Versace: In search of some young rock ’n rollers

　　

　　The presence of Gian Giacomo Ferraris, the new chief executive of Versace, at the Baselworld watch fair in March underlined an increased focus on the luxury fashion brand’s watches and jewellery line.

　　Mr Ferraris chose the opportunity to confirm a new watch line, to be introduced this year.

　　“To capture the young generation, the rock ‘n’ roll young women, I think we need to have ready at the end of this year the Versus line of watches,” says Mr Ferraris.

　　Versace, one of the world’s most famous luxury fashion brands, is synonymous with high-octane glamour. Its watches make up 7 to 8 per cent of turnover.

　　But while the aesthetic may spell exuberant confidence, behind the scenes the books have told a different story.

　　An operating loss of €30m ($41.8m) was recorded in 2009; in October last year, the business was restructured at the expense of 350 jobs – 25 per cent of the company’s workforce – and the Burago accessories plant in northern Italy was closed in order to centralise production.

　　Mr Ferraris, the former Jil Sander chief executive, was the force behind the recent structural sea change.

　　Promising to guarantee the future of the brand and bring it back into profitability, he has emphasised the importance of accessories in his new business structure, since taking over in June 2009.

　　“Clearly, this year the company has to balance the business with accessories. They now represent 35 to 40 per cent; I intend to balance them, so that accessories represent 50 per cent.”

　　Placing emphasis on accessories such as watches and jewellery is commonplace for luxury fashion brands; in many cases they form the backbone of a business.

　　The new Versace strategy is in line with other luxury fashion diffusion lines, such as Emporio Armani, DKNY, and D&G, which all have watch ranges aimed at the younger consumer.

　　According to James Lawson, director of Ledbury, the luxury market research specialists, accessories are attractive for a number of reasons.

　　“First, they tend to be at a lower price point, acting as entry level products for people coming to the brand for the first time,” says Mr Lawson.

　　“They also allow brand advocates to complete their wardrobe. Second, they are frequently manufactured by others, under licence, so the economics can be attractive. A third reason is that they tend to sell well in emerging markets, as a result of the brand’s high visibility on the product, as opposed to, say, clothing,” he says.

　　Versace’s new watch range will be an extension of Versus, the fashion brand’s diffusion line, which was resurrected in September 2009 after a five year hiatus.

　　“It is the duty of a fashion brand: we must capture the young generation,” says Mr Ferraris.

　　“We need to direct a certain customer segmentation and I think Versus is the answer to this , long-term strategy.”

　　Donatella Versace will oversee the design and the licensing agreement with the Timex group will also continue, “watches – Swiss watches – are very specific. To design watches, you need technical [expertise]. You cannot do everything – to control this input is to perform for the end consumer,” says Mr Ferraris. The average price of a Versus watch will be about €200, while a special project, including more expensive watches will be announced toward the end of the year.

　　The style of the Versus watches has yet to be confirmed, although if the Versace watch line is anything to go by, they may be relatively classic in approach.

　　“Donatella’s vision is in producing for the clients this energy, this glamour, but also a minimalist interpretation. I assure you it is very business-like,” says Mr Ferraris on the style of the Versace watch line.

　　Versace will also expand its stand-alone watches and jewellery stores. After opening one in Rome in 2007, and another in Dubai in 2009, Roberto Selva, Versace’s director of licencees, confirmed other openings.

　　“The idea is another, maybe, in 2010 and another in 2011. It could be two strong locations: one could be European and one could be East Asia. We have 44 per cent of our sales in the Middle East, in the US about 12 per cent, Europe 15 per cent, and the rest is China – that is the emerging market now.”

　　Why is a stand-alone more effective than combined accessories and clothing? “You can express the lifestyle world of Versace,” says Mr Ferraris.

　　“In certain areas you also have to be recognised as unique in this kind of distinction, to be more powerful in terms of expression.”

　　And the timing, according to Mr Lawson, could be just right. “The watch sector had a torrid 2009, but is bouncing back now,” he says..

　　“Category expansion has to be carried out carefully, ideally into sectors where the brand’s attributes map easily.

　　“In other words, our research shows that one of the core Versace brand attributes is glamour, which translates well within watches and jewellery.”

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