FERRAGAMO STRENGTHENING ASIAN DISTRIBUTION CONTROL
Byline: Samantha Conti
MILAN — In a bid to tighten control over its distribution network in Asia, Ferragamo has formed a joint venture with its Hong Kong retail franchisee Imaginex Holdings Ltd. Ferragamo said in a statement Wednesday that each partner will have a 50 percent share in the new company, to be known as Ferragamo Retail HK.
Imaginex has managed Ferragamo’s 12 sales points in Hong Kong for the past 12 years and is owned by Peter K.C. Woo, who owns Wheelock and Co. and Wharf Group. As reported in these columns, Wheelock earlier this month took a controlling interest in Joyce Boutique Holdings.
“We are constantly working toward a vertical integration of our business, in order to nurture a close and controlled relationship with the final customer,” said Leonardo Ferragamo, chief executive of Ferragamo’s Europe Asia division. “With the Hong Kong joint venture, the focus is on upgrading the quality of the stores, both through renovations and improving customer service, rather than expansion.”
Hong Kong currently accounts for 7 percent of Ferragamo’s sales. Of the 12 Ferragamo doors in the city, 10 are stores and two are men’s corners at Lane Crawford, also a unit of Wheelock. The Far East currently accounts for 24 percent of Ferragamo’s sales, which were approximately $402.5 million in 1999. The company has more than 404 sales points in the region, 257 of which are in Japan.
Mondano, a subsidiary of Imaginex, currently controls the 14 Ferragamo stores in mainland China, which continue to be operated through the existing franchise arrangement. Ferragamo said the new joint venture partnership would be “strategically important in building bridges to mainland China” as well. “Ferragamo has been in mainland China for eight years, and clearly we are happy to have a structure already in place for any further opportunities that market may offer,” Ferragamo said, adding that in Asia the company’s strategy has been to focus on the local customer base, rather than rely solely on tourists.
The Italian company already controls distribution in Japan and Korea through joint venture agreements with local partners, and Ferragamo said the company’s plan is to pursue a similar strategy in Singapore, Malaysia and Indonesia. The franchisee for those regions is also Ferragamo’s joint-venture partner in Korea.
Ferragamo is one of a growing number of Italian luxury goods companies that are taking direct control of distribution, generally at the expense of licensing or franchise agreements. Gucci has been systematically buying back its franchises in the Far East. Earlier this year, the company entered into a partnership with its longtime franchisee F.J. Benjamin Holdings for the distribution of the Gucci, Yves Saint Laurent and Sergio Rossi collections in Singapore, Malaysia and Australia. Gucci controls 65 percent of the joint venture company.