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FURLA: THE COURAGE TO DEVELOP A WORLDWIDE BRAND
It's one of the most famous 'Made in Italy' brands in the field of leather accessories, and on the 27th October it celebrated its 80th anniversary. Furla's history (www.furla.com) combines traditions and innovation at the same time. The company also has a strong international presence, with 196 own brand shops worldwide - which will become 200 before the end of the year - and about 1,000 stores, made up of corners shops, shops-in-shops and sales points in multi-brand department stores. In 2007 its earnings are expected to reach 150 million euros, and 64% of its turnover will derive from exports.
We ask its President, Giovanna Furlanetto, how the company changed in nearly a century of evolution.
Furla is an eighty year-old company started out in the market by concentrating on developing its distribution network. My father took great care to develop strategic links with suppliers and clients which allowed the second generation to evolve the business model of the company from simple distribution to a build a proper brand. The turning point was when we started producing goods under our own name, building on a profound knowledge of the market we were operating in and supported by the financial solidity the company had achieved.
The key moment, therefore, was when you moved on from simple retailing to develop your own production line.
Exactly. In the Eighties we starter producing for the Furla brand and to commercialise our products following a model that at the time had been adopted only by the Benetton group, i.e. using franchising stores. We opened our own shops in downtown cities or in strategic streets, while at the same time we expanded through partnerships in those areas where it did not make sense to enter directly.
How important was the Italian market for you, and far does it still matter for you?
Italy is where our roots are and today it still is our biggest market, with a 36% incidence over our global sales, 65 own brand shops and a market share (around 40%) that is probably the largest for any single brand in our price bracket.
When did you realise that the next step was to focus on exports and that concentrating only on the Italian market would have limited your growth opportunities?
Around the mid-Eighties we started looking abroad, by opening our store in Paris first and then in New York. At that point we started to realise the significance of an internationalising strategy to develop a global brand. It was not a painless process: we took the risk of opening stores in France, which is never easy for foreign companies, and even more so in Madison Avenue in New York, where the turnover rate for retail stores is extremely high. It was a tough challenge, but today we have two stores in Madison Avenue and about twenty all over the US. The choice to set up camp in such a visible and strategic location paid off in the rest of the US market, including in department stores.
What was the next 'frontier' after America?
While continuing to expand steadily in Europe, in 1990 we set our sights on the Japan, entering the market with a directly controlled subsidiary, taking in all the risks that such a choice would involve. It was a bold move. We could have developed a retail partnership, but in the end we took the more ambitious route of entering directly with a company of our own. It was a winning tactic: today Japan is our second-largest market and accounts for about 20% of our turnover. We have 40-45 shops between high street stores and shops-in-shops in department stores. Moreover, Japan has become a launching pad for the whole of Asia. We branched out into China, where we launched our brand five years ago, and especially in South Korea, which is our second biggest market in Asia. We are also present in Singapore, Malaysia and Thailand.
What are the challenges for the future?
For us, the future is now. We aim to consolidate our presence in Europe, from Portugal down to Eastern Europe and right up to Russia, where have already opened seven stores and our presence there is becoming ever more strategic. Further east, we are interested in the Arab Emirates market and especially in India, where we are about to enter. Furla's strategy is always the same: expand our brand all over the world. The Furla brand is our strongest asset: our brand awareness in the world is certainly superior to the size of our firm in terms of brand recognition.
Since the added value in Furla's products is their capacity to represent and update the excellence of Italian craftsmanship, we ask the new CEO, Paolo Fontanelli (in charge since only a few months) what are the production strategies adopted by the company and what mission has been assigned to its supply chain.
We have historical and very profound links with our suppliers: they have a high degree of responsibilities, even in terms of quality control for the finished product. We consider them our partners in all aspects, even though we are not connected by share swap agreements. The production phases related to creativity, design, prototyping, study of materials and everything else which is necessary to develop a new product, stay in-house. But for the industrial stage we call on external partners, almost all based in Italy, with whom we have historic links. While we have some suppliers in the Mediterranean basin for some products such as small leather goods, 90% of our products are manufactured in Italy. 'Made in Italy' is very important for the Furla brand.
Before wrapping up our interview, we ask Mr Fontanelli to illustrate Furla's innovative strategies in the field of retailing. Do you believe in e-commerce?
We are very keen on it, as it demonstrated by the fact that the reorganisational strategy I am pursuing includes online sales. Our products are very well suited to be sold on the internet and we are already doing so in the US, with encouraging results. The figures are still small, but the growth trend of e-commerce in the US is significant, reaching into double figures and with enormous potential. We also want to concentrate on the travel retail sector (airports and duty free shops), which is well suited for Furla's range of products.