Salvatore Ferragamo is planning an ambitious incursion into Latin America’s growing luxury clothing and accessories market in a move that will make the region as key a growth driver to the Italian luxury and leather goods chain as Asia.
This story first appeared in the November 1, 2011 issue of WWD. Subscribe Today.
Speaking on the fringes of the 2011 Latam marketing conference held in Miami last week, Ferragamo’s Latin America managing director Diego Stecchi said the chain hopes to install 10 stand-alone stores and 12 corners by 2015.
“We have a very aggressive expansion plan in the region, where fashion and luxury markets are growing at very impressive rates,” Stecchi said.
The new doors, which will boost Ferragamo’s points of sale in the region to 106 from 84 now, will be opened mostly throughout South America and Mexico.
Stecchi said the retailer, which opened its first shop in Lima, Peru, in June, will roll out the new units in Colombia, Chile and Mexico, as well as in other unspecified markets.
Meanwhile, the new corners will open in markets where the retailer already has a strong presence, including Mexico and Brazil. The moves will flesh out the luxury purveyor’s foothold in Mexico, Panama, Dominican Republic, Argentina, Colombia and Costa Rica, where it already sells merchandise through monobrand stores, as well as department and multibranded store corners.
Currently, Ferragamo has 19 stand-alone stores, with seven operating in Mexico, four in Brazil, and most of the others in Colombia, Chile and Argentina. Mexico drives the company’s corner sales with 13 doors operating in the Palacio de Hierro department-store network and two in Saks Fifth Avenue’s Mexican stores. The remaining corners are spread throughout Colombia, Panama, Argentina and the Caribbean. In Brazil, Ferragamo operates one door in the Daslu luxury department-store chain but has plans to significantly ramp up that count in the near to medium term.
Stecchi said 60 percent of the new doors will be owned by Ferragamo and 40 percent will be franchised, showing the fashion house’s desire to own more of its floor space. Currently, 28 stores are directly owned and 56 franchised throughout the region.
Because of their booming economies and growing ranks of upmarket consumers, Stecchi said Latin America and Asia will account for the bulk of Ferragamo’s future store openings.
While luxury fashion is poised to grow sharply in both emerging markets, Ferragamo will position itself differently with its Latin American customers, most of whom are young males seeking high-end formalwear.
When it comes to luxury apparel and accessories, “Latinos are more formal consumers [than in Asia and other markets],” Stecchi said, adding that suits, and most notably ties, are big sellers in the region.
“Work ties are in higher demand than in our more mature markets,” Stecchi noted. “If you go to Bogota, for example, you see many more men wearing ties and formalwear for work, so ties are one of our best-selling categories.”
Buying luxury is increasingly becoming a mark of success for Latin America’s growing number of young and moneyed executives. Unlike Asia, however, observers at the marketing conference noted that Latin American luxury customers appreciate a warmer and more intimate shopping experience as well as more humble treatment from selling staff.
“They do like to be pampered and our selling approach is friendlier and warmer as a result; more on a one-to-one basis,” Stecchi said. Latin American stores are also smaller than other markets to provide a more intimate environment where staff usually get to know each customer more personally, he added.
However, Stecchi mirrored other conference views that some Latin American countries’ import procedures are causing headaches for luxury retailers looking to grow in the region.
“Import procedures are complicated in Argentina and Venezuela,” Stecchi added. In Argentina, merchandise importing can be a “very lengthy” process with no clear communication from custom authorities about cargo import approval timelines.
Stecchi said: “We don’t know how long we will have to wait to have the merchandise in our stores. This can be a big loss for us and the government.
“There are lots of tourists in Argentina that want to shop in Buenos Aires, so being able to get the latest fashion on time is very important. Otherwise, customers go elsewhere to get it.”
According to Stecchi, if Argentinian import procedures were sped up, Buenos Aires could become a much more important Latin American fashion and luxury market.
In Venezuela, he added, the government’s U.S. dollar currency restrictions also make importing procedures more expensive and, with Hugo Chavez’s administration unlikely to end anytime soon, the market will likely remain challenging for luxury purveyors in coming years.