MBO@Halder

Made to measure

2015-7-10

In September 2013 Halder invested in the MBO/MBI of Bottega Manifatturiera Borse, an Italian manufacturer of luxury handbags. After the ownership and management change, Bottega relaunched its „Gianfranco Lotti“ brand to cover the consumer market in parallel to its B2B business. Since then the company has moved forward in leaps and bounds – let‘s take a closer look.

Room for growth

A quick glance at the market reveals that high growth rates of the past (global demand for personal luxury items tripled to €223 billion in the last 20 years) have stabilised at 5% in 2014. According to management consultants Bain & Company, who prepare an annual market study for Italy’s industry association Fondazione Altagamma, the slowdown is primarily attributable to a sluggish recovery of the global economy since the 2008 recession. According to the experts, however, the slowdown makes growth more sustainable than before.

For companies like Bottega (annual sales of €35 million), a €12 billion increase in market volume for 2014 definitely offers sufficient room to realise ambitious plans. „For us, it comes down to know why somebody should spend a lot of money on a ‚Gianfranco Lotti‘ handbag when there are bags of better-known luxury brands around“, says Franco Lucá, managing director and a stakeholder in the business. Much can be done by working on market presence and brand awareness – Bottega has already achieved a great deal through its advertising campaigns, PR, testimonials and events in traditional and social media. “But a brand can only grow if it is consistent in all aspects and trusted by consumers as well as distributors“, Lucá points out.

The spirit of the business

What is that exactly? „Gianfranco Lotti“ handbags incorporate traditional Tuscan craftsmanship, the best quality materials, contemporary design with classic touches and top quality manufacturing, all underpinned by conservative volume planning. This creates exclusivity – which is reflected in the product range: to celebrate the opening of its own boutique in Milan, Bottega released a small „limited edition“ collection in the spring of 2015 – developed by a designer who had previously worked for companies such as Bally, Dior and Ferragamo. The autumn/winter 2015/16 collection will include around 100 items which can be purchased in stores or via the company‘s website. Keeping collections to a manageable size helps to gauge consumer reaction, reduces stress on internal resources – and matches the brand perfectly.

And what could be more exclusive than a unique item? „One piece only“ is Bottega’s idea for designing and making handbags that are truly one-of-a-kind. „The only requirement is that a handbag bears our logo. The client is otherwise free to create whatever they want. They don‘t need to worry about current collections or choice of materials. Their designs are not archived. I don‘t think anyone else in our market offers that“, says Lucá. „Our Middle Eastern clients are particularly thrilled.“

But it doesn‘t stop there: „Gianfranco Lotti“ handbags carry a lifetime warranty that covers all damage caused by normal use and manufacturing defects. This is a clear indication of manufacturing quality and of the manufacturer‘s pride in the product. It is also a strong commitment to customers – provided in writing. „It does have appeal,“ says Lucá, pointing to an analysis of shopping patterns which suggests that the exceptional warranty helps with sales conversion. „To us, offering ‚one piece only‘ and a lifetime warranty is completely consistent: it is all based on work done by skilled hands.“

Infrastructure grows in step

Products are available not only via an upgraded website, but also at flagship stores in Paris, Florence, Milan and Chongqing (People‘s Republic of China). Another store in China and a store in Seoul are to be opened this year, and Bottega will also work closely with the South Korean duty-free organisation. 2016 will see the opening of a new boutique in Dubai. „The first stores in Paris and Florence now attract a good level of traffic, and sales figures are increasing. It is too early to say for the others“, explains Lucá. Store locations have been chosen with care, since a large proportion of luxury goods demand is related to tourism – Chinese consumers, for example, spend much more on luxury items abroad than they do at home.

There has also been good progress internally: the company has a new organization and middle management has been strengthened regarding production, quality, supply chain, finance and design. The company will move into a new building opposite its current headquarters in the coming year which will provide a better framework to organize work flows on almost 2,000 m². „We are anticipating higher demand, setting up a comprehensive security concept – think ‚grey market‘ – and some elements of the manufacturing process are being insourced. Overall we have implemented 70% of our planned internal measures“, confirms Lucá.

This also strengthens the traditional core B2B business which makes handbags for other luxury brands. These brands will probably consolidate their supplier base over the next few years because of the difficult market situation e.g. in Russia. Established as a high-quality manufacturer for many years, Bottega aims to be a “go-to” partner for this client group in the future.