Luxury Italian handbag maker Furla believes China is the key driver to its growth.
The company expects its sales in China to outpace the rest of the company’s sales this year due to Chinese austerity measures and a rising Chinese middle class. Furla’s CEO Eraldo Poletto tells Bloomberg that the company expects a double-digit percent sales increase in China compared to a “high single digit” percent sales increase in the rest of the world.
Because of China’s austerity measures, including president Xi Jinping’s ban on lavish gifts to government officials, high-end brands such as Prada have come under fire. This is causing Furla to focus on the mid-level Chinese luxury market that will put the company in direct competition with brands such as Coach Inc. and Michael Kors Holdings Ltd.
CEO Poletto said, “We see ourselves as a door to the luxury world.” He continued, “The middle class in China is expanding and their wealth accelerating, that’s where our growth comes from.” With prices between 250 and 450 Euros, Furla handbags sell for a fraction of Prada prices, which puts them in reach of the Chinese middle class.
Though Furla is still scouting locations for its flagship store, the company has already partnered with menswear retailer Trinity Ltd. and supplier Li & Fung Ltd., which are both owned by Fung Group. Furla hopes this partnership will be a stepping stone to opening 100 stores in China within four years.
image source: think retail