Where Will Prada Performance Shrink And Where To Go In The Future?

"In China

The market space is fully opened.

This opens up new market opportunities for emerging brands.

At the same time, China's luxury market is constantly developing and changing. The traditional big brands should also enhance their resilience, otherwise they will face the risk of being "out of favor" among Chinese consumers.

Tang Rong, 25, has just had an unpleasant negotiation at the PRADA counter in Hang Lung Plaza.

When she traveled in Italy last October, she bought a famous killer bag of the brand, and now a P on logo dropped.

The counter in Shanghai asked her to pay 500 yuan for maintenance.

"The clerk said," all five of them have been dropped and repaired, which is 500 yuan. It is also the price to repair one letter. "She was somewhat unwilling, but still paid the money disgruntled, and decided not to buy the brand.

After the disappointing 2013 earnings report, PRADA's performance in 2014 remained unsatisfactory. In the past year, the Hongkong luxury group Prada SpA 1913.HK (1913.HK) dropped by more than 30%.

This weakness lasted until the beginning of the year of the sheep.

According to PRADA's latest 2015 financial year (January 31, 2015 deadline) performance bulletin, its total sales in 2014 were 3 billion 552 million euros, down 1% from the same period last year.

Worse still, not long ago, JP Morgan watched Prada SpA, which made a 5% reduction in its 2015 profit forecast.

Force men's clothing?

As a group leader, the Prada family has been trying to save the brand that has been over 100 years.

In a four hour investor conference held in Milan last April, Patrizio Bertelli, chief executive of Prada SpA (1913.HK), elaborated on the investment and expansion plan of the group in the next three years.

According to the plan, Prada brand will open 120 new stores in 2014-2016 years, of which 50 are men's wear shops, so that the total number of men's stores increased from 30 to 80 now.

At present, men's wear products are sold in 220 Prada outlets worldwide, with a total revenue of 800 million euros in 2013, accounting for 25% of the group's total revenue.

Giulio Brini, brand retail director, said: "men's clothing will become the main force in our development". He believes that men's clothing has a strong growth potential, and revenue will rise to 1 billion 500 million euros in the next 3~5 years.

Men's clothing will become the main force of Prada's development?

If you understand this brand, you will know that its brand slogan is "women like Prada", and its demand is to make "the best woman's brand".

Although it intends to reform drastically, it seems to be fruitless at the moment.

It is understood that although Prada has strong performance in the Japanese market, apart from Japan, the other Asia Pacific region is the worst hit area of its performance decline.

Data show that sales in the Asia Pacific region fell 5% in fiscal year 2014.

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The 2014 fiscal year is a more uncertain and complex geopolitical and financial environment, which temporarily hampered the growth of the group. However, he also said the environment would not affect the medium and long term growth goals of the group.

Can Prada turn the tide and return to the old golden age?

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Emerging brand challenges

More than Prada, the whole luxury market is not doing very well.

For example, Gucci's revenues in the past two years have continued to decline, while its parent company Kering SA KER.PA (KER.PA) has seen a 5% decline in its operating profit in 2014.

The other is considered to be the top student in the luxury goods industry, Herm s International SCA SCA (HRMS.PA), and Hermes international has downgraded its annual growth target for the first time in many years.

The Asia Pacific region, especially the Greater China region, is the hardest hit in the decline of luxury goods.

The brand does not even dare to expand shop again in the past.

"Luxury companies have been vigorously expanding their retail channels in the past few years, especially in the mainland of China, so that supply is far greater than demand."

Luxury industry and stock analysis normal Hui said.

In addition, in her view, the change of consumption channels and locations is also a major reason: "due to China's high tariffs (and other minor reasons), 75% of Chinese luxury consumption is in overseas or overseas purchasing form."

Bain's 2014 China luxury market research shows that the scale of the purchasing market reached 550-750 yuan last year (the overall size of the mainland luxury market was 115 billion yuan), and the number of tourists traveling to Japan and South Korea increased by about 60%.

Bain's survey also found that the boundaries of Chinese consumers' segmentation were fuzzy and consumers preferred brands more and more diversified.

The consulting firm's survey of 1400 Chinese consumers found that the possibility of changing luxury brands is increasing.

70% of respondents said they liked to try different brands and styles, and nearly 45% of respondents planned to buy more new luxury brands in the next 3 years.

Consumers who do not have much loyalty to the brand are slipping away from those proud luxury brands.

Tang Rong, for example, was waiting for a week to get it repaired.

Killer pack, but has recently been fascinated by the new luxury brand MCM, because the latter's spokesperson is Korea's popular combination EXO.

"The market space for luxury brands in China is fully open.

This opens up new market opportunities for emerging brands.

At the same time, China's luxury market is constantly developing and changing. The traditional big brands should also enhance their resilience, otherwise they will face the risk of being "out of favor" among Chinese consumers.

Bain Bruno, the global partner of the company and the author of the 2014 luxury Research Report, said.