tv Studio 1.0 Bloomberg March 26, 2016 9:30pm-10:01pm EDT
♪ francine: welcome to leaders with me, francine lacqua. joining me today for an exclusive interview is the ceo of an italian shoemaker. the company's products range from foot wear, perfume, to eyewear, and it is still headquarters in florence, where it was founded back in 1927. michele norsa has been head of the company since 2006, and took it public in 2011. today we talk to the ceo about and theth strategy,
future of the italian luxury in a fashion industry. thank you for joining us. let's start with the focus on asia. do you believe there is still chinese growth for the luxury market? michele: looking into the medium to long-term, i have no doubt. the number of people who are entering the middle class, the average income of the people, the culture, how they have been able to develop very fast the beltsng curve from luxury to traveling it is great , potential. then there is also the traveling aspect. they have become more travelers, more curiosity. millions, more than 100 million people and changing , destinations. so this is also a surprise which may be modifying most of the spending behavior. francine: do you have to adapt your strategy?
do you have to constantly look at numbers to figure out how the chinese consumer spends, where they spent, and how they travel? michele: absolutely. i am trying to understand where they travel, and where they will go. there has been a clear evolution, because from the beginning, only hong kong and macau were the achievable destinations both for visas. then you had australia, europe, and sometimes in mexico. and then, a lot of traveling recently inside asia. there is in improving relationship between japan and china. francine: what surprises you the most about the chinese consumer? michele: i think the speed. , francine: at which they shop or at which they travel? [laughter] michele: the speed of evolution. they have been evolving from group traveling to individual traveling. they have been learning
languages extremely fast. all of the journalists speak two or three languages very easily. they have been adapting themselves to food, to traveling conditions, and they get deeper and deeper inside brands. looking at the products, comparing, comparing prices unfortunately, because this becomes an issue sometimes. but they are getting also nicer when i go into a store. the relations people, the staff, which at the beginning was a little cold. it is becoming more pleasant. there is more to come. francine: there has clearly been a crackdown on bribery or gifts related to luxury items in china. has it affected ferragamo? or, because you are in shoes, which is more personal, it has not been affected as much? michele: in a certain moment, it affected everybody. you saw different behaviors in different areas. in beijing, shanghai. in last year of the last year in , the year before, you could see
the streets empty. not many more people are carrying shopping bags. and you could really see even the embarrassment of the people where they were going, asking what is wrong. in the second and first year cities you could still see the , normal behavior. the impact on corruption was very high. even when the university came on the board of the chinese european business poll. you could see how people from certain companies were not going to master or were not allowed. people were controlling their behavior. with the time going on, a different product means a lot. people don't want to build or appear of shoes, or a small bag. this was related to more expensive items. like to watches. francine: talk to me about the market turmoil. does it impact your sales? or does it make it better?
the psychology, i guess, of this market turmoil that we saw last september, that we saw last january, i am not sure how it translates into your sales in the region. michele: it is not an immediate relationship with the stock market. because there has been a lot of things about the number of chinese, who are buying this, i don't believe there is so much direct involvement. i think the stock exchange is still closer to gambling and really to doing business. it is moving in athletic ways at times. what you feel is the mood changes. this has been, i think a mood , towards hong kong. it is a strong impact move. the move towards macau, travel visas, and in terms of growth of account, you still keep finding everybody convinced about
midterm growth of 6% or 6.2%. maybe not the top of the basket, but still you see the kind of confidence. in the short term, there are moments where it is more difficult. francine: where is the region that you see as most concerning? there has been a huge fall in the price of oil. that affects most of the emerging markets that are producers of commodities. is that again a concern for you? you are also very exposed to europe and the u.s. michele: no, if we talk about asia of course materials and oil , has been impacting. in you should think also terms of the accountings, which are more interested in consumption. they are not producers. if you take japan or china, there will be consumers. that will not be. the geopolitical risks which are sometimes impacting they don't , know if korea is far from us. l, a few hoursseou
from chinese cities. when there is devaluation, the concern. francine: so much volatility. michele: exactly. the volatility in currency has been higher than last year. the currencies are moving reasonably. last year, they were very sudden movements. what is impacting probably is the size of the movement. all of a sudden, you have a self-contained moving percentages. francine: do you still, do you project -- are you brave enough to make a call on the dollar? it seems most chief economists do not. michele: no. now what is more interesting is trying to understand the challenges. and there will be a lot of challenges next year. and also see the opportunities. it is very difficult to work with a timeframe which is longer than six months. working with the middle east,
tel aviv and so on, it could impact every day a different market. even the news about securities, cyber security, which can impact now. i think what is interesting is the challenges displayed in a good way. take the opportunity. francine: coming up after the break putting the digital into , fashion, ferragamo fights against fraud with microchips in its products. we talk innovation and protecting the value of the brand. an exclusive interview with the ferragamo ceo michele norsa. ♪
♪ francine: welcome back. today we are speaking with michele norsa. he is the ceo of ferragamo. ferragamo is the quintessential italian luxury goods company founded back in 1927. it is still centered in florence and it was family-owned until it went public in 2011. from the opening of the first national stores back in 1948, the company has expanded to become a key player in the global industry with shops in over 90 countries. mr. norsa, thank you for staying with us. we were talking about the challenges. you are talking about the opportunities, geopolitics.
what is the one opportunity you cannot miss over the next 12 months? is there a target consumer you need to be sure that you reach? michele: the most difficult is millennials. in fact, nobody is very clear also where they start or finish, but roughly 2.3 billion people with the age 18 to 30, they are moving very fast. they are spending money in a different way. francine: why different? michele: because they are always connected. and they are always comparing prices. they are trying to understand things. they are trying to understand what is new. but at the same time, they behave sometimes conservatively. sometimes they buy products which have already been successful. not to look for the potential. this is what would be interesting to understand. also, the destination of how they will spend time. and probably, they are leaping
in a different way, than other people who were traveling a few years ago. this is reserved for the future. francine: this is a game changer. how much do we know about how much they look at celebrities? how much do we know about how they are influenced by what they see on instagram or twitter? is,ele: i think it celebrity is something that always works. and of course, from the movie, hollywood, also the local celebrities, the people who are considered important in the asian life. you see, korean actors, the cory and movie industry, sometimes hollywood it, ood. wood -- bollyw i think they are also moving the young people faster. they are creating, generating themselves a phenomenon. this appears in the way they the
are traveling, the way they are spending. the way they are traveling. they are traveling to resorts, not only to the big cities. they have a lot of background on where they're going. and so they could become even better consumers than the generation before. francine: doesn't mean that you have had to adapt your style? a lot of fashion shows have changed calendars to keep up with this season we do not have anymore. we don't have the four seasons. how does ferragamo until of that? -- deal with that? michele: i am not in favor of changing the tradition of an industry like italy, you have to think of what this produces. in italy we manufacture 100%. in italy as a pipeline of project, as timing, which is -- it must be completely different. we cannot imagine fast fashion
if you just want to win back the consumer. i don't think people really need. people need to see new products in the store. this is true. every time they come they want , to see something new, sometime you may even have products in the fashion shows. maybe ready in one month, two months. you do not need to wait six months. in terms of changing faster the store, inside the store, having more colors, having more alternatives, more sizes, more things which are probably in the same team, but different. consumer also is very updated. francine: made in italy still sells. michele: absolutely. this is something more important. francine: why? michele: there is something even more important. made in italy means sustainability. the younger generation appears to be careful on sustainability. so it means it is manufactured in a certain way, in factories friendly, and
using materials and colors and things. i think it is becoming even more important why you want to know where it comes from. francine: ferragamo has also been one of the companies spearheaded the fight against fraud by micro-chipping the products. tell me about it. michele: i think this is very important. in terms of privacy, we don't follow the microchip after it left the store. we are not spying on the customer. what we are trying to do is trace the product around the world. there has been a phenomenon with product moving from one place to another, trying to immediately understand the two products. it gives some product, which can be mixed. i think it goes to give the consumer a kind of guarantee that we do what we can, do the
maximum that we can do. and very often helps in closing stores, stopping operations, and giving the feeling that you are present everywhere. even in china we got a lot of favorable lawsuits. even in the united states, you can close hundreds of websites. this is the area where the cyber security or insecurity is becoming really -- francine: how much does it take up of your time? how much do you worry about fraud compared to geopolitics and the curve and trying to understand the chinese consumer ? michele: i would say the consumer is probably the number one. geopolitics is number two. because you must try to anticipate if you just take into account what is happening. you do not want to gamble. and counterfeiting, that is what everybody is following on the web. this is not really you're not , concerned about finding a
we continue our exclusive interview with michele norsa. norsa has been at the helm of ferragamo since 2006, taking it public in 2011. he has just been elected to stay in the post until 2018. we continue the conversation with a look at the company's future. we talked succession, possible m&a, and more. what worries you the most? is it, you know, i always talk about risks and rewards. you need to make sure you give back to shareholders. you need to put a succession plan in place. you are always in constant speculation of being an m&a target. michele: i think it is a major concern for the ceo of a family-public company is to definitely also create value but create value from a long-term. i think it is not be our not companies running after the quarter or we are under pressure to go over turnover. the top line, and so on. what are you trying to build is
really sustainable growth in a certain sense. what we tried is to have the confidence of the market. also we believe that from the beginning, we have been very open. talking about, try to explain what was at the bench. we are still small. we are a company that is 1/3 of, 1/2 of some of the major competitors. we have room to grow. our core integrity's. francine: do you feel vulnerable? if you look at these big french companies, they are buying everything up under the sun. do you think it is an opportunity? how much time do you spend about -- if you have to defend yourself? michele: no i felt vulnerable , until we reached $1.5 billion. i don't think it is big enough in terms of the potential to invest. so the vulnerability comes from that. you may believe it financially, a certain condition when you
become. but then i think it is the market it has really appreciated the focus of the company. the most successful companies in a certain way. they are the companies focusing on their own brand. ferragamo is looking at. you have to know. you have to know everything. you have to know the value of the company. you have to know how people move inside the companies. also, how is the evolution of the ceo. this is information you must have every hour. francine: you must have plans to retire at some point. how much do you think about your succession plan? would it be someone from the family? michele: i don't want to say anything, because in deed to the family has gone public. because they knew the number of shareholders and future shareholders was getting bigger. of course, when i joined in
i would not have imagined to 2006, stay as ceo for 10 years. a ceo is really a lot of stress. you have to have more, to do more at the same time. so it makes sense to think about somebody who is like you. a younger, but probably on the other side, the ceos tend to be very centric and there is something you should do. doing it in a good way is also one of the most important objective in your mind. francine: what do you most like about your job? you must love it. you have been at the helm for a long time. michele: i think i enjoy working with people in a very global way. for me, the most interesting thing every morning is to open up and see what did they buy and what did they do? in one country, when we can open, why are the chinese going
to market? what we can develop in terms of service. why you cannot change a new pair of shoes. leaving in an industry which is evolving every day and in a very local way. and then working with people. francine: how do you do your research? do you actually look at sales figures on a daily basis or weekly basis? michele: i watch -- we have 380 stores. i watch the figures of all of the most, all the stores every day. i would go to the biggest one, definitely. maybe not in the morning, but at the end of the day, all of it, it was not so at the beginning when i joined the company. and then i would call the ceo and try to understand why macau was doing well or not. if it was better than united states or falling. this also creates pressure from the people who are working. they know i am looking and they must look at themselves.
and then you get a lot of information also on more details about the traffic in the stores, the commercial of the day, the ticket. it is interesting to see how these consumers are spending around the world. . but to see how consumers are spending around the world. francine: because it has changed? michele: no. it is too similar. what is surprising me is that you would expect the monte carlo store to have a ticket that is five times and then at the end it is $50 or $100 different. it is surprising to me. because i would have expected a bigger difference. when you look at large averages, they tend to -- francine: it was a great pleasure to have you in the program. thank you. michele: thank you very much. ♪
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