Prada Is Late. Is It Late To Make Up?

Although it was late, Prada did not let off the make-up market. Beijing time December 12th, Italy luxury group Prada announced that it will join hands with the French L'OREAL group to develop cosmetics products named after Prada, and the cooperation will start in 2021. In the field of luxury make-up, LVMH, Kai Yun and Hermes are already making a lot of noise. There is also the potential of Fenty Beauty to endorse big brands. How much more space is left for Prada?

　　 Join hands with L'OREAL

According to Prada group's statement, Prada has signed a long-term licensing agreement with L'OREAL group in December 11th. L'OREAL will create, develop and distribute high-end cosmetics products series for Prada with Prada, and it is expected that the agreement will come into effect in January 1, 2021. As for the future planning of the cosmetics products, the Beijing business daily sent an interview outline to Prada and L'OREAL group.

According to the agreement, the Prada make-up line will be officially launched in 2021, that is, it will have to wait another year. This rhythm is "too slow" for cosmetics experts and poly beauty founding partners in the summer, "this kind of rhythm may not keep pace with the rapidly changing social media era".

Prada group currently has core brand Prada, young luxury brand Miu Miu and shoe brand Church "s" and Car Shoe, in addition, the group also authorized the production and sale of glasses and perfume.

At present, Prada group's closest product to cosmetics is perfume, which was launched in 2004. In 2003, Prada and Spain Cosmetic Perfume group Puig jointly created a perfume and skin care products main business branch, dedicated to jointly develop Prada brand beauty products, but only for perfume business, beauty business has not made substantial progress.

　 No longer calm

In recent years, other luxury brands have been involved in the scramble for the beauty market. Prada has always been the onlooker of the industry. "At this time, Prada suddenly announced that the make-up was in, perhaps not from voluntary, but because of objective market pressure". Zhou Ting, director of customer group CEO, said that product diversification is the inevitable trend of luxury brands. When it comes to layouts, there are generally two opportunities: first, when the brand is in an upward stage, and the two is when the brand is in crisis.

Prada obviously belongs to the latter. Although the current Prada is not at all dangerous, the Prada that has just passed the perilous beach can not have any room for relaxation. Since 2014, Prada has fallen into a decline in its brand aging and weak product innovation since its debut. After that, it has been unable to turn over for many years and lingers in its low performance. In 2018, though the Prada group ended its slide, its revenue grew by only 6%.

In the past two years, Prada's efforts to reverse the situation are obvious to all. For example, to protect the full value product, reverse the brand value diluted by the past discount, at the same time, cooperate with Oracle to carry out the digital transformation, and let the traffic star and young consumers dialogue. In China, Prada has also been stationed in e-commerce channels for the first time.

But the transformation results will not be seen at the same time. In the first half of 2019, Prada group's revenue grew by only 2% over the same period last year, a slowdown from 3.3% in the same period last year. Although net profit increased by 57% over the same period, the core brand Prada grew by only 1% during the sales period from a single brand performance. Other brands also maintained a low single digit growth. It is worth noting that sales of Prada in the most potential luxury market in Greater China are not rising.

Prada Group executives have previously stressed that the growth of performance is mainly due to the growth of retail sales of full price products. Zhou Ting said: "when a brand thinks that the main business is enough to support the profit target, it will not diversify or even see it." But poor performance will rush to find new growth points.

　　 Winning geometry

Nowadays, luxury brands' transboundary beauty make-up can improve profit margins, which has become the consensus of the industry, and is also a new battleground. This year, the news of luxury brand layout and beauty make people dizzy. In March this year, Hermes announced that it will launch a series of cosmetics in 2020, which will be supervised by the group CEO Axel Dumas, and is expected to contain two series of make-up and skin care products.

In May, Gucci of Kai Yun group also brought the new lipstick products back to the make-up market. The $1 million Gucci lipstick hit the market in the first month, setting a sales record of 1 million. It brought a revenue of $38 million to Gucci in one month. According to Gucci's color makeup authorized manufacturer Coty group, it is estimated that in the 2020 fiscal year, the global retail sales of Gucci cosmetics will be expected to reach 1 billion dollars, and the sales target in the Chinese market is 600 million yuan.

As an old rival to open the cloud, LVMH group itself has many flagship cosmetics brands such as Dior, Guerlain, Givenchy, Benefit and so on. Besides, there are also new black horse Fenty Beauty. In the first 9 months of this year, LVMH revenue increased by 16% to 38 billion 400 million euros, of which the perfume and cosmetics sector achieved an income of about 4 billion 900 million euros, an increase of 11% over the same period last year. Fenty Beauty contributed $500 million in sales to LVMH in 2018.

Luxury brands are so fond of beauty that the industry believes that the consumption threshold of luxury clothing and handbags is higher and the total consumption is limited. By contrast, the price cap of cosmetics is relatively stable and easy to obtain wide range of consumers.

"The competition in the make-up market has been fierce. The whole market is not enough, and there are still new entries. Whether Prada has the opportunity, the key depends on how it does marketing. " Summer in an interview with Beijing Business Daily reporter said.

In the summer, it is the age of social media marketing. This is both an opportunity and challenge for luxury make-up. Because make-up is better than perfume, it is more suitable to spread through pictures and videos. That's why luxury brands in recent years like to enter the beauty market from make-up instead of perfume.

At the same time, for luxury brands, social networking means laying down their roles and communicating with young consumers, which is a big challenge for all luxury brands including Prada. "Even LVMH needs deep binding Rihanna to do Fenty Beauty, which is actually the reason," said summer.