opens in new windowPrada Group, which has struggled for years to translate its fashion industry authority into sales growth, reported its best performance ever in 2022. Since then, it has outperformed its competitors, reporting soaring sales even as the broader luxury goods market slowed and the world entered a downturn. 2024.
Miu Miu, which has been the driving force behind the group’s recent growth, has successfully revamped its disruptive yet wearable designs to capture the attention of a wide range of shoppers across ages and nationalities, with sales throughout most of last year. The height was approximately doubled.
The brand stays in the spotlight not only with fashion shows that continue to spark conversation online, but also with cultural activities such as literary talks, pop-up bookshops, and multi-layered art installations that serve as the backdrop for its latest runway and series of collections. I am collecting. Performance during Art Basel Paris. “We believe that addressing the cultural aspects of society is essential for the long-term survival of our two brands,” said Andrea Guerra, the group’s CEO. speak
The group’s main brand, Prada, has also continued to grow, albeit at a slower pace, while rival luxury giants LVMH and Kering have reported declining sales. The brand has raised prices, sometimes significantly, but has yet to be punished by customers and continues to spend on both seasonal products and best-selling items, such as Galleria totes and nylon backpacks.
Guerra, who previously led the hospitality divisions of Luxottica, Eataly and LVMH, will become Prada Group’s first chief executive from outside the founding family. He will take the helm of the Milanese fashion empire from 2023, aiming to advance succession plans and continue to outperform competitors in the volatile luxury market.
BoF: Despite the overall industry slowdown, Miu Miu continued to report strong results throughout 2024. How can you explain this success?
Andrea Guerra: Miu Miu has always been very respected and very trusted. But for a few years, the business got a little too far away from the brand. Everything on the runway and branding was still very accurate, but that wasn’t always expressed in the products and stores. We put everything back together about three years ago and this is a success story.
It’s also about launching something specific in society and connecting brands, products and identities to what consumers are looking for.
BoF: Many customers certainly respond to Miu Miu’s clear and creative identity. Is that a big reason why it’s such an outlier? Does luxury have a creativity problem?
AG: The industry is at a tipping point. There’s been disruption in creativity, disruption in corporate leadership, and for the first time in years, we’re seeing negative numbers the likes of which the industry has never seen before.
Brands showing positive growth in 2024 all take a long-term view of creativity, design, communication, and management. And there is a strong connection between creativity, image and company. This is one of the most important “positive tensions” needed in this industry, but it is not necessarily seen in all brands today.
BoF: Looking ahead to 2025, how do you plan to strengthen and support Miu Miu’s business, which has grown so rapidly?
AG: First of all, we’re not talking about huge absolute numbers. So it’s easy to imagine what it would be like to get plus 50 (percentage) or double.
Next, add the degree of masochism. Analyze weak signals coming from the market and compete more with yourself. With our branding and creativity, we do the same thing, but always more authentic and more impactful. It’s about doing something a little louder, but not necessarily louder.
What we did at the runway show and at Art Basel Paris shows how strong Miu Miu’s cultural roots are in art and film. The installation, a collaboration between the brand, Mrs. Prada, and a Polish artist (Goszka Makuga), was one of the hottest events in Paris that week. We do more than just label and tag events. We are either part of something or we are not.
It’s like Prada’s Luna Rossa (Italian sailing team in the America’s Cup). This is our team. Or you can talk about the Prada Foundation. It’s our museum.
BoF: Although they are quite diverse, they are deeply intertwined. Is this what you meant when you talked about building “multidimensional brand equity” in your recent earnings call?
AG: We believe that addressing the cultural aspects of society is essential for the long-term survival of our two brands. We are carving our culture and carving our society. When you look at our store, it’s really an open door to understand where architecture is going, where art is going, where engineering is going. That represents the world of Prada.
The Prada brand is trusted from sports to culture and art. These aspects can influence very different typologies of consumers and attitudes. We are not only a lifestyle brand, but also about glamorous evenings. That is, Prada is naturally “polyhedral” (polyhedral). In other words, Prada is a living element that can live and respond to different parts of life. Not many brands can do that
BoF: The art, architecture and sports activities you are talking about are very closely connected, in a very personal sense, to the interests of Madame Prada and Mr. Bertelli. You have been brought in to guide the succession of the company. How do you think about amplifying and promoting these cultural messages within the framework of succession planning?
AG: We are on a long journey. Our two founders are still young in spirit. They work 24/7 and are thinking about the future of brands in decades.
