Ferrari’s F1 success little help in fight with Fendi
Carmaker’s rides scream luxury but its threads are more run-of-the-mill
With more than 220 Grand Prix wins, Ferrari is the most successful Formula One team in history — a record that goes a long way toward justifying the $200,000-plus sticker price of its street-legal sports cars. Yet as Chairman Sergio Marchionne seeks to expand the brand into luxury goods such as apparel and accessories, that racing pedigree may hurt Ferrari as much as it helps.
Marchionne has long maintained that as a seller of sleek and speedy toys to the megarich, Ferrari has more in common with Fendi and Chanel than Fiat or Chevrolet.
“Ferrari can’t be viewed just as a carmaker,” Marchionne said after the company’s Oct. 21 share offering on the New York Stock Exchange.
It is “positioned in the luxury goods space with its relevant peers: the Hermes of the world, the Pradas.”
Problem is, the bulk of Ferrari’s non-car products are designed more for Grand Prix fans than for people who can pay $250,000 US for its 488 GTB convertible. The key selling points are the company’s name and its prancing-horse logo rather than the materials and workmanship that are the hallmark of the big luxury houses. That means many of its products more closely resemble a Harvard University T-shirt or a New York Knicks jersey than the $600 belts US, $3,000 jackets US, or $10,000 US handbags sold by the likes of Gucci, Fendi and Dior.
Management has to ask “what is their ambition for the brand?” said Rebecca Robins, a director at consultancy Interbrand in London. Getting into other kinds of luxury “is a very different proposition for a brand such as Ferrari.”
In a filing for its initial public offering, Ferrari said it plans to “selectively expand” sales of other goods, though Marchionne acknowledges it will take time to forge an image as a maker of anything besides cars.
The company will hire people from the luxury trade to “build that business one piece at a time,” Marchionne said after the New York debut.
“To be perfectly honest, we are not deep in that talent pool today.”
In 2011, then-chairman Luca Cordero di Montezemolo hired Andrea Perrone, former chief of luxury suitmaker Brioni, to expand the division.
Perrone created a new clothing line called “Pr1ma,” selling 240euro ($266 US) Panama hats, 390-euro sweaters, and 1,980euro suede jackets. The effort never really took off, though, and Perrone left in January. In September, Ferrari hired Luca Fuso from eyewear maker Safilo to replace him.
The company sells its Ferrari-branded goods online and via about 20 franchised and 12 company-owned stores from Miami to Macau. But Ferrari reported just 21 million euros in merchandising revenue last year, or 0.9 per cent of its total sales of 2.5 billion euros — and that fell from 25 million euros in 2013.
“We see few other ways for Ferrari to crystallize material profits from the brand as effectively as” with cars, Exane BNP Paribas analysts Stuart Pearson and Luca Solca wrote in a report before the IPO.
The branding effort, which also includes a Ferrari theme park in Abu Dhabi, featuring the world’s fastest roller coaster and an Italian trattoria, doesn’t exhibit the consistency in pricing and quality needed to earn Ferrari a place alongside the global leaders in luxury, according to Armando Branchini, founder of consultant Intercorporate.
It can’t keep selling the $18 US key rings, $41 baseball caps US, and $65 US Ferrari- red swimming trunks its Formula One fans want while also charging $570 US for sunglasses and $2,700 US for a bomber jacket.
Ferrari must “position the brand at the very top of the range across their activities or they are not going to be successful,” Branchini said.