDP. Meanwhile, in Europe, we probably never experienced this number in almost 50 to 100 years.
Things are developing and changing so dramatically; our goal is to be present in the market and really push the brand as well as learn about the consumers and the real estate market. We’re very confident, however, as we can see the Chinese consumer in China and outside China.
We’re trying to be consistent and offer proper assortments of [our] collection both in mainland and outside of China. We will also try to create excitement outside of China to have a different assortment compared to the shops that you can find in China and vice versa, tailoring the assortment appropriately.
What are the current challenges and opportunities the brand is facing in China?
The great opportunity is definitely the middle-class community that’s growing, as well as the internet and increasing appetite for beautiful, qualitative products. There’s an increasingly young population that desires to explore and know more about the brand. The challenges are for the company to learn the specificities of the Asian consumer: even for the customer service and training, we are using a company based in Singapore, as we like the idea of learning from the amazing customer service type that you can find in Asia in order to be ready here (Europe)—to be ready to welcome the Asian customers.
Another challenge is the real estate. I think this is a key component; sometimes, the real estate is booming, but it’s difficult to understand if the outcome will be successful or not. Having the key partners is a true challenge where we need the time to learn to make mistakes and keep doing what is right.
How important is Chinese social media as a part of your China marketing strategy?
Social media is a gigantic opportunity; we created a digital department within the company that is run from someone coming from a very strong background in London. We changed and revamped the e-commerce and digital platform last year as it’s a great opportunity for a company of our size to have consistent communication and have our message go across everyone via diverse channels. It’s a key factor because Asia is about digital, much more than in Europe. We’re trying to act locally on our platforms (Weibo, WeChat, etc.) where we want to create a social environment that can really be spoken honestly and openly about. We want to listen to our community and not create a top-down communication but a bottom-up to be part of the community and listen to them.
We’re currently seeing a rising tide of brands such as Michael Kors, Tory Burch, and other accessible luxury labels in China. How does Furla see itself compared to these affordable luxury brands in terms of competition and brand image perception?
I think that in the premium market, the Americans are the strongest; they have the biggest companies and are doing an excellent job. I believe the key difference is that we are made in Italy. This means that the attention to the materials, details, and design that we have is unique. This makes our product have a different content in terms of quality and design, creativity, and passion. I think the Chinese consumer can definitely understand the difference and our added value. They are competitors that I highly respect, however, we have our own qualities and avenues to explore. I love competition.
Yanie Durocher is a lifestyle and fashion blogger at The Marginalist.