A little help from 'Mr Bags'
> Prada plays catch-up online in China
Patrizio Bertelli said it would focus on physical stores.
Prada will this year complete the roll-out of its e-commerce platform in key markets including China, South Korea, Japan, Australia and Russia. It's already active in Europe and the United States.
Prada declined to comment for this article.
RISKS AND REWARDS To be sure, an online presence won't solve other issues like too many shops, and customers can feel some tie-ups make the brand less aspirational. Online buyers can also be more fickle.
Yet Prada's modest online sales target, including sales through etailer partners, is for 5 per cent of its total by end-2018. For smaller, luxury outerwear maker Moncler, it's 6 per cent this year – meaning it's already reaping the data dividends that come with online sales.
The power of China's online stars means they are impossible to ignore in a country where hundreds of millions of people use microblogs such as Weibo.
Top fashion blogger “Gogoboi” has more than 7 million followers there. “Mr Bags” has a more modest 3 million, but is seen as a leading influencer when it comes to accessories.
"When a new bag comes out, probably it doesn't get much attention. But when a fashion blogger or celebrity carries it, it's suddenly out of stock," said Yang Lei, a Chinese online shopping agent selling luxury goods back to China. And Prada needs that support. Even as its China sales recovered slightly in the first half of this year, to US$359 million, Prada's global profits fell 18 per cent, after a 2016 bottom line that was its lowest since its 2011 initial public offering. Gucci, meanwhile, has seen its sales jump.
Of course, slow-to-digital was not Prada's only issue. It also opened more stores than its megabrand rivals and failed to spot the power of high-margin casualwear.
A Reuters analysis of Weibo shows Prada far behind Coach, Gucci and Louis Vuitton in terms of celebrity tie-ups and endorsements online. The brand has 309,000 followers on the popular platform – around a tenth of what Coach can boast.
Unlike some rivals, Prada has steered clear of creating limited edition capsule collections in collaboration with influencers. In contrast, a young, fringe Chinese rap group told Reuters they were in talks with Coach over a tie-up – a sign that even potential future stars are being tapped.
"The power of digital is a critical part of our global transformation plan ... we are always seeking innovative ways to leverage social platforms," a Coach spokesperson told Reuters, adding that partnering with Chinese actress Tiffany Tang and singer Timmy Xu "is one way we are working with KOLs to build emotional bonds with our consumers."
Prada is finally following, albeit cautiously.
"Prada works with influencers in different regions including Asia, but will push into this more and increase collaborations," a person familiar with its plans told Reuters, noting Prada is "not obsessed" with collaboration and doesn't want to dilute its brand.
Alongside “Mr Bags” in Milan last week, Prada also hosted Filipino fashion blogger “BryanBoy”, Hong Kong actress Tina Leung, South Korean model Irene Kim and Singaporean designer Yoyo Cao.
Prada has also done pop-up stores focused on Asia, aiming at millennial shoppers.
That push could help reach consumers like Xu Dan, a 28-yearold business development worker in Beijing, who says she reads all “Mr Bags” posts: "I trust these bloggers' sensitivity to fashion."
Not everyone will be easy to move.
Akane Kishi, a 29-year-old human resources worker shopping in Tokyo, said Prada had just not kept up. "I often see Fendi on Instagram and think I want to buy that one, in that colour," she said.