Marilyn Monroe, Audrey Hepburn and Greta Garbo are among the Hollywood stars who helped immortalise Italian shoemaker Salvatore Ferragamo. Michael Finnigan talks to grandson James about legacy, fashion and the family business
Trading the blistering Florence sunshine for a summer crafting shoes might sound like a child's worst nightmare. So imagine the surprise when a 10-year-old James Ferragamo, grandson of celebrity shoemaker Salvatore Ferragamo, asked to be shown the ropes. Three decades later he is the director of women's and men's shoes and leather goods at the eponymous family business—a position that will one day stand him in good stead for leadership.
Perhaps it shouldn't have come as a surprise: every generation of the Ferragamos has had an early start. Founding father Salvatore, for example, began a cobbler's apprenticeship at age nine. By 12 he was running a small shop out of his father's basement. His son Ferruccio, present chairman of Ferragamo and James' father, joined the firm at 18 and has been there ever since. It's a trend that runs back to the 19th century, and informs strategy even to this day.
“Ferragamo is a brand that has always been very attached and loyal to its traditions and heritage,” explains third-gen James Ferragamo, who joined the family business in 1998. “Although I never met him, I'm very proud of my grandfather's work and his way of life.” He says that to understand the nature of the business today, it is important to know his grandfather.
Salvatore Ferragamo was born in 1898 in Bonito, Italy, as the 11th of 14 children, to a poor family. After completing the aforementioned apprenticeship in Naples, the future fashion magnate migrated to Boston in 1914 to work alongside his brother, who at the time was working in a cowboy boot factory. After being appalled by the quality of the boots, he convinced his sibling to move to California, where they set up a shop for repair and design. He quickly garnered the nickname 'shoemaker to the stars'.
It wasn't long before the Ferragamo name became synonymous with quality, but the entrepreneur made efforts to remain a student of the craft. Before his desire to return to Italy became overwhelming, Salvatore embarked on a degree in anatomy at the University of Southern California in order to ensure his shoes pleased the foot as well as the eye. In 1927 he returned to Italy and set up base in Florence.
Despite finding modest success, a series of poor management decision—exacerbated by economic pressures of the day—forced Salvatore to declare bankruptcy. Through a great deal of hard work, he rebuilt the business by the 1950s and managed to expand the workforce to 700 expert craftsmen. They produced 350 shoes per day.
Today the Ferragamo Group is one of the world's best-known luxury brands. It's headquarters loom over the Ponte Santa Trinita—the bridge where Italian poet Dante Alighieri met his true love, Beatrice—and posted revenues of €1.01 billion ($1.07 billion) in the first three-quarters of the 2016. Equally important to their success is this generations' celebrity fans, which include Jake Gyllenhaal, Channing Tatum, and Jeremy Renner, as well as Kate Winslet, Nicole Kidman, and Freida Pinto.
While continued success is likely for an operation of this size, no family business is immune to the challenge of succession. Thankfully for the Ferragamos, inheriting Salvatore's disposition for design and entrepreneurship is 45-year-old third-gen James Ferragamo, who studied at Millfield School in the United Kingdom, and later a Marketing and International Business degree at the Stern Business School in New York. He has to date played an integral role in ensuring the global success of the third-generation business.
“We were free to choose our professional path,” explains Ferragamo, reflecting on more than two decades at the family business. “But I never had any doubt, I always wanted to be a part of the family business. So I joined a management-training programme in 1998 and then moved into development and production of women's shoes. One of my first major projects was developing a ballerina shoe based on a 1954 design made for Audrey Hepburn.”
James is one of the lucky ones: a maximum of three family members from the third generation are allowed to work in the business. His cousin, Diego di San Giuliano, operates as a member of the board of directors and coordinates the digital activities of the brand, while cousin Angelica Visconti is the Ferragamo Group's director for South Europe. “We are very close and we try to continually strive to do better, and never get complacent,” Ferragamo adds.
Finding such a professionalised succession programme is rare among family businesses. In addition to the three spot rule, next generation “aspirants” must have a university degree, a master's degree, outside experience of at least two years, and must complete an entrance exam conducted by family members. It's a challenge James says ensures total commitment to the business.
