Prada turnaround strategy focuses on digital and less stores
Following continued negative financials, Prada is now implementing a turnaround strategy which includes a digital ad campaign, a focus on a younger customer, and a move to close stores and make the full Prada group product selection sold through e-commerce.
Bertelli acknowledged that customers today shop wherever and whenever they want, and look at any product without “ever being seen” by a store associate. According to its annual results, Prada’s ready-to-wear category is outperforming its leather goods and footwear. Putting those items online will no doubt help boost its growth.
To support its surge in e-commerce capabilities, Prada has hired Chiara Tosato, formerly a commercial director at Mediaset in Milan, to lead a new team at the company dedicated solely to the luxury group’s digital efforts. This team will be bringing each brand’s full product selection online, building new websites for Prada and Miu Miu, and expanding localized e-commerce platforms to five new markets: China, New Zealand, Korea, Australia and Russia.
“Providing a more consistent experience online, based on our DNA, is a priority,” said Bertelli.
Beyond e-commerce, Prada’s digital expansion includes forging a direct connection between customers and sales on social media platforms like WeChat in China, Line in Japan and Instagram. WeChat, which services the platform’s 800 million users in China, recently rolled out a capability for Chinese tourists to use its payment system, WeChat Pay, in luxury stores abroad, including Prada. Bertelli referred to physical stores as a “starting platform for digital activity,” including social payments and future online purchases.
Still, Prada is backpedaling on a previously bullish store-opening strategy, closing a selection of underperforming Prada and Miu Miu stores and renovating others to feel more current. It’s also investing in a new pop-up shop strategy, starting in Japan, where a series of pop-up stores will stay open for three weeks. Pop-up stores can give Prada a temporary boost in a new market without the necessary investment of a full-time store, and provide a nimble, low-risk setting for testing new technology.
“Pop-up stores will be used for new projects to create excitement with consumers,” said Bertelli. “Pop-up stores are a project that may actually be compared to fast fashion in a certain way — it’s quick, fun and exciting, and integrates our digital strategy beautifully.”
With new e-commerce and physical retail strategies underway, Prada is looking at digitally native wholesale partners Net-a-Porter and MyTheresa.com to do the heavy lifting when it comes to driving sales. In 2016, those two partnerships drove an increase in wholesale revenue of 15 percent. Bertelli is hoping to boost that further by seeking out new wholesale partners.
“As far as wholesale is concerned, we should point out it has become a digital activity, too. In the past, it wasn’t rational or logical to serve too many wholesale customers,” said Bertelli, citing price competition as a reason for limiting wholesale partners. “Now, it makes a lot of sense because wholesale distributors are acting on different sales channels.”