Luxury sector exemplar Prada implements a “controlled growth” strategy for staying competitive in turbulent times and preserving its brand integrity.
One of the Italian luxury goods group’s planned tactics is to cut back on its wholesale network, taking what it describes as a more selective approach in choosing wholesale partners. This will reportedly entail ending relations with some Italian and European wholesale partners while forging new ties with digital and ecommerce players.
A key aspect of Prada’s strategy is to impose more uniformity in pricing across different markets and outlets. It will offer fewer markdowns, and cease end-of-season promotions at its shops. The Milan-based company’s intent is to improve its margins and preserve its brand integrity, both by making its products more exclusive and gaining more centralised control over pricing.
As the luxury sector becomes increasingly fragmented, a number of luxury goods purveyors are seeking better control over pricing policies. As Reuters reports, prices have been put under pressure by booming online sales. Prada’s decision “is essential to ensure greater consistency in pricing policies” and aims to support sustainable long-term growth, the company said in a statement.
The luxury brand has also been giving much more weight to ecommerce and social media, while focusing on younger consumers, as part of a turnaround initiated in 2017. It has made substantial technology investments and ramped up ecommerce with the goal of reaching global coverage by 2020. Its physical stores are evolving, with more focus on the in-store experience, events and pop-ups.
Prada is also turning more attention to corporate social responsibility. On May 23 the company announced plans to ban the use of fur, responding to widespread ethical concerns. It is the latest fashion house to do so, joining luxury brands such as Burberry, Kering SA’s Gucci, Armani, Versace and Chanel, which have already banned the material.