Once on the roster, responsibilities pile on thick and fast. Ferragamo says this is due to the increasing demands of a globally focused business. He explains how the company stays abreast of consumers' demands: “Over the years we've enhanced our production process to meet global demands. We produce shoes with six widths, which, in combination with lengths, offer about a hundred different measurements for each model. The wide selection ensures our clientele can find shoes 'that always fit.'”
While mass production techniques arguably go against Salvatore's vision for individuality, James is aware of the importance of bespoke products. “More and more these days, customers desire exclusive 'one-of-a-kind' products of extreme luxury,” he explains. “Therefore, we have launched the project of made-to-order shoes collections including the Varina or Vara, Drivers, and Tramezza. Customers can personalise the products to suit their own taste. To make things even more exclusive, they can imprint their initials for a truly unique accessory.”
This drive to distinguish one's brand in the luxury market is increasingly important. Last year marked the beginning of a new era of slower growth for the global personal luxury goods market—including leather accessories, fashion, jewellery and watches, and fragrance and cosmetics—which, according to consultancy firm Bain & Company, reached €253 billion in revenue.
“The luxury market is stuck in a holding pattern for the foreseeable future,” says Bain partner and researcher Claudia D'Arpizio. “All eyes are again on Mainland China, which is the key to unlocking recovery around the world, and the US, where local consumption is failing to offset decreased tourism. Consumers' changing purchase patterns, including a reshuffling of tourism and revitalised local spending in Europe, will likely do little to drive luxury brand growth much beyond the low single digits.”
In such an increasingly challenging market is it any wonder that Ferragamo looks to heritage and tradition to inform its strategy: the focus on legacy helps tell a story of authenticity and quality. Another measure that is particularly important to the Ferragamo brand is the 'Made in Italy' merchandising mark—typically used to denote quality—which in many ways they helped pioneer.
Luca Solca, luxury analyst at Exane BNP Paribas, believes the firm could take the focus on heritage one step further. “Salvatore Ferragamo reminds me of a sleeping beauty: its potential is significant, but it has yet to blossom,” he explains. “Product innovation seems to be on the back foot—a risk, in my view, in a market which is rewarding newness and penalising 'more of the same'.”
He continues: “Salvatore Ferragamo and his unique connection to Hollywood seems lost in the current communication and story-telling—this should be rekindled and brought back centre stage. There is a significant amount of work to do, but success could bring the brand to new heights.”
To help bring these types of perspectives to the table, James identifies non-family managers as being indispensable to the company. One of the Ferragamo Group's most important hires came in 2006 when they appointed Italian manager Michele Norsa to the role of chief executive. He was told to prepare the business for an initial public offering.
“Just over a decade ago the family chose to be supported by external managers, because we believe that it is important for the family to draw a path, but also because of the realisation that we need the contribution of different skills,” James explains, adding that he had demonstrated considerable ability during his tenure at the Valentino Fashion Group.
The move proved to be a success: Ferragamo's 2011 flotation of about 25% of stock valued the company at €1.5 billion ($2.19 billion) and was largely orchestrated by Norsa. It gave the Ferragamo family breathing room to concentrate on strategy.
While some family members found it hard to hand over control, the Ferragamos managed the issue by providing Norsa with a well-designed leadership plan. Norsa's mandate was to prepare the company for a stock market listing, encourage global expansion, and to ensure more accountability at the business.
After almost a decade, Norsa achieved his goal and stepped down in August 2016 amid a huge shakeup in leadership in the fashion world: Burberry, Alexander McQueen, and Versace all saw prominent figures step down this year. Eraldo Poletto, the former chief executive of Italian fashion brand Furla, is set to take his role.
This management upheaval has caused a great deal of uncertainty at the board level of many luxury fashion houses. Thankfully for the Ferragamo Group, James and his chief executive father, Ferruccio, 65, are on good terms. The next gen discusses their relationship: “I must say that I do not find working with my father overly challenging, as I have worked in the business from an early age. My first role was at a Ferragamo store when I was nine years old, during my summer holidays. I earned 500 Italian lire per week. When I was 11, I started working at our factory as a shoemaker. I had to prove that I was qualified to help run the business. I think that is recognised.”
For James the main reason for unity between family members stems from the values instill by their 94-year-old grandmother, Wanda, who served as president of the business after her husband's death, and who remains active in the business today.
