Prada in China is still trying to make a strategic turn in the market

Prada in China is still trying to make a strategic turn in the market. To have a strong brand like Prada, few people know that the precursor of the fashion house is a store specializing in supplying leather products imported from England by a businessman named Mario Prada and his brother Martino in 1913 in Milan, Italy. In early 1919, Prada’s products were chosen by the royal family as the official supplier, creating a great reputation in the world of high fashion at the time. In 1958 Mario handed over control of the Prada workshop to his son but … he said that his son was not sensitive to business, so Mario ceded the right to his daughter, Lusia Prada. In 1978, Lusia Prada handed over the running of the company to her daughter – Miuccia Prada. When taking over the leadership position, Miuccia Prada went against the majority, she dared to go against the trend and the times, she directed the design team to use materials such as nylon, umbrella to create into a trendy, durable, beautiful item and the price is very soft.

Prada in China and the brand’s milestones

In 1989, the women’s fashion collection was launched for the first time with very high applicability. These are neat, simple, elegant designs, luxurious materials with basic colors that make women fall in love with the brand’s designs. Statistics in the United States are estimated at 31.7 million dollars, and by 1994 the figure had exceeded 210 million dollars.

And if you are a fashionista, you will never forget the colorful pop-art designs of the Spring / Summer 2014 season. Prada honors the beauty of women by combining costumes with bra sequin applique, stones and fur coats, sports socks and rubber sandals. Shortly thereafter, Miuccia Prada was honored as the winner of the Design Award of the Year by the Design Museum. When returning to the Spring / Summer 2016 season, the background music came from “Lady Scarface” by Lydia Lunch and the cover of “Gloomy Sunday”; overall, Prada remains loyal to the trend of the 90s and neutral tones. In addition, the theme of ‘eccentricity’ throughout the collection is boxy jackets and skirts as well as individualized skirts. Prada creates accents with unique piercing designs, earring accessories that catch the eye of the viewer because of the multi-dimensional shape, origami art, and the ‘golden lipstick’ make-up that is expected to be ‘trendy’ makeup trends that year.

However, Prada faces a major obstacle in the Asian market when China’s treasury is losing stability. Foreign exchange reserves of this country dropped $ 99.5 billion to $ 3.23 trillion in January 2016. The Société Generale SA economists said: “It is difficult to achieve 6.5% GDP growth in China” which makes the brand’s revenue announced by the bank are on the rising decrease, estimated loss of about 38%.

In 2019, not only Prada in China but this is the new turning point of the Prada Group is taking place, but it is happening very slowly. The Hong Kong-listed company increased its revenue by 2% to 1.57 billion euros in the first half of this year, a little higher than analysts’ estimates; although still below the growth of global luxury personal goods. Performance in the Chinese market is very important and retail sales are down 3%.

According to Vogue Business, net profit increased 57% to 155 million euros compared to the same period last year, although this was largely due to tax benefits. However, operating profit decreased by 13% and the company’s profit margin continued to decrease continuously for many years. Luca Solca, an analyst at Bernstein, said that the company’s bottom line will be 14% lower than the first half of 2018 after excluding items once.

Shares of Prada in China have dropped about 12% in the past six months. Thomas Chauvet, head of luxury goods research, an analyst at Citigroup, said there has been a difference between luxury brands since 2016. But Prada has also seen sales growth 7 % in Europe, where trade is expanding faster than any other region. America remains unchanged and sales in Asia are down 6% with exchange rates. Prada has been slow to adapt to Chinese tastes, which has driven much of the development of the luxury industry. Miu Miu is the worst performing brand in Prada’s portfolio, with sales down 8% at exchange rates. This is partly due to the drop in retail sales following the Prada Group’s decision to gradually reduce end-of-season sales at stores later this year. The company says this has a single-digit impact on retail trends, while full-price sales increased by 2% in the first half of this year.

Prada’s decision to streamline business still has not affected the market research strategy. It is a cut between European brands’ brands while developing online partnerships. Sales rose 14% in the first half of the year thanks to new agreements with electronic service providers like Highsnobiety, but executives said the impact of the new plan will be felt in the second half of the year in 2019 and the first six months of 2020.

Thomas Chauvet added: “In the long term, it is very good for the brand, especially in Europe.” Lorenzo Bertelli, the head of marketing and communications for Prada and son of Patrizio Bertelli and Miuccia Prada, outlined the company’s plan to use digital and data as part of the change. It has promoted partnerships with Oracle and Adobe to better use and analyze data and will launch a new retail innovation department.

Patrick Bertelli added that Prada is also investing in sustainable production and environmental issues to attract younger customers, including the launch of a new line of recycled nylon bags and announcing that all the collection will be fur-free from 2020. “We are taking important steps to develop as well as a more ethical approach to business, connecting with a new generation and maintaining our identity”.

Phong

Photo: Internet