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The evolution of a luxury brand:

the case of Prada

Evolution
of a luxury
brand

Christopher M. Moore
Caledonian Business School, Glasgow Caledonian University,
Glasgow, UK, and

915

Stephen A. Doyle
Department of Fashion, Marketing and Retailing,
Glasgow Caledonian University, Glasgow, UK
Abstract
Purpose The purpose of this paper is twofold. In its initial stages it undertakes a review of the key
fashion industry-related themes emerging from the IJRDM. Subsequently, it reflects upon these
themes in the context of luxury fashion brand Prada and in so doing identifies four key change phases
in the evolution of the brand.
Design/methodology/approach Review of literature spanning 20 years.
Findings The paper identifies five overarching general themes. These comprise fashion retailer
brands, the internationalisation of fashion retailing, the emergence and challenges of on-line fashion
retailing, changes in the supply chain and changes in consumption.
Originality/value The paper provides a valuable overview of the main research themes within the
context of fashion retailing. In addition, it provides a critical insight into the changing nature of Italian
luxury fashion brand Prada.
Keywords Fashion, Marketing, Brand-management, Luxury, Growth
Paper type Case study

Introduction
European research in the area of fashion marketing and retailing is a relatively recent
activity and significant research pace in the area extends back no more than 20 years.
That does not discount previous studies as unimportant. Indeed, the work by
Lualajainen (1991, 1992) on Hennes and Mauritz and Louis Vuitton contributed much
to our understanding of the international market expansion of what have become global
fashion retailers. Similarly, Treadgold (1990, 1991) provided invaluable insights into the
increasing shift towards internationalisation of retailers in general and in particular the
internationalisation and philosophy of Laura Ashley and the impact that this had upon
the companys foreign market entry methods. Yet, while these major fashion retailers
were considered, the focus of these studies was precipitated more by an analysis of
international strategic development rather than the specific nature, form and experience
of particular fashion companies.
While European fashion retailing research pre-the early 1990s was barren, it was
significantly more advanced in the USA. Emerging often from researchers based within
consumer science departments or food/agricultural/textile science faculties, these
studies were dominated by consumer choice/consumer behaviour considerations and
quantitative methodologies reliant upon college student samples. Crucially, American
researchers define, describe and categorise fashion as apparel and the majority continue
to do so. In contrast, European research used clothing, then fashion as the collective

International Journal of Retail &

Distribution Management
Vol. 38 No. 11/12, 2010
pp. 915-927
q Emerald Group Publishing Limited
0959-0552
DOI 10.1108/09590551011085984

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term. It could be argued that this distinction is not accidental. The difference marks
a distinction in the way that fashion is played out within the American and European
retailing markets. Apparel indicates and represents a functional viewpoint that
understands the sector objectively driven by interests in product performance,
manufacturing processes and merchandising techniques. And 20 years ago,
functionality was largely the principal characteristic of the American clothing sector.
For it could be argued that the fashion retailer as brand per se is a relatively recent
phenomenon in the mass market of the USA fashion sector. It has only been with the
loosening of the strangle-hold of department stores on clothing distribution and the
emergence and success of brand-led fashion retailers such as The Gap, Abercrombie
and Fitch and Victorias Secrets that the fashion retailer as a brand has had any
relevance in the USA. Consequently, consideration of the American fashion retailer as a
brand in its own right is a relatively recent phenomenon and this is reflected in a
literature that little account either of the business models of fashion retailers in the USA,
or of the role that its own-brands play in the securing of competitor advantage.
From the early 1990s, the literature began to consider the nature, form, structure and
activities of fashion retailers within Europe. This emergence is inextricably linked to the
supportive contribution of the International Journal of Retail & Distribution
Management (IJRDM) and in particular the advocacy of the journals editor, Professor
John Fernie. The journal is not exclusively European in its perspective, but it has
provided a distinctive platform that reflects the European fashion retailing situation.
Reviewing the fashion retailing related IJRDM articles in the past two decades; it is
possible to identify five research themes that have dominated thinking and debate in the
area. These are as follows.
1. The fashion retailer as brand: the fashion brand as retailer
Perhaps marking the most distinctive feature of the European fashion retailing sector,
the brand has emerged as a pre-eminent strategic communications device to signal the
values, positioning and identity of the retailer and its products. The literature has
explored these issues in a number of ways in the journal, such as on a case study basis.
For example, Vignali et al. (1993) work on Benetton, Lea-Greenwoods (1993) review of
River Island and Moore and Birtwistles (2004, 2005) evaluation of the business models
of luxury fashion retailers Burberry and Gucci. Alternatively, survey-based approaches,
such as that by Moore (1995) have sought to delineate more broadly the features of
fashion retailers branding strategies. What is common to all of these studies is the
realisation that fashion retailers, especially within Europe, have assumed the brand
creation, development and distribution roles. This direct involvement has provided
direct control over design, distribution, communications and pricing. The benefits of this
involvement have been well identified elsewhere (Fernie et al., 2003) but pre-eminent
among these are those relevant to securing brand exclusivity and the attendant
advantages of customer loyalty.
2. The internationalisation of fashion retailing: globalising the fashion branding
Fashion retailers are among the most international of companies (Moore et al., 2010). The
IJFDM output in the past two decades has tended to focus upon two specific stands. The
first is the role of the brand in supporting foreign market growth (Wigley et al., 2005).
This is particularly evident in fashion retailer cases studies, such as Per Una in Taiwan

