Though sales slowed in 2013, Salvatore Ferragamo still sees growth potential in second and third-tier Chinese cities, according to Reuters. Company CEO Michele Norsa says, “There are still elements of structural growth in China which has kept up in the second and third tier cities, despite having slowed in big capitals like Shanghai and Beijing.”
Uncommon among luxury companies, Ferragamo is seeing its wholesale revenue grow faster than that of its directly-owned retail stores, which are often the biggest revenue generators for luxury fashion brands. Even with rising growth in its wholesale division, Ferragamo saw its annual revenue growth in Asia drop to 9 percent in 2013 from 17 percent in 2012.
To boost revenue in its retail stores, Ferragamo is renovating its current stores and is opening new stores in “less well known cities” such as Yantai in northeastern China, Surabaya in Indonesia, and Cartagena in Colombia. The company has also re-opened its San Francisco store, which attracts a large number of Chinese tourists.
Part of boosting growth in China is combating counterfeit luxury goods. “We have recently begun taking action in China, where we have already won a civil case against a high-end hotel whose store sold counterfeit products,” says company chairman Ferruccio Ferragamo, according to Inside Retail Asia.
Creating revenue growth in Asia is a top priority for Ferragamo, as Asia accounts more than a third of its global sales. Though Ferragamo makes three quarters of its money from shoes, handbags, and leather goods, the company sees potential for growth in watches, eye wear, and other accessories.
image source: ferragamo.cn