MILAN — Prada SpA expects to launch a new retail concept for Miu Miu by the end of the year while at the same aiming to double the size of its e-commerce business by 2018.
But don’t expect to see the entire run of show of Miuccia Prada’s collections online — the luxury house is eager to boost its e-commerce sales, but sees the channel more for accessories and other products rather than ready to wear. A goal of expanding e-commerce is actually to drive more customers to Prada’s brick and mortar stores, which are becoming a key foundation for the group’s continued growth.
The new Miu Miu concept, which is expected to be revealed in Paris later this year, and the increased focus on the Web were only two of the items discussed in an almost two-hour conference call Monday regarding the company’s 2015 results, which were released Friday. The key topic was the group’s aim to build up “a customer-centric culture.”
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The Italian luxury group gave a presentation about its 2015 financial figures to analysts in New York on Monday. “The majority of our shareholders are Americans, and that was the purpose from the beginning by listing in Hong Kong, one of the most important markets, and we were aware that in Hong Kong the interest of American funds ran deep,” said chairman Carlo Mazzi.
He said the company could not see any real change in market trends, but underscored that he was “not pessimistic, but optimistic in terms of reaction of the company,” defining it as “very skilled,” which differentiates it from “new competitors.” He said he saw “opportunities in the medium term,” despite a market that is “still weak.”
Prada SpA on Friday reported a 26.6 percent drop in profits in the 12 months ended Jan. 31 to 330.9 million euros, or $364 million, on flat sales of 3.54 billion euros, or $3.91 billion.
Group strategic marketing director Stefano Cantino said one of Prada’s priorities “is to strengthen and enhance customer relations,” and highlighted four macro areas: Channel, leveraging Prada’s distribution network; products, “meeting market expectations while preserving its identity”; communication, “targeting a global audience,” and experience, with “tailored attention to customer experience by providing outstanding services.”
Alessandra Cozzani, chief financial officer, said the company would optimize its retail network, rationalizing store space, with the expectation of closing or downsizing some existing stores over the next two years.
Cantino said the company is also developing e-commerce with “major international partners,” such as Mytheresa.com and Net-a-porter, a new step. Prada expects to double the size of its e-commerce business in two years and increase the number of categories available online, while refraining from selling ready-to-wear for the time being, “given the complexity of the product,” said Cantino.
Investing in and embracing digital communication and social media will help attract new customers and Millennials. “Both Prada and Miu Miu last year have been active with special projects dedicated to social media, seeing remarkable increase in engagement” and reaching 6.9 million fans on Instagram, a 167 percent growth year-over-year, observed Cantino. Social media projects will be further enhanced in 2016. The group also focused on China, activating social platform Sina Weibo in February. The presentation credited Blogmeter, noting that during Milan Fashion Week, Prada was the most engaging brand on Instagram with 515,000 interactions in one day reaching 7.2 million followers.
The Miu Miu music app was launched in February, twinning the brand with music lovers who can create personal video clips. New features will include the possibility to shop selected key items online. Cantino explained that there is a change of image taking place at Miu Miu, which is “adapting to new trends in the market,” with a new stylist, who “already worked on the fall show and the ads.”
When one analyst questioned the commercial viability of Miuccia Prada’s designs, Cantino responded: “You are talking about merchandising. I don’t see any lack of creativity. Mrs. Prada will remain head of design for both Prada and Miu Miu and thinking of new products has nothing to do with creativity. There is no question that this company sets the trend in the industry.”
Cantino said that “more than 50 percent of new customers are quite younger,” and that the group can “attract any age between 15 and 60, with the average around 40. With the new digital retail project and communications, [Prada can] attract new potential consumers, maybe in three years’ time but it can start opening a dialogue.”
The executive also highlighted a focus on women’s wear as the “potential is bigger” in this category compared with men’s at the moment. One analyst observed this was a change in direction compared with the previous fiscal year. “Due to the economic environment, we will concentrate our effort on the women’s category in 2016,” Cantino responded. A slowdown in the Asia Pacific region was also seen as contributing to the refocusing on women’s rtw.
Regarding the see-now-buy-now bags introduced for fall and immediately available after the show in February, Cantino underscored it was “an opportunity to open a new dialogue with existing and new customers,” and that the feedback had been “extremely positive,” but that the company did “not want to go on” with this. “Surprise was the key factor. Whenever we feel we have a good bag we will [do it]. But it’s not an ongoing project.”
On the other hand, he played up the tailored services, made to order and store marketing events that contribute to please customers, who “expect a special treat.”
Cozzani also discussed pricing issues — “rebalancing” prices every month on new products and the application of a “flat spread of 10 percent for all regions.” The company is “fueling all price ranges,” she said. As for currency tailwinds, they are expected to be “neutral” in 2016.
Cozzani added that she expected a “better second half of the year, although Europe is lacking tourists, the Asia Pacific is not improving and the U.S. is in a wait and see mood. Japan is resilient, though.”
Mazzi concluded: “I don’t like the word luxury, I prefer beauty, value and creativity. Our program is value for money, our strategy for the future.”