“My grandmother impressed upon us the spirit and energy of Salvatore,” James says about his assertive, strawberry blonde grandmother, who is affectionately called 'signora' by employees at the company. “My grandparents were very much in love. For my grandmother that means ensuring we not only remember his legacy but also push it forward. She taught the importance of family, respect, hard work, and to constantly innovate. I really believe one must never stop being curious. Having a family like mine grounds me. I travel and work and explore but at the end of the day, there is always the family there to support me, a family to go home to.”
While many would agree that support from relatives is the quintessential trait of successful family businesses, it is equally important for the younger generation to stand on their own two feet. After two decades, James says his secret is to remain focused on the company's founding principle of quality craftsmanship and design. Even with his master plan, the next gen hasn't managed to avoid the daily grind.
“My typical day starts with my morning duty of dropping the kids off at school, followed by an intensive day in the office full of meetings or product reviews,” the Florentine explains—he is married with three children yet still manages to work a 60 hour week. “My schedule changes based on the collection. If we are presenting, then I spend my days in the showroom or meeting customers to better understand their needs. If we are developing a collection, I spend the days working with the designers, merchandisers, product developer and production to prepare for manufacture and sale.”
But, even with family support and 60 hours a week in the office, it is simply not enough to create great products in a globalised market—as of 2014, the Ferragamo Group's retail network consisted of 373 directly operated stores, while the wholesale and travel retail channel included 270 third-party operated stores. It means the next gen must pay particular attention to the unique tastes of each different market.
“We have the opportunity to diversify our business to the different geographical areas and this allows us, from a purely economic point of view, to be present where we have the best opportunities,” James explains. “The market is global. There are possibilities to communicate anything on Instagram or other social media, instantly, to everyone in the world. But I think more and more there is the need to understand that you are not 'mass market' and are looking to enter the specific culture of each country. Therefore it is very important to work specifically in each market.”
The Ferragamo Group's push into China, for example, has resulted in dozens of signature designs aimed solely at the Asian market, while China itself is one of the firm's most lucrative markets. For all their success, the slowing luxury market in China is forcing Ferragamo to adapt their approach. James says there is still hope: “In China we are facing a long-term development, supported by large investments and by a vast and widespread distribution … there is still room for continued growth.” Bain & Company says growth amounted to 1% in 2015. It's not much, but better than nothing.
While the Ferragamo Group looks to corner a bigger section of the Asian market, they would be wise to keep in mind that success can be measured in other ways, namely, corporate social responsibility. Thankfully they're well aware of the legacy they leave behind. One of their most recent initiatives came in 2014, when the group signed up to participate in DHL's GoGreen Project—a project that seeks to reduce CO2 emissions while supporting offset projects. They also set up a cross-functional working group called Green Team in 2014, dedicated to designing and promoting corporate responsibility initiatives.
One of the team's initiatives is a professionalised approach to sustainability that will inform its decision making in future. And so the Ferragamo Group sets itself the following goals: promotion of the welfare, health and professional growth of its employees; reduction of its environmental impact; and to support artisan culture and excellence of local cultures. For their efforts they won the Arete Award for corporate social responsibility in 2014.
“Our commitment to sustainability is very strong,” James explains. “Creativity, innovation and excellent craftsmanship were, from the beginning, the core values of our company, which has found a practical application in the design and the manufacture of all our products but also in the need to preserve this great heritage.
“The deep bond of Salvatore Ferragamo with the land, its culture and its community permitted us to gain a greater awareness to protect both the places where we operate and the people who work for the company. We have developed a complex project of corporate social responsibility, which goes beyond what is required by laws, rules and by national and international regulations and we are particularly proud of this.”
With their insistence on quality, commitment to corporate social responsibility and familial ties, it is clear that legacy is of utmost importance to the Ferragamos—a point that informed the business strategy since the day the firm was founded and will likely be the last word in its story.
“The legacy of my grandfather is an extraordinary gift,” James reflects, when asked about his grandfather's influence. “If you look through his designs, the archives, you realise so many of his shoes would still be considered modern today. They're full of special details. It's our desire to continue what he started and push it forward. To do so requires bringing in the right talent, creating a viable business infrastructure and most of all honouring the past, while keeping an eye on the future. One can't only live in the past, my grandfather wouldn't want it that way.”
Does that mean James' children will be spared an early start in the business? A gambling man would likely bet on leather over Lego. You see, for the Ferragamo family, high fashion isn't just in the blood—it's part of the sole.