Prada's key to success
In February of last year, when the line of the classic slim red logo of the Linea Rossa series flashed on the runway, every fan felt the heart beat faster. Nowadays, the Linea Rossa series, inspired by technology and alias Prada Sport, has officially returned. This is also the first time that designer Miuccia Prada has incorporated her latest ready-to-wear collection into the collection. In the mid-2000s, the Linea Rossa series continued to decline in the group and began to focus on glasses and basic models. The rise of streetwear, the popularity of smartphones, and the mix of high-tempo, ready-to-wear and streetwear on Instagram have contributed to the return of the Linea Rossa collection.
This season is the first show of the new Linea Rossa collection in the retail market. As part of the Prada 2018 Fall/Winter collection, the collection will be sold in Prada stores, department stores and online platforms alongside Prada's signature prints and women's handbags. Customers can buy down jackets and other items like neon lights. .
The sense of science and technology is a major selling point of the Linea Rossa series: nanotechnology fabrics can regulate body temperature; the down jacket filler contains graphene; the nylon surface is coated with the world's thinnest membrane structure, and the wear resistance is extremely strong. The series is windproof, waterproof, breathable and attractive.
“The Linea Rossa series is a perfect interpretation of several essential elements of the brand's genes,” co-CEO Patrizio Bertelli told BoF. (He runs the company with his wife Miuccia Prada, whose family founded Prada in 1913 – when it was positioned as a luggage manufacturer.) “Using nylon, a streetwear-like fabric in everyday dress, reflects Prada. Anti-traditional spirit."
Analysts are pleased with the return of the Linea Rossa collection. Many people believe that in the era of sports and leisure, the abandonment of this lower-priced, technology-inspired series is the wrong decision, causing losses to the company. Few brands have the perfect combination of high-tech materials and creativity, and Prada is one of them. The Linea Rossa collection exemplifies this. In addition, for most people, Miuccia Prada's ready-to-wear collection is an unreachable dream, but the lower price of the Linea Rossa collection strengthens Prada's more intimate market positioning than Hermès and Chanel.
In the past, nylon bags contributed 20% of branded bag sales. But after deciding to enter the high-end market, Praa abandoned the original pricing strategy and increased the price of handbags to obtain more lucrative profits. Although Miuccia Prada's fashion show series has been as amazing as ever, the commercial series has failed, and the unremarkable handbag design and the appearance of the shoes have lost interest to consumers. At the same time, cheap luxury brands such as Michael Kors are beginning to eat into market share.
“Product innovation is not enough, so competitors will take their market share,” said Mario Ortelli, managing director of consulting firm Ortelli & Co. Prada's response to digital opportunities is also slow. While luxury brands are developing online sales, Prada is expanding its retail network.
In addition, brands with strong athletic attributes such as Lululemon and Moncler fill the gap left by the Linea Rossa collection. “They ignore the market under their control, and in the context of the increasing urbanization of luxury goods, this is the wrong approach,” said John Guy, an analyst at Mainfirst AG.
Sales bear the brunt. In FY2016, the Prada Group's net sales (including the sister brands Miu Miu and Church’s) were approximately 3.2 billion euros, down 9% year-on-year (at constant exchange rates). (Prada accounts for more than 80% of the Group's total sales.)
But everything is not without a turn. Prada used the film "Gattaca" and tamper-resistant nylon to create a nostalgic style in the 1990s and return to the stage of cultural exchange. Inspired by Miuccia Prada's creativity and genius, Tony Liu and Lindsey Schuyler, the founders of cultural genes, even renamed their Instagram account, which is focused on “counterfeiting,” as “Diet Prada”.
What Prada seems to understand, began to add more nylon products (such as backpacks and purses) and sports and leisure elements to the business series. The Cloudbust "Lao Shoe", which went on sale in 2017, was very popular, and it was a smash hit, but the time to come out seems to be a bit late.
In the first half of FY 2018, the Prada Group achieved sales of 1.5 billion euros, an increase of more than 9% over the same period of the previous year, higher than analysts expected. Sales of the Prada brand also increased by 10%. The overall profit level has also improved.
“Our strategy is clear, and if we implement it steadily, we can leverage the full potential of the global retail network and achieve long-term sustainability, and we are confident,” says Bertelli. “Especially investing in products, brands and retail networks, as well as creativity and enhanced consumer interaction, will lay a solid foundation for our future development.”
The return of the Linea Rossa series is a reflection of this strategy. Although it will certainly be welcomed by fans, the impact of this move on overall performance remains to be seen. Nylon is cheaper than leather but much more expensive than in the past. For example, a nylon backpack sold for $570 in 2000 and the lowest price in the season was $990.
Still, the Linea Rossa collection is sure to create more sales than leather and ready-to-wear. “The Linea Rossa collection is very famous,” Guy said. “The gross margin is very high, which is two very powerful advantages.”
Bringing the Linea Rossa collection back to the market may be the smartest move for Prada for a long time, but there is no guarantee that the brand will recover from the recession. Although the brand has introduced more attractive entry-level products, it has paid more attention to the digital strategy than before, but has not yet developed an effective inheritance plan.
Bertelli said in June 2018 that although their 30-year-old son Lorenzo (joining the company in 2017, responsible for digital propaganda work) is still learning, the Prada family "will never sell" the company. "At this juncture, his abilities have not been verified," Guy said. “I am not sure if this is an important step.”
Bertelli told BoF that although Lorenzo had just joined the company a year ago, he has been paying attention to the movements of various departments of the company. (Lorenzo is not directly responsible for the return of the Linea Rossa series, but he helped develop a communication strategy.) "So if he wants, he will be able to take over the company in the future," Bertelli said.
In addition, “understanding the interests and GeekBuying Coupons complexities of different consumer groups is the most difficult, especially in the millennial and Z eras,” says Bertelli. But intergenerational change is just one of the increasingly complex manifestations of the luxury market. Today, the globalization and digitization of the luxury market has reached an unprecedented level. Competing with brands behind big group support, such as Gucci and Louis Vuitton, is becoming more difficult.
“Prada is doing everything right now,” Ortelli said. “But sometimes, even if you do everything well, there will be competitors who will surpass you in terms of speed and momentum.”
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