Prada’s strategy

When thinking about fashion, the city of Milan inevitably comes to mind. The major fashion capital is home to the oldest Italian shopping gallery, the Galleria Vittorio Emanuele II, where Mario Prada opened his first boutique of the eponymous fashion house in 1913.

Known for being one of the most influential fashion houses in the world, Prada’s success is due largely to its close study of changes in contemporary society and its commitment to freedom of creative expression. Individuality is part of the iconic Italian luxury brand’s mission to make fashion personal while creating unique, wearable classics.

As with other luxury fashion houses, the Covid-19 pandemic negatively affected Prada Group, which operated with an average of 18% of stores closed in 2020.

Let’s dive into Retviews data to discover more about what makes Prada resilient.

Leather goods vs. clothing: is Prada focusing on the right investment?

According to their 2020 annual report, Prada Group lost around 25% in revenues and in total net sales compared with the previous year. However, the fashion group is seeing sales rise in the second half of 2021, reaching total revenues of 1.5 billion euros in the first half of the year — surpassing analysts’ expectations.

Prada invests more in clothing than many of its competitors. Clothing makes up the second-highest percentage of business share — second only to leather goods, which are part of Prada’s rich design heritage. Despite the assortment share is their lowest sales sector, we can still highlight that footwear is a well-performing category.

Accessories are not always a good-performing category for luxury houses

Accessories still represent a high share of the total product line among luxury houses. But for Prada, this category doesn't perform so well. It represents just 21% of their assortment share, and it makes up only 1.4% of Prada’s net sales.

Looking at the past few years, it’s noticeable that Prada accessories didn’t perform well for a while. Even if the overall volume of accessories produced is high, the luxury brand could improve its strategy with regard to its assortment in order to achieve better results in this area.

Positioning of leather goods: go with a premium or luxury pricing strategy?

Since its beginnings in Milan, Prada has focused heavily on leather goods — mainly bags and purses. In comparison with its competitors, Prada performs well in terms of assortment and has stayed competitive in the market.

Prada maintains an entry-price level lower than many competitors for leather goods, allowing the Italian brand to reach younger generations. However, the luxury house wants to improve the perception of its brand by positioning itself in a higher price range in terms of the most frequent price and maximum price.

Miuccia Prada & Raf Simons: Is it the moment to reach a new pool of competitors?

Belgian designer Raf Simons joined Miuccia Prada as co-director of Prada in April 2020. Miuccia Prada and Simons — both opinionated, style-shaping designers — created their first women’s collection, called “Dialogues,” which will debut in September 2021.

Comparing 2020 and 2021, even if the most frequent price remains unchanged over this time, a notable increase in the minimum price of 68% can be observed. This probably means that Prada has begun raising prices to reach a higher price point.

Is this move a consequence of the pandemic year, or an opportunity for the Italian luxury brand to shift further toward premium-price positioning?

Prada reimagined: what’s the next step?

The addition of Raf Simons’ creativity confirms that the pioneering fashion house’s contemporary vision is sufficiently agile to respond to societal changes and its customer base’s evolving tastes.

Thanks to the innovative marketing approach that allows the Italian luxury brand to directly communicate with its audience, Prada is improving the customer experience on all its digital platforms. E-commerce grew by 100% or more compared with last year.

Will the personalized customer strategy allow Prada to accelerate and strengthen its clients’ engagement?

Stay tuned!