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Mon, Jul 19, 2010
The Business Times
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Bulgari's baptism
by Corrine Kerk

GOOD riddance to bad rubbish, and hello to new and exciting things - including a beautiful hotel in London's upscale Knightsbridge, just in time for the 2012 Olympics.

At least, that's what one imagines Francesco Trapani saying to an exceptionally painful 2009. As the chief executive officer of Bulgari puts it, there have been 'very difficult years' in the past, but last year really took the cake - with the group recording its first-ever loss. The proud Italian name, which celebrated its 125th anniversary last year, lost 47.1 million euros in 2009 - it made a 82.9 million euro profit the year before. Much of it was due to restructuring; there were write-downs, headcount was cut and under-performing stores closed.

'Efficiency is now a value even for luxury companies - it was not the case in the past,' says Mr Trapani, who was in town last week for the official opening of Bulgari's new-look 3,600 sq ft flagship store in Marina Bay Sands. 'My personal opinion is that the worst is behind us, but the next three years or so will not be easy. So it's not enough to work on efficiency and cost-cutting, but to improve the overall offer - enhancing the product, image projection and service - and we are working on many projects to achieve this.'

The most visible of these new initiatives is their Spring/Summer 2010 advertising campaign featuring actress Julianne Moore - the first time Bulgari is using a celebrity for a product other than perfume. And while other luxury brands have, for a long time, featured different categories of products together in the same ad, this is the first time Bulgari is doing so.

'This is pretty important because instead of several campaigns for each product line, we went into a big campaign,' he says, adding that 'a lot of money' was invested in it. 'This reinforces the brand across many product categories, telling the customer that Bulgari can be a good consultant for your style.'

Other examples of its new focus include roping in famous names to help design some of its products. Acclaimed London-based and India-born sculptor, Anish Kapoor, for instance, designed a new version of Bulgari's iconic B.zero1 ring, while celebrity, Isabella Rossellini, designed a new handbag collection.

Another move is to dig into its heritage, such as with its new Serpenti watch collection. 'The watch market is so crowded that we have to bring things which are a bit unique, with no competition,' says Mr Trapani. 'That's why our Serpenti watches can generate a big success, because in the '50s and '60s, we were very successful selling jewellery with the snake shape, and celebrities have been asking to wear pieces from our vintage snake collection on special occasions.' He believes the only way to make people buy today is to excite them: 'So our product is more innovative, there is a different way of communicating and an association with opinion leaders like Anish Kapoor.'

Going forward, Mr Trapani says the company should have four legs to stand on - jewellery, watches, accessories and perfumes & cosmetics. But at the moment, it only has 31/2 legs because the accessories business is contributing just 8.7 per cent of sales, versus the roughly 20-45 per cent each from the other three.

He puts it plainly: 'We need to grow our sell-out volumes in accessories. We need awareness and credibility. Today, when someone wants to buy a handbag, Bulgari is not the number one brand that comes to mind.'

So apart from the new ad campaign and Ms Rossellini's handbag range, Bulgari has engaged British designer Matthew Williamson to create a capsule handbag collection for Spring/Summer 2011, to 'interest the press and create additional credibility'. There are, however, no plans for the brand to hire a famous designer full-time.

Meanwhile, to address the problem of customers in the luxury business being fickle and 'jumping from one brand to another', Bulgari started a new project two months ago which it believes can make clients more faithful. Mr Trapani, is tight-lipped about the secret project, only saying that it is being tested in Italy and will take at least a year before results are clear.

As for sales, with Europe's current economic and financial troubles, it's no surprise that Greater China - China, Hong Kong, Macau and Taiwan - is the focus. As at Q1 2010, revenue contribution from Europe and the Americas stood at 34.3 per cent and 13.6 per cent respectively, while that from the Far East stood at 46 per cent. 'We are doing three things simultaneously in Greater China,' says Mr Trapani. 'We're aggressively expanding our distribution network, opening mono brand stores and developing our multi-brand store network.'

And of course, there are fancy new things to work on and look forward to, such as a new hotel in London, which is 'more or less a done deal'. 'It will have a local owner but be managed by Ritz Carlton and Bulgari,' says Mr Trapani. The 84-room hotel will be Bulgari's third, after the one in Milan and the resort in Bali. It will also offer a few serviced residences for sale. In addition, Mr Trapani is in discussions to open a resort in Sardinia, and a hotel in Beijing.

Bulgari, which is listed on the Milan Stock Exchange, with the Bulgari family holding a 52 per cent stake, will announce its first half results on July 29. For Q1 2010, it registered an 11.8 per cent (at current exchange rates) year-on-year rise in turnover to 199.1 million euros, and a net loss of 8.3 million euros, compared to the net loss of 29.3 million euros in Q1 2009.

'I'm coming out of the worst year of my professional life,' says Mr Trapani. 'But at the same time, I've never seen the company so dynamic from a creativity point of view.' Considering the baptism of fire that was 2009, a toast then, to 2010.

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