Italy’s Furla upbeat despite squeeze on luxury market

The retailer hopes its price structure and loyal customer base will help it sail smoothly through the recession. Furla chief executive Paolo Fontanelli said: “Price positioning for premium product is important to us, customers are trading down from the major brands, and labels such as Gucci and Louis Vuitton are introducing entry price points. We have always had those price points.”

Furla now has 298 standalone stores and 1,000 selling points across 64 countries. About 35 per cent of its business comes from Italy and 20 per cent from its second largest market, Japan.

As the head of a global business, Fontanelli is well placed to have an overview of the state of the world economy. “We have certainly seen the US become critical,” he said, noting that until last year it was the retailer’s third biggest market. “Elsewhere customers are becoming a lot more price-conscious than they used to be. We had Russian customers in Italy and the UK who used to buy three handbags at a time. They are now choosing more carefully what they buy.”

Italy has not been a serious concern to the retailer yet. “We have a much more loyal customer base who wants to be reassured by our product.”

Although retail has been generally difficult in Japan, where the government has announced a ¥10 trillion (£67bn) fiscal stimulus plan, Furla said that this market has not been down significantly.

In 2008 the brand achieved a global turnover of £157m – annual growth of 4.5 per cent, with like-for-likes ahead for most of the year between 2 and 2.5 per cent. “Things are becoming more difficult,” admits Fontanelli.
“But if Japan can maintain we will not be too far off 2008 this year.”

The UK has been a big growth market for Furla in the past year, after a flagship store opened on London’s Regent Street in December. Tourists have helped to buoy sales at its four stores in the capital. They account for half of total UK sales at its Regent Street and Bond Street stores.

Furla hopes to invest more in its UK business but will not rush into aggressive expansion. “Everything in 2009 will be driven by cash flow,” said Fontanelli. “We are a family business and would never go into debt to open stores.”