On the heels of the Spring/Summer 2016 shows this fall, a number of articles have been dedicated to Prada’s longtime creative director, Miuccia Prada. In one such article, entitled, “Is Miuccia Prada the most powerful and influential designer in fashion?” Alexander Fury noted: “By ignoring convention, Donna Miuccia Prada has become fashion's first lady.” This is a difficult point to discredit. Mrs. Prada, who says she “values substance over style,” has long held the title of one of the most prominent names in fashion. She has been described as a “profoundly maverick risk-taker,” who has “the extraordinary ability to change her viewpoint radically on a six-monthly basis” making it almost impossible for other brands to keep up. Prada is the fashion insider’s favorite brand, but it is also appealing to those on the periphery. Yet, it seems no one is shopping.
Reconcile the aforementioned praise for Prada with the fact that Prada is in a state of financial “crisis,” as Business Insider stated this past spring. It is true; the Italian luxury brand has not had a spectacular couple of years. In September 2014, it cut down its revenue guidance due to weaker than expected consumer demand, as it posted a 21 percent fall in net profit for the first half of the year. At that point, the brand also noted that its revenue for 2014 was expected to be flat compared with 2013. Ultimately, net sales were down 1 percent, while profits were down 28 percent. As a result, the company further stated that it planned to open fewer stores than previously planned for the year. In addition, it would implement other cost-cutting and organizational changes.
Unfortunately, things are not looking significantly better this year. For the three months ending on April 30, 2015, the company's profits fell 44 percent, due largely to "the continuing difficult market conditions in the Asia Pacific area, especially in Hong Kong and Macau," according to CEO Patrizio Bertelli. In September, Prada reported a 23 percent fall in first-half net profit, as it has continued to be hurt by a slowdown in Asia, particularly in Hong Kong and Macau.
What does this tell us about Prada? Well, first, despite falling sales, appreciation for the brand and its trailblazing creative director has not waned. The constant press and social fury surrounding the brand is not to be overlooked. This is positive, as it indicates that fans have not lost hope.
We also know that Prada is not struggling alone in the current climate. Other luxury brands have suffered from a lack of growth in recent years, particularly in China. However, it seems a number of other brands have been able to make a turn around. According to Bloomberg, “Prada contrasts with Hermès and LVMH Moet Hennessy Louis Vuitton, for instance, which reported higher first-half profit [in 2015] despite some difficulties in Hong Kong, Macau and mainland China.” Hermès took steps to limit supply and LVMH revamped its Louis Vuitton’s handbag offerings to cope with diminishing demand. While Prada has aimed to boost growth, namely by introducing the Inside bag (with prices starting at about 2,000 euros) and slowing expansion, the results have not been stunning. Still, the company said it is “confident” in its ability to adapt.
While Miuccia Prada may be one of the most intellectually gifted designers in fashion, with her main collection labeled as “one for thinkers,” the business is not quite what it used to be. As Fury quite accurately put it, “Most of the fashion world doesn’t concern itself with complicated ideas like Prada’s.” Why? Certainly in part because there is so little time. As London-based designer Matthew Williamson recently noted: “We have four collections a year now and it’s a relentless process. Long gone are the days of sitting in a garret thinking, ‘I can only do this when I’m in the mood!’ It is a business, so while there’s a creative element, it’s also about making products on time.” And he’s right.
In fact, most designers have to produce more than four collections per annum. Before he left Christian Dior this fall, Raf Simons was overseeing four ready-to-wear collections and two couture collections per year, and add to that two collections for his eponymous label. Most creative directors do not have the luxury of creating truly intellectual collections, something Simons has noted, saying last month: “You have no incubation time for ideas, and incubation time is very important. When you try an idea, you look at it and think, ‘Hmm, let’s put it away for a week and think about it later.’ But that’s never possible when you have only one team working on all the collections.”
It seems that the designers and design houses that are coming out on top are not necessarily taking major risks in favor of moving fashion forward. Instead, they are abiding by the schedule, focusing on what consumers want right. this. instant. Garments and accessories that are – at least to some extent – commercial. That can be merchandized, purchased and worn right away – that require little thought. For the ones that are taking big risks, they are are supplementing the risks with strong accessories and licensed goods that are much more accessible.
Maybe this is why Prada is struggling. The brand has, after all, been focusing on what analysts are calling all the wrong things. In lieu of introducing enticing new bags, it is opting to roll out new retail spaces. As Reuters noted early this year, “The trend in luxury goods is to drum up same store sales by curbing expansion and wowing customers with new products, yet Prada continues to pay over the odds to open swanky new shops and stock them with handbags little changed from previous bestsellers.”
Prada has made attempts to revive its exclusive, luxury brand image, as Louis Vuitton and Gucci began doing several years ago in light of the onset of logo fatigue and lack of exclusivity resulting from an increase in production of lower priced goods. However, where Louis Vuitton and more recently, Gucci, have succeeded, Prada has fallen short. “Prada has gone overboard in moving its handbags [range] upmarket and narrowing its product assortment. Compelling new products at entry-price levels would almost certainly help the company get back on its horse,” per Luca Sola, head of luxury goods at Exane BNP Paribas.
And still yet, Prada has not shown that it is up to par with its peers in terms of its digital efforts. The Digital IQ Index, the study that New York-based think tank, L2, recently released tracks brands’ competency across various digital platforms and rates their performances annually. Out of the ranked categories of performance (genius, gifted, average, challenged, and feeble), Prada was situated as average, amongst a number of similarly well known luxury brands, such as Chanel, YSL, Balenciaga, and Valentino. “The company now needs to take a more forceful approach to digital,” says Sola.
Maybe that – considered in conjunction with the introduction of some new, upper level accessories – will bring Prada’s overwhelming appeal (which is still very much alive, at least in theory) and its less impressive bottom line more in synch.