Forbes: A New Plan For Ferragamo And Versace Watches
December 11, 2017
It’s no secret that retailers, distributors and manufacturers need to find new ways to meet consumers’ changing expectations in the luxury and fashion markets. These changes in consumer behavior led Paolo Marai, president and CEO of the Timex Group Luxury Division, which manages the timepiece business for Salvatore Ferragamo, Versace and Versus Versace, to appoint the MadaLuxe Group as its U.S. and Caribbean distributor.
This new arrangement was actually announced in January but the two companies have spent almost a year formulating a strategy before truly making the partnership known in November. It’s a multi-tiered approach that ultimately focuses on the in-store experience for consumers.
"We started in January but we really wanted to have a kind of honeymoon period and develop an understanding of the way we need to work and the way we need to develop and that’s why we decided not to make it a big event in the very beginning. Let’s work a few months together and get a really strong team," Marai said in a recent interview.
The companies have spent this year hiring people in management roles experienced in both the fashion and the Swiss watch industry, including people who used to work with Fossil, Burberry, Tom Ford and Tag Heuer. They are working on sales training, product pricing, inventory management at the store level, in-store displays and aftersales service that are all uniform in the experience they provide. It’s not an easy task as the watch brands are sold in department stores, independent specialty stores and in branded boutiques. So relationship building is vital for this effort to be successful.
"This year has been a transition year but we are seeing very positive signs that 2018 will be a strong year. First of all because we have a bunch of new products coming that we feel good about; and second, we organized ourselves to have this smooth transition not to disrupt the market," he said. "I feel that 99% of the time we are absolutely aligned at what needs to be done."
MadaLuxe Group is a 30-year-old family-owned business that is one of the largest distributors of luxury fashion and accessories. It designs, produces, buys, sells, markets and distributes apparel, accessories and home goods from well-known luxury and contemporary brands. This is the company’s first time in the watch business, which is one reason why it has been on a hiring spree looking for talent. However, this is a company well-experienced in providing solutions for luxury fashion brands with a distribution network of about 300 retail stores in the U.S.
The company, which has seven divisions, was co-founded by the mother and son team of Sandy Sholl, CEO, and Adam Freede, president. They created the luxury segment of their business seven years ago and see it as a growth business because of younger consumers who are welleducated and curious when it comes to luxury
"We just believe many more Americans understand what luxury is," Sholl said during the same interview with Marai. "In the past they may have been intimidated to walk into a luxury store but now they are a lot more knowledgeable. We penetrated the luxury market very aggressively and spent a lot of time with all types of luxury lifestyle products."
Freede added, "We see the American market as a very big growth area in all categories, not just timepieces, because of the quality and craftsmanship of heritage brands. These timepieces go right into what we believe are major trends in the U.S."
Marai said MadaLuxe has long-term relationships with department stores. He believes MadaLuxe will increase their presence of Ferragamo and Versace watches, ensure the sales staff is well trained and properly manage the inventory.
"We needed a partner who knows luxury and who has a distribution-enhanced approach with department stores. They know the heads when going from one department store to another. This helps a lot. We chose someone with tremendous luxury experience and with a very openminded approach."
Marai is also happy that MadaLuxe has created a division just for the management of the Ferragamo and Versace watch business.
"There is a complete new team dedicated to watches, which is something that makes us feel good," he said. "We really hired a bunch of people who are expert in the watch category."
Marai, a native of Milan, has seen first-hand the changes in the fashion and luxury watch businesses since he began to lead the Timex Group Luxury Division in 2005, headquartered nearby in Lugano, Switzerland.
"It’s a new type of consumer that wants to buy in a different way and we have to learn how to process this new consumer," he said. "It’s not just about new products because new products mean nothing if you don’t have the entire marketing story around it. I’m not even talking about marketing as it has been done in the past. It’s a completely different story right now.
"What is happening is that when people are entering a store they don’t want to buy a product. They want to have an experience, which involves the quality of service and the way you display your story inside the store," Marai continued. "There is a lot of history behind a brand and there’s a new generation of people who want to know more about it in order to feel that they’re not just buying a product. Instead, they want to buy something that pertains to their world."
Much of the strategy is dealing with how young people digest fashion today and what appeals to them. Some fashion brands, such as Versace, have an identity based on its enormous popularity in the 1990s. When asked if young people still identify with this esthetic, Sholl said that in her experience Versace is as relevant today as it ever was and she points to her Versace watch as an example.
"Versace is the most recognized and the most popular brand. It’s actually astounding how good Versace does in general as a brand," she said. "When you look at this watch I would buy this as jewelry. It’s more than just a timepiece. It’s just a great fashion statement."
Marai pointed to Milan Fashion week, where Versace was the highlight with its tribute to its founder, Gianni Versace, who was tragically killed 20 years ago. For the runway show, the fashion house brought back supermodels of the ’90s: Cindy Crawford, Naomi Campbell, Claudia Schiffer, Carla Bruni and Helena Christensen. But Marai also noted that the show was a statement about the future of the brand.
"The strength of the brand is not from a position of the past. It must show that it has a capacity of what it says for the future generations. Definitely, Versace as a brand is showing they are really turning the page. The last show they did in Milano was in honor of Gianni. But it also was statement that said, ‘You did it, now it’s time to move forward.’ It was a very important message."