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Shoes out of the market disjointed, Prada is not only fine-tuning
Italy, Milan - in recent years, Prada's sales and profitability have been hit. And for too long, Prada handbags have been missing the entry-level price market, trying to hit high-end prices. But Prada is not Chanel after all. Relatively low prices have long been written into the Prada brand DNA, and it's critical - if the company wants to see organic growth back on track. The market gap of Prada footwear products is also obvious. Footwear has been one of the few positive categories of the company, and now the brand shoe business has gone back because management has underestimated the rise of sneakers. Considering the trend of sneakers is obvious, but this is really surprising. There's another match: Overall, the brand's new sales are good, and as part of Prada's entire portfolio, there has been a significant increase, but the same store sales of evergreen products are falling sharply. The strong positioning of haute couture and the strong consumer response to new leather products support the idea that Miuccia Prada and its creative team are at the top of the game. But the decline in sales of evergreen products also suggests that the marketing display that plays a key strategic role has not been seriously taken into account. Without strong commodity marketing capabilities, the risk of creative effort is being shared, energy being diluted and resources wasted. In fact, Prada seems to lack the most powerful businessman, with the brand creative director and his department, instead of changing the leadership design. Of course, even if you do the right thing, you end up selling it. Prada also misread the market at this point. Prada's retail network is undoubtedly top quality, but organic growth is not speeding up, just like forcing a suit of oversized, overpriced suits. And the question of digitization. Back in 2014, I asked Prada CEO Patrizio Bertelli why he was skeptical about e-commerce. His answer was, "I'm not skeptical, but there's more important things to do, like opening new stores." Of course he wasn't the only one who underestimated digital opportunities, but Bertelli started a 180 degree turn later. Now, digital business has become a Prada priority, though not very ambitious. Chiara Tosato, general manager and digital director, said her goal was to achieve only 5% of total sales (direct and wholesale) before the 2018 fiscal year, significantly lower than the market average of nearly two times the proportion. But digital is just the latest example of Prada's need for clearer strategic thinking. But there's good news. In the first half of 2017, Prada confirmed that the brand is improving the price mix, and the discount is going down, which is undoubtedly positive and will strengthen the brand value in the medium term. No doubt, Prada is still one of the world's most famous soft luxury brands, but the real promise of the brand has not yet been realized, and in view of the seriousness of the error in the fashion house in recent years, it is clear that the company needs more than just fine-tuning.