Devil in the detail

The Art of Retail war… Milan-based luxury giant Prada stitched-up investors as shares tumbled 11% in trading amid a reported slowdown in the second half of 2018. The owner of Miu Miu and Church’s latest trading update left investors feeling twitchy over China sales numbers.

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Old Colonial sores… Chinese shoppers now make up around a third of global shopping and execs at the Milanese-maestro accepted they’re going to have to do a better job in China which grew 8%. Prada chief’s pointed out that the low demand in Hong Kong (HK dollar) & Macau (Macanese pataca) — which are both major shopping districts for mainland Chinese — were attributed to the weaker Chinese yuan.

If only the devil would wear it… What doesn’t sit comfortably with investors is the competition comparison. While most can stomach a broader slowdown, the fact that competitors, LVMH (owner of Louis Vuitton) and Kering (owner of Gucci) delivered record sales, has investors questioning Prada’s latest marketing strategy.

Makeover… Kering and LVMH have piled money into store renovations and creating experiential shopping to complement a digital strategy. Prada has made some smarter recent moves but they have been slow out the blocks.

Chinese cracks… China is proving a divisive market for retailers. While Prada has joined Apple and Caterpillar on the suffering heap, the retail market is proving particularly brutal. It comes down to local knowledge of marketing channels. The success of Keringand Gucci is down to personalising stores to local tastes and local digital channels while maintaining the European attraction.

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