It is very unusual for an Italian company to plan a generational change, and the family says, “We will remain independent, Lorenzo[Bertelli, son of Patrizio Bertelli and Miuccia Prada]will be the boss, and Lorenzo will be the manager.” ” he says. This is obvious in the long run and is obvious to everyone.
From 50 kilometers up in the air, the journey looks as big and open as a California highway. If you look closer, it may look like a mountain road.
BoF: If you look at the Prada brand, you can see that there has been a huge focus on retail execution in recent years. Please tell me about it.
AG: The store is a tool for something that has completely changed at Prada over the past six or seven years, and that is the relationship with Prada’s consumers or potential consumers. We’ve always been a brand-oriented, image-oriented, product-oriented company, but we haven’t always been the best in our relationships with customers.
We place great importance on the in-store experience because our stores are the center of that relationship. People don’t just want a tag, they want to live inside a brand. They want to know what we think, how we act, and get excited with us. They want experiences that bring the Prada brand to life. That’s what we’ve been focusing on.
BoF: How do you filter this approach across the culture of a large organization like the Prada Group?
AG: This is another long journey. It’s about bringing in some people from outside (the company) who know how to do these things from a master’s point of view, as well as training your own employees and making them understand that this is an opportunity to evolve. .
BoF: Brands across the luxury sector are grappling with weak consumer sentiment in key countries and the impact of lingering inflation. What other factors are driving the downturn in the luxury goods industry? Do you think it comes primarily from cyclical macroeconomic pressures, or is there something deeper at play? Or?
AG: There are some very specific challenges, the first being China. We strongly believe in Chinese consumers and China’s long-term (potential), but I think parts of 2024 and 2025 will not be easy in that part of the world.
There are also more specific (towards luxury) cycles. Many companies are undergoing change and turning points, changing creative directors and CEOs.
This area is probably a little spoiled by leather products. Leather goods are increasing in volume and price, making it an easier business than ready-to-wear and footwear. There is no size adjustment. In some cases, hyperinflation (handbag pricing) occurred that had nothing to do with the dream value they were giving consumers. On the other hand, the consumer may have said, “I have too many bags in my closet.” Maybe I’m going to go on a cruise. I’m going to spend my vacation in a super luxury hotel. ‘But I still think it’s cyclical and the sector will continue to grow in nature.
BoF: What is causing this hyperinflation? What can brands do about it now?
AG: Prices have not just gone up unnecessarily. There are market segments where products, dreams, and experiences can actually be tolerated at a higher price. But some brands that raised prices or abandoned loyal customers probably should have been more calm.
There is only one real solution. It’s about enabling brands to inspire people to dream, to offer products they can trust, and to offer consumers a completely unique experience.
The most important thing when selling at any price is not to let down your primary consumers. They always need to find your world comfortable for them.
BoF: What does the shift to experiential spending mean for luxury?
AG: Especially since COVID-19, we are seeing an explosion in the world of experiential luxury. Hotels, Cruises, and Meals. The good thing about it is that it’s still part of the luxury industry, it’s bigger, it has stronger assets and stronger pillars.
The boundaries become blurred. The walls are coming down. In other words, we are all competing for a share of our hearts, a share of our pockets, and a share of our wallets. Should I spend thousands of dollars on vacations and products? Can I put something together? Personalized products incorporate personal touches and vice versa. I think that will be something to look forward to over the next 10 years.
BoF: So, the situation in China will continue to be complicated next year. How do you expect demand for luxury goods more generally to evolve?
AG: 2025 will be a tough year, at least for the first six months, just as the last 12-15 months have been. The demand still exists. People still desire and dream of luxury. At Prada, we need to do an even better job in order to continue to grow above the industry average and regain the market share we take for granted.
BoF: Prada Group, Zegna and Brunello Cucinelli have all outperformed the market in recent quarters. However, competing for market share has historically been tough for independent companies. How can we compete in the long term with conglomerates like LVMH?
AG: It’s tough working in an industry with such powerful and wealthy giants. We have to have very good ideas. It needs to be faster. We need to be different. We need to develop closer relationships with our partners so that we can understand communication, real estate, and how to deal with landlords faster than others. To become a little smarter, we need to do things more simply and quickly.
BoF: You’re still very optimistic about the industry’s potential. why?
AG: Our brand exists to make people dream. This is what we have to do. The more we dream, the more connected we are to society and culture, and the more the next generation can dream with us.
This interview has been edited and condensed.
This article first appeared in The State of Fashion: Luxury, an in-depth report on the global luxury goods industry co-published by BoF and McKinsey & Company.