(Wigley and Chiang, 2009); the now defunct childrenswear brand Adams in Spain
(Johnson and Allen, 1994); the expansion of Debenhams in the Middle East ( Jones, 2003)
and Marks and Spencer in Hong Kong (Jackson and Sparks, 2005). The influence of the
brand to consumer perceptions of internationalising retailers market entry is also
recognised in very recent studies (Alexander et al., 2010). The second strand is concerned
with retail market structures in places such as India (Halepete and Seshadri Iyer, 2008);
Spain (Gold and Woodliffe, 2000); Korea (Choi and Park, 2006), Brazil (Alexander and de
Lira e Silva, 2002) and in particular the features of the fashion retailing environment in
these markets.
3. E-fashion: style on-line
Online fashion specialists, such as Net-a-Porter and ASOS have provided compelling
evidence through its growth and profitability that fashion is not excluded from online
opportunities. Furthermore, the fashion retailers, Top Shop, All Saints and Gant have
been able to combine a strong retail and online presence to generate significant brand
growth opportunities. Despite the significant growth of online fashion selling, the
literature remains under-developed in this area. Murphy (1998) and Marciniak and Bruce
(2004) provided an early analysis of the fashion e-commerce and noted the tentative
development of a web presence by European fashion brands; while Ashworth et al.
(2006) considered the means of securing online advantage within the lingerie sector.
With respect to the fashion retailers perspective, the lJRDM has remained largely silent
since then. Greater attention has been given to the behavioural dimensions to the online
fashion shopping (Newman and Foxall, 2003); considering the impact of technological
advances (Kim and Forsythe, 2007), consumption behaviour across distribution
channels (Goldsmith and Flynn, 2005) and connected to the latter, the significance of
brand trust upon shopping behaviour (Hahn and Kim, 2009). Opportunities for retailers
to use the internet as a means of customer segmentation via customization have recently
been considered by Cho and Fiorito (2009). Yet, despite the fast pace of e-fashion sales
growth, fashion e-tailing has been under-represented in the literature and there is
significant opportunity for investigation from both a corporate and consumer
perspective.
4. A new fashion supply chain: cheaper, better, faster
The fashion supply chain has undergone seismic change in the past generation.
Previously, fashion supply chains were characterised by its inflexibility, a dependence
upon long term predictions and commitments and a tendency to source from specific
locations over long time periods. One Spanish fashion conglomerate has done much to
change old strategies. Inditex, and specifically its most financially important fascia,
Zara, has at the very least altered perceptions of how a modern fashion supply chain
should be configured. As a vertically integrated business, Zaras control over the design
to retail cycle has provided the critical advantage of speed. Where previously, the trends
of high fashion took at least six months to percolate to the high street, now Zara can
service a high-street interpretation within six weeks.
5. Fashion consumption trends: with brand, therefore I am
While there has long been an intrinsic understanding that fashion brand choices are
used a means of self-definition, self-demarcation and self-communication the intensity of

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competition and increase in availability has created a more fashion aware and informed
group of consumers. In respect of this, the role of fashion style and brand choices as
coded identifiers (McCracken and Roth, 1989) has similarly intensified. Significantly,
Wigley et al. (2005) highlighted the relationship between brands and consumers as being
based upon mutuality of perceptions whereby the brand and the consumer have
synergistic characteristics. This highlights the need for brand to develop and manage
what may be termed a consistent, appropriate and desirable back-story to which the
consumer can ally themselves and interpret within the context of its own identity.
Woodruff-Burton (1998) stressed the constructed nature of the self from a
post-modernist perspective, indicating that how consumers represent themselves is
through an amalgam of selected and edited cues, comprising amongst other dimensions
fashion brands. In respect of this, there is therefore clear alignment between this view of
the consumer and fashion brands as entities that are created, managed and sustained
through an array of tangible and intangible devices. Bakewell and Mitchell (2003) and
Bakewell et al. (2006) delineate the generational and gender challenges for fashion
companies in its studies of generation Y consumers. Not only do these studies support
the basic premise that consumers engage and utilise brands to for both private and
public reasons, but they also serve to stress the complex role of fashion brands in
communicating dimensions such as attractiveness, seriousness, status and success.
In undertaking this review of the literature spanning two decades and demarcating
the key, over-arching themes that emerge the significance and influence of the IJRDM as
a venue for fashion retailing research becomes evident in terms of breadth and depth. In
addition, it establishes a valid framework for the consideration of fashion brand
marketing and management that is simultaneously historical and contemporary and as
such facilitates an evolutionary review of fashion brands from its early stages through to
present day. In respect of this, revisiting the fashion related research that has comprised
the IJRDM provides an insight, both historic and contemporary, into the nature and
influences of change manifest within the sector. Reflecting upon this changing fashion
landscape and its impact upon the organisations that comprise it, the subsequent section
of this paper will analyse Italian, luxury, fashion brand Prada and the change stages that
characterise its evolutionary phases.
Prada: then and now
Established in Milan in 1931 by Mario Prada, Fratelli Prada (as the business was
originally named) immediately claimed a premium market positioning in the Italian
accessories market. This was achieved in two ways. First, the company opened its first
boutique in the Galleria Vittorio Emanuele shopping arcade. The arcade, named after the
first king of the unified Italy, connects the Piazza del Duomo with the Piazza della Scalla,
which sits as the foreground to the citys famous Opera House. Since its opening in 1877,
the Galleria has been inextricably linked to premium retailing. While in more recent
times the space has become an important Milanese tourist attraction and also home to
some fast foods chains; luxury brands, including Louis Vuitton, Tods, Gucci and Prada
still retain a highly visible presence there. Second, Fratelli Pradas product focus of
leather travel accessories was from its inception, targeted to match the lifestyle needs of
the elite consumer. This link with the higher echelon was formally recognised by Italian
royalty, when Fratelli Prada was designated an official supplier to the Royal Household.
This gave Prada the right to incorporate both the coat of arms and the knotted rope

insignia of the House of Savoy into its trademark logo. These emblems remain part of the
Prada brand livery (Prada, 2009).
Both Fratelli Prada and that other great Italian luxury accessories firm, Gucci, shared
some similarities but exhibit some striking differences. Both were founded within ten
years of each other (Gucci in 1921) and both within two important commercial and travel
destinations (Gucci in Florence) and each focused upon accessories for a customer
segment made rich by commerce and for whom impressive travel accessories were of
importance. But three important differences distinguish its business approach over the
next 50 years.
First, Gucci identified the power of celebrity for brand status enhancement by being
associated with the greatest American and Italian movie stars of the 1940s onwards.
Pradas image was more sedate than celebrity.
Second, buoyed by the demand generated by its celebrity status, Gucci engaged in
an aggressive international expansion, focusing upon important cities including
Philadelphia, San Francisco, New York, Beverly Hills, Chicago and London. In
contrast, Prada remained largely a domestic business.
Finally, while Gucci engaged in a prolific brand extension strategy through many,
varied licensing agreements (which by the beginning of the 1980s had almost ruined its
brand status), Prada did not.
By the early 1980s, Prada was a business that was little known outside of Italy. With
its reliance upon imported finished goods, largely from England, Pradas product range
was indistinguishable and a distinct brand identity was indiscernible. The literature on
fashion brand revitalisation has recognised the importance of individual(s) whose vision
and creativity brings about a transformation of the brands status and success (Moore
and Birtwistle (2005) on the impact of Tom Ford at Gucci). For Prada, that transforming
individual was the founders granddaughter, Miuccia who took over the company in
1978 from her mother.

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The four phases of change

Reviewing the Prada business model under Miuccias 30 years of leadership, it is
possible to identify four distinct phases of the brands evolution. These phases are
delineated in Table I and explored thereafter.
Phase 1: the search for a differential
When Miuccia Prada took over the business, it is claimed that she was a reluctant heiress
of this somewhat moribund business. However, with the support of her partner (who
subsequently became her husband), Patrizio Bertelli, the two recognised the need to secure
a distinction for the brand. With a highly localised distribution network, dependence
upon third party products and with no recognisable design signature, she recognised
the need to offer a radical and different proposition within the luxury goods sector.
Phase

Title

1
2
3
4

Search for a differential

Establishing a growth platform
Aspiration and acquisition
Retrenchment and consolidation

Table I.
The four phases of
pradas brand evolution

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Bertellis family business was also in the leather accessories market and through the
integration of his production capability and Miuccias creative expertise; the
groundwork for the creation of an international luxury Group was set (Prada, 2009).
In the early 1980s Miuccia began work on an utilitarian collection luggage collection
that was stark yet technically advanced. Totes, holdalls and backpacks made from
industrial black nylon cloth were developed and these were branded clearly but discretely.
The black triangle shape of the Prada insignia placed against the black of the nylon
provided an understated but potent branding device. These new products, distinct both in
its design and branding, were a startling counterpoint to the logo-branding excesses and
the ostentations product designs that dominated the luxury market at the time.
Furthermore, in promotion of the range, Miuccia drew from her academic background (she
has a PhD in Political Science) to claim an almost philosophical tone for the brand, placing
it as an intelligent and discerning alternative to the vacuous excesses of competing
businesses (Craven, 2008). As such, the brand was pitched to attract the cognoscenti rather
than the celebrity-pack. By 1984/1985, her hardwearing, subtly branded nylon bags had
generated not only significant demand, but also fashion credibility.
Miuccia Pradas utilitarianism, combined with an ethos of sophistication, technical
competence and controlled extravagance provided Prada with a differential in the
crowded luxury goods sector. This is explained by Bertelli: To be Prada is to be
perfect in every way. The process of making a contemporary product demands a new
level of commitment to both handicraft and technology (Prada, 2009, p. 90).
Phase 2: establishing the growth platform
Having developed a new, modern and highly distinctive accessories collection, Miuccia
in collaboration with her husband, Bertelli, sought to put in place the elements critical
for the future international development of the Prada brand. The starting point was to
secure wholesale accounts within the leading department stores and fashion boutiques
in the USA and Europe. This provided an opportunity to establish brand interest and
awareness at minimal cost and risk.
The next step was the creation of a new store design one distinctly different in
terms of identity and feel from the Prada store in the Galleria Vittorio Emanuele.
Designed by the renowned architect Roberto Baciocchi and opened in 1983 at the Via
della Spiga in Milan, this store became known as The Green Store, by virtue of its
distinctive pale green colour scheme. Sleek, austere yet sophisticated, the Green Store
provided a blueprint for the opening of an international network of Prada stores.
Reminiscent of Hollanders (1970) New York. London, Paris syndrome, the company
opened a fleet of Prada Green stores beginning in the New York in 1986, followed by
Paris, Madrid and London. A domestic store network was also established; the first
opening in Florence.
Yet, while the company developed its international store network based upon the Prada
Green concept, there was also recognition of its need to retain an individuality and distinct
character. Over the past 20 years the company has developed a particular perspective on
retail space which the company expressed in a series of maxims in 2009 as follows:
(1) Variety among stores: Shops should not be identical.
(2) A variety of spaces: Prada can