By guest author Christina Binkley from Vogue Business
Key takeaways:
- Ferragamo chief executive Micaela le Divelec Lemmi says that the company is working to catch up in e-commerce and digital as stores remain closed.
- This includes a new website, clienteling services and Spotify playlists targeted at younger customers.
- Le Divelec Lemmi considers digital to be the “bridge” that can connect consumers, retailers and factories.
Sometimes innovation means catching up. Business was just turning a corner for Salvatore Ferragamo Group when the coronavirus pandemic hit its global network of stores and its Italian factories. Rounds of shuttered stores have been particularly hard on the Florentine footwear maker, which has been slow to shift to online sales, which are so low that the company declines to divulge them.
Ferragamo’s men’s and women’s fashion collections are one of the mainstays of Milan Fashion Weeks. With 4,000 employees, the company reported EUR 1.38 billion in revenues in 2019, an increase of roughly 2 per cent from EUR 1.35 billion in 2018. That was big news — its first increase in sales since 2015, all the more notable, since it came despite a hit to revenues in Hong Kong, as a result of the protests there. Asia and Japan are responsible for 46 per cent of Ferragamo sales.
Now caught flat-footed with limited online sales, Ferragamo is seeking to quickly build what Micaela le Divelec Lemmi, its chief executive officer, calls “bridges” between the brand and its consumers, retailers and factories. In coming months, Ferragamo will make an effort to pick up its digital game, including immersion in augmented reality and virtual reality that may be the only means of showing new collections for many months, she says. But for a brand that pulls in most of its revenue from stores, innovation may also come in the way it employs old-school tools such as the telephone, and how it helps clients ease back into shopping the bricks-and-mortar way.
With their focus on the personal touch, luxury brands have been slower than much of the retail industry to embrace online sales and data-centric marketing approaches that have been common since the early naughts. For the laggards, the pandemic has been the final straw, forcing them to quickly innovate and catch up. It is clear that digital-resistant consumers are now shopping online for all sorts of needs — food, household products, and fashion — as other avenues to goods are closed.
“We find ourselves on the starting block, and we need to find the way forward,” says le Divelec Lemmi, who has been working from the home she shares with her family outside of Florence, where she notes her household is simultaneously hosting business meetings and online school classes. (“I am not sure if they’re trying to deal with schools, or if they are trying to not deal because there is always a good excuse,” she says of her kids with a laugh.)
At Ferragamo, the 51-year-old executive is wary of making sudden changes that would upset loyal customers with a new brand direction for a company that is closing in on its centennial anniversary. The idea is to take advantage of a newfound interest in flexibility and to re-set expectations in the “fraction of a moment,” she says when people are open to something new.
One of the most visible questions facing fashion brands is how they will march out their collections in the coming months. Saint Laurent threw down the gauntlet last month, announcing it won’t hold its next catwalk shows, relying instead on digital communication. While London Fashion Week has committed to digital fashion shows, the major fashion weeks in Paris, New York and in Milan, where Ferragamo shows, have not yet offered such broad guidance to brands. Le Divelec Lemmi says she is assuming the only solution will involve augmented or virtual reality.
“The digital reach will be absolutely central because it’s very unlikely we will be able to host press from all over the world,” she says. “We don’t want to put people in a strange position of taking any kind of risk.”
As Italy descended into the coronavirus response, Ferragamo began shutting many of its 654 stores (393 are self-operated). It, meanwhile, financed the renovation of two Florence hospital wards that had been closed since the 1990s, donated respirator masks and 50,000 units of hand sanitiser. The company has frozen non-essential capital investment, renegotiated leases and revoked its proposed dividend on 2019 profits. Nevertheless, Ferragamo, whose shares trade on the Milan stock exchange, warned that its first-quarter revenues could be down by nearly one-third from a year earlier. Its shares are trading near historic lows.
Investors are braced across stock exchanges for bad news from fashion brands. Tapestry, which owns Stuart Weitzman, Coach and Kate Spade brands, last week reported a $685 million operating net loss for its first quarter after closing 90 per cent of its stores in the mainland US. Neiman Marcus and J.Crew, both laden with private equity debt, have both filed for Chapter 11 bankruptcy protection in recent weeks. LVMH revenues fell 15 per cent to €10.6 billion in the first quarter of 2020 – a result the company called “resilient”. At Kering’s flagship Gucci brand, revenues plunged 22 per cent to €1.8 billion.
To head the company toward recovery, le Divelec Lemmi swiftly accelerated completion of a new Ferragamo website that had been in development before coronavirus emerged. Launched last week, the site is long on magazine-like editorial imagery. It isn’t digitally groundbreaking, but it has plumbed the company’s rich archives, which date back to the brand’s founding in 1920s Hollywood by Salvatore Ferragamo.
Ferragamo first launched a shoppable website in the US and parts of Europe in 2009 but hasn’t until now pressed aggressively to shift sales online. Even now, the personal touch is a mainstay of its marketing. The company is asking sales associates to use the new site as a reason to reach out personally to clients, especially in Europe, who still rely on the telephone. The idea is to tiptoe toward a reopening of its stores, where clients may pick up goods they’ve ordered or even arrange a private shopping event. Le Divelec Lemmi is counting on luxury goods to serve as a means of seeking comfort, once stores return, but she assumes that shoppers will be slow to come inside. The plan is to liberally allow stores to arrange for private shopping expeditions where a client won’t have to share store space with strangers.
The new Ferragamo
While part of its strategy is geared to catering toward existing clientele, the brand is reaching out to younger customers — who may not know that Ferragamo did the footwear in Cecil B deMille’s The Ten Commandments (and may have never heard of deMille)— by appealing to their creative senses. It launched a Spotify playlist featuring imagery from recent ad campaigns and offering a broad array of songs from its fashion shows and its creative team’s inspirations. One, called Freedom, features Donna Summer, Sufjan Stevens and Lemon Jelly. Those who dig a little deeper into Spotify will find that Ferragamo’s design studio offers a peek into its workings with its own playlist — creatively entitled “Design Studio” — that offers five hours of music from Terence Trent D’Arby to Kim Carnes and Queen. This playlist is delightfully unedited, playing some songs twice in a row.
One project, in the works before the pandemic, was forced to postpone. To launch its new Vivaviva shoe — a modern update of its classic Vara shoe — the brand planned to use a virtual-reality device to allow a client in a store to immerse themself in the manufacturing process, visiting a Ferragamo factory where the Viva shoe was being made, enabling the client to change the colour and other details of the shoe while pre-ordering it. This is another of those bridges that le Divelec Lemmi speaks of – this one bridging the factory and the store. It will have to wait until technology teams can turn back to it.
As a longtime luxury goods executive, le Divelec Lemmi, who arrived at Ferragamo in 2018 after a long stint at Kering brands including Gucci, where she worked as chief consumer officer, says she has had her own struggles to use digital technology while working from home. While she sees digital innovations as tools to build those bridges to consumers, she notes that they are only as available as the telecommunications that enable them. Italian telecommunications companies have been racing to provide bandwidth to homes that had previously been devoted to office buildings, including her own home.
“To be honest, if I thought five weeks ago that I would arrange a conference call, let alone from home with wifi that is working so slow, it was not something that I would ever have considered,” le Divelec Lemmi says. “And these days, it’s becoming something natural.”