Euromonitor International Interview Series: Luciano Bertinelli, CEO at Ferragamo Parfums
Euromonitor International is pleased to present an interview with Luciano Bertinelli, the CEO at Ferragamo Parfums, part of the luxury specialist company Salvatore Ferragamo S.p.A, based in Italy. The CEO discusses prevailing matters in fragrances, including the strength of the niche segment and the desire for personalised offers, as well as the rise of stand-alone stores among beauty players, subjects of interest to industry observers and fragrance players, as the competitive landscape bears greater resemblance to a battleground for market share and too few consumers, often finicky on scent.
Niche perfumeries have been on the rise in recent years, potentially even eroding some of the market share from global prestige brands such as Salvatore Ferragamo. Can global fragrance brands compete with the niche segment with exclusive collections?
The niche perfumeries have undergone an important and interesting development and growth over the past years, becoming almost a trend. We do not consider them a competitor but an opportunity for haut de gamme products and exclusive collections, like our Tuscan Soul and Tuscan Scent Quintessential Collections, which are only distributed in our Salvatore Ferragamo Boutiques and selected top department stores.
Do you believe fragrance personalisation is the new way forward in the industry to compete in a saturated market?
I think that fragrance personalisation, in terms of creating an individual scent, could be an additional way to compete in a saturated market. In fact, nowadays consumers increasingly appreciate and seek exclusive, unique and made to measure products. Having said that, I guess that the eventual advantages in terms of additional sales would not be compensated enough by the complex business model this tool would require. On the contrary, I consider personalisation related to innovative aesthetic elements of the flacon and packaging a strong way to differentiate a fragrance in a saturated market. Also to leverage on market opportunities like local festivities helps to stand out. On the occasion of the Salvatore Ferragamo’s 20th Anniversary Celebration in China, for example, we launched a limited edition of Signorina Eau de Parfum, exclusively available in our boutiques in China.
Intellectual property protection is lacking in fragrances. Do you think this could benefit the industry if it was implemented? How?
To copy a perfume is very difficult as it is a multifaceted olfactive creation with a long process of development and technical and chemical know-how. Of course the industry could have some benefits from intellectual property protection, since each perfume would be really unique. In practice, managing the entire process linked to it would be very complex and would have more costs than benefits.
Some global brands such as Burberry and Christian Dior now operate their own stand-alone stores merging their fashion business too. Do you believe this provides a competitive advantage in the retail environment?
It can be an extraordinary competitive advantage from an image point of view and a great opportunity to attract different customers who are not only interested in fragrances. This is an important strategic decision to take, considering also the high investment of stand-alone stores. We at Salvatore Ferragamo have started to work in this direction with dedicated brand counters in top department stores, joining three product categories: fragrances, eyewear and timepieces. For now we opened the first ones in China and Italy and are considering to expand this business model to other countries. This is a first step in that direction with a limited investment to better evaluate the real business opportunity.
Online retailing in the beauty industry is become popular with consumers. Fragrances, however, often rely on the consumer smelling the product before making a purchase decision. Do you see online activity becoming a major source of sales in fragrances, especially given the more digitally-engaged younger consumers?
Compared to other fashion accessories or beauty products, the first fragrance purchase often relies on the consumer smelling the product. I think that more than any other product you use or wear, a perfume expresses and underlines your personality and therefore the choice is an individual one. Of course consumers approach a fragrance because of the brand, the appealing communication and aspect, but in the end they buy it because they like the smell. Online shopping becomes a major source of sales when it come to the re-purchase of fragrances.
What are the emerging challenges in today’s fragrances market?
In a very competitive scenario, distribution and visibility are our main challenge, for both off and online channels. Today, consumers are frequent travellers and purchasing is no longer only domestic. Therefore it is important to gain not only a local but global coherent visibility and be aware of high and low travel periods.
As for Salvatore Ferragamo, any new launches in the pipeline, or perhaps recent launches (such as Signorina Collection or Tuscan Scent) that you would like to discuss? Why do they stand out in the market?
The worldwide rollout of Signorina Misteriosa just started. It enlarges the Signorina franchise. Signorina is our most iconic product enjoying major success thanks also to the quality and strong link to the Salvatore Ferragamo Maison. In the second part of the year we’ll launch a new men’s line deeply linked to the DNA of our brand.
For more, visit the Ferragamo Parfums website