Salvatore Ferragamo was once hailed as the shoemaker to the stars. His creations were among the most desired, most prestigious, and most disruptive; his focus on craftsmanship was second to none.
His namesake brand, Ferragamo, is known for its commitment to timeless elegance and sophisticated style. It seamlessly blends traditional craftsmanship with contemporary design, ensuring that each piece is both classic and on-trend.
If there is one brand in Italy that should have the same desirability as Hermès, it is Ferragamo. The reality, unfortunately, looks much different.
While the former clocked in a solid sales performance over the first three quarters of 2023, the results for the Italian luxury fashion house are lackluster. Sales at Ferragamo fell by 9.2 percent at constant exchange rates in the first nine months of the year, hit by weak demand in Asia and North America. Revenue in the period reached 844 million euros (892.53 million), down from 920.7 million euros during the same period last year.
Although analysts had expected the results following a weak first and second quarter, such a dramatic downfall reflects much deeper issues with the brand beyond economic headwinds.
This is even more evident when looking at the regional numbers. The critical Asia-Pacific and North American markets declined in revenue by 11.7 percent and 18.2 percent, respectively, while Europe and the Middle East saw moderate growth of 3 percent. Other top-end fashion brands like Zegna reported a strong performance in the same period.
One explanation for Ferragamo's downturn is its active de-emphasis on wholesale. If the brand strengthens investments in its own retail network, then the sales refocus can be a smart move, giving it more control over the distribution network and the client experience while improving profit margins. However, this is most likely only one part of the issue.
The more systemic questions Ferragamo needs to address are about brand storytelling. The long-standing ethos of blending traditional craftsmanship with contemporary design is reflected in the New Renaissance theme that creative director Maximilian Davis introduced with wonderfully designed clothes and accessories. The core challenge I would pose is: How does the New Renaissance translate into a client-centric value creation model? In other words, what’s in it for the client? Which emotion does the brand want to evoke?
It’s not so much about what makes the brand different but more about how clients can feel differently. In the end, luxury is pure emotion, and the emotion needs to be brand-specific.
It’s not so much about what makes the brand different but more about how clients can feel differently. In the end, luxury is pure emotion, and the emotion needs to be brand-specific.
When I visited Ferragamo stores recently all over the world, I did not feel a branded emotion. The products were unmistakably beautiful, but so were those of their closest competitors. The emotion has to be experienced at all touchpoints, and this needs a script (the “brand story”), training, and the right KPIs to evaluate how the brand performs.
Luxury brands need to inspire beyond the product. Quality, design, and craftsmanship are now merely expected; they do not create desirability. People desire brands that have an emotional promise — it’s about the human, not about the product. This is probably the area that Ferragamo needs to focus on most in order to generate years of growth and unlock the power that the brand undoubtedly has.
It's a call to action for all luxury brands, independent of the category. The sector has experienced the strongest demand in the last two years. It is easy to lose sight of the essential: How do we create value for our clients in an extreme fashion, beyond the product and through the brand? Most brands have significant vulnerabilities here.
Ferragamo is far from being alone. Remember, it’s a brand with a storied history, extreme craftsmanship, and wonderful designs, and yet its numbers are negative. It's time to refocus on the human factor and put the client at the center with an emotional promise that is delivered at every touchpoint. Luxury brands, take notice!
This is an opinion piece by Daniel Langer, CEO of Équité, recognized as one of the “Global Top Five Luxury Key Opinion Leaders to Watch.” He serves as an executive professor of luxury strategy and pricing at Pepperdine University in Malibu and as a professor of luxury at NYU, New York. Daniel and his team collaborate with luxury brands, mid-sized enterprises, and startups to enhance brand positioning, messaging, pricing strategies, and overall profitability. He’s authored best-selling books on luxury management in English and Chinese, and is a respected global keynote speaker. Daniel frequently conducts masterclasses on various topics across Europe, the USA, Middle East/Africa, and Asia. He’s a sought-after luxury expert, appearing on platforms like Bloomberg TV, Forbes, The Economist, and more. Holding an MBA and a Ph.D. in luxury management, Daniel has received education from Harvard Business School.
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