Bottega Veneta CEO says bigger, not more shops key to growth

Bottega Veneta CEO says bigger, not more shops key to growth

10:38am EDT
By Astrid Wendlandt and Pascale Denis
PARIS (Reuters) – Bottega Veneta, Kering’s No.2 luxury brand in terms of sales, is slowing down the pace of shop openings to preserve exclusivity, and plans to focus on enlarging and improving the performance of its existing stores, its head said.

The Italian brand famous for its “intrecciato”, a weaving of leather stripes that makes its bags supple, robust and recognizable, is one of Kering’s main growth engines, helping make up for slower growth at sister brand Gucci.
Bottega Veneta is also a relatively logo-free brand, which means that it suffers less than Gucci or bigger rival Louis Vuitton, owned by LVMH, from consumers’ growing preference for more discreet labeling.
Gucci and Louis Vuitton have also been hit by excessive expansion and are now trying to regain their exclusivity by moving upmarket, offering more expensive leather bags and opening fewer shops.
“We need to carefully balance retail expansion and exclusivity, which is one of the biggest topics in the luxury goods industry today,” Bottega Veneta Chief Executive Marco Bizzarri told Reuters in an interview.
“The ubiquity risk, Bottega Veneta is dealing with it.”
Created in 1966 in Vicenza, Bottega Veneta saw sales soar to more than 1 billion euros ($1.39 billion) last year from 402 million in 2009. Sales rose nearly 14 percent on a like-for-like basis in 2013, while Gucci’s nudged only 2.2 percent higher and were negative on a same-store basis.
When Kering bought the brand in 2001, it was loss-making and made revenue of 35 million euros.
“Business trends are positive for Bottega Veneta,” Bizzarri said. “We see no slowing of demand, in China or elsewhere.”
Bottega Veneta recorded 25 net store openings in 2013. Bizzarri said it would open fewer boutiques this year, but he declined to give a precise figure.
He said Bottega Veneta would focus on enlarging existing spaces, mainly in top fashion capitals and where the brand could tap demand from emerging market tourists, the biggest buyers of luxury goods.
He said he planned to reinforce its presence mainly in Europe as he believed the brand needed “to be strong where it comes from”.
Bigger shops would enable Bottega Veneta, often criticised by analysts as being too reliant on leather goods, to display and sell a wider variety of other products such as shoes and ready-to-wear, he added.
The brand’s best-sellers include the Veneta woven leather bag, which starts at 1,800 euros, the cabat version at 4,500 euros and the knot, which starts at 800 euros. Leather goods make up 86 pct of total sales, but Bizzarri declined to say whether that level was likely to change in the future.
“Growth will come from higher sales per square meter thanks to larger shops and a better shopping experience,” he said.
Bizzarri, who used to run Stella McCartney, another Kering brand, took over the helm of Bottega Veneta in 2008. The Italian brand has since nearly doubled its retail network to 221 stores.
“We are far below the competition in terms of number of shops and we want to keep that,” Bizzarri said.
Gucci runs a network of 474 stores and Louis Vuitton around 480, while rival Pravda has 330 shops.
Bizzarri said, however, that he wanted to keep growing the average size of the brand’s shops, which has risen to 140 square meters from 112 when he started running it.