Earlier this month, Prada announced it’s worst profits since its Hong Kong IPO in 2011. It didn’t take them long to announce how they were planning to stem the bleeding and – in a surprise to no one – an increased investment in e-commerce looks to be the answer.
In an online space which is moving at an increasingly fast pace, Prada’s take-it-slow attitude has come at a significant cost, as net revenues declined 9% over the same period last year.
“Omni-channel integration” key to Prada resurgence
In his notes, Prada CEO Patrizio Bertelli outlined Prada’s plans to reverse this trend. The assembly of a “new team” to bring “further expertise to [Prada’s] digital strategy” suggests that Bertelli recognises that they are behind the rest of the industry when it comes to their digital strategy.
Bertelli offered a brief insight into what Prada’s digital strategy will consist of, chiefly “the roll out of [a] new global digital platform, collaboration with e-tailers, and in-store integration” – a tactic which has proved fruitful for a number of Prada’s competitors. Bertelli added: “I am confident that our creative vision combined with investment in online and offline engagement with our customers put us firmly on the path to sustainable growth.”
Chiara Tosato, formerly a commercial director at Italy’s largest commercial broadcaster Mediaset, has been hired to lead this new team at Prada’s HQ. Tasked with the aim of bringing the brands’ full product offering online, there will be a complete redesign of Prada and MiuMiu’s websites, as well as an increased focus on localised e-commerce sites in China, Korea, Australia. New Zealand and Russia. This investment can’t come soon enough, with revenue drops across the globe ranging from -5% in Europe to -12% in Asia Pacific and the Americas and -13% in Japan.
Prada’s existing e-commerce shortfall
Prada, who currently only offer a small selection of bags, shoes and accessories through their online store, have provided further evidence that the offline-only approach to brand exclusivity is a fading concept. Gucci this week announced a 86% increase in online sales this quarter – thanks largely to the popularity of Alessandro Michelle’s designs, as well as a sustained investment in e-commerce and online marketing. It’s no surprise to see other brands following suit.
Prada’s current website only features a small selection of bags, shoes and accessories.
In Gucci’s case, their significant investment into social media and e-commerce has translated into a 48% increase in sales for Q1 – their strongest growth in 20 years. Partnerships with online retailers (such as exclusive capsule collections for Net-A-Porter, and a planned 90-minute-delivery service via Farfetch will only contribute further to their huge online sales.
In recent weeks, LVMH have launched a new digital lifestyle and e-commerce platform, offering their exclusive range of wines, champagnes and liquors to a thirsty online audience. With brick-and-mortar retailers filing for bankruptcy at a record rate, e-commerce and digital looks to become one of the most lucrative and competitive spaces for the luxury industry.
If all goes to plan, expect news next year that Prada are enjoying a record resurgence – perhaps it won’t be long before we see the likes of Chanel and Hermes expanding their e-commerce offerings.