Prada loses sight of wow factor in expansion push
Luxury brand needs to boost same-store sales by focusing on new handbags, not new shops
If in fashion, being late on a trend can be lethal, playing catch-up in terms of business strategy can be just as damaging.
Prada is learning that lesson the hard way. The trend in luxury goods is to drum up same-store sales by curbing expansion and wowing customers with new products, yet the firm continues to pay over the odds to open new shops and stock them with handbags little changed from previous bestsellers.
Prada, say analysts, urgently needs to focus less on new stores and more on new handbags.
The group, which also owns the Miu Miu and Church's brands, opened 250 stores in the past three years, far more than rivals. It has finally slowed the pace but still plans 30 to 35 more stores this year, which it says is part of its long-term strategy.
"Prada is starting to focus on same-store sales growth three years later than some of their peers as their priorities were elsewhere, but it is clearly better to do it later rather than never," said Erwan Rambourg, an analyst at HSBC.
Analysts estimate same-store sales at Prada fell year on year by 12 per cent in the third quarter to October and may have dropped as much as 9 per cent in the quarter to January.