MILAN -- While some luxury giants are taking a hit on sales from China's slowdown and anti-corruption drive, Moncler, the not-so-giant fashion brand known for its 1,000-euro down jackets, is still growing fast. Its revenue for the first six months of this year rose by a reported 35%, helped by the cheaper euro. The figure was 26% excluding the effects of exchange rate fluctuations.
"China is not as good as last year, but I think we didn't lose Chinese customers because we have a lot of Chinese who travel to Europe." Chairman Remo Ruffini explained in an interview with Nikkei. Moncler's revenue in Asia grew 36% at constant currency, helped by Japan and China. But Europe, the Middle East and Africa are also doing well, rising 18%. "Europe is very successful at the moment thanks to the economy, and also a lot of tourists."
Japan is another place where he expects more Asian tourists to buy their jackets. Moncler will open a new flagship store in Ginza, one of the most prestigious districts in Tokyo, with a grand opening scheduled for Oct. 24. At 560 sq. meters, it will be the second largest Moncler store in the world, Ruffini says "We can really show our customers our strategy, philosophy, more products and our vision." He had always wished to show more variety in Japan, where sales tend to concentrate on iconic products. And with Ginza being a favored shopping spot for Chinese and South Korean tourists, Ruffini appears confident. "The rent is very high, but we are quite confident of reaching our numbers."
Chinese travelers shopping aboard is not a new phenomenon, but Ruffini sees the trend accelerating, and consumers becoming more sensitive to foreign exchange rates. "For example, London, which has a different currency, is not as successful as Paris," he said. Consumers are adapting to the changes "super-fast." It is to a point where he now feels that he needs to be conscious of inventory around the world. "We don't want to say we don't have enough stock in Europe or have too much in China," stressing that the situation changes from day to day.
In such a volatile climate, Ruffini's goal is to maintain regional balance in the company's expansion. Asia, including Japan, now makes up 35% of Moncler's revenue, up 5 percentage points from last year. The Americas are up 5 points to 15%, while the share for Italy and the rest of Europe has decreased, making the company less dependent on any one market.
He also intends to counter currency fluctuation by adjusting prices. "We already reduced the gap between Europe and Asia, and I think in the winter our strategy is to really go as close as we can."
In South Korea, Moncler decided to enter a joint venture with local retailer Shinsegae, in order to overhaul its operations in a market where it was highly dependent on wholesale. It transferred its 12 wholesale stores to the new joint venture, and converted them into retail stores. "It means for sure, that we are going to suffer at the beginning, but we can have a very good market like Japan and China."
Ruffini explains that before, wholesale stores emphasized too much on selling more volume, and therefore, selling mostly entry-price products. "We didn't want to do that," he said. Taking time to build a better brand image and spreading the message of the brand is his priority at the moment.
Another thing Moncler will invest in is e-commerce. Ruffini says that "we are growing quite fast [online], but in small numbers." But he sees that in the future it will be key to embracing younger customers. "It is not a question of having strong revenues [online] now. I think it is about building up a culture, a different culture for your customer." When asked about how long it will take for its online sales to become more significant, he said, "I don't know, this world is very fast. It means you cannot say [what will happen] five or ten years ahead. We don't have to make a clear project, but we have to work very hard and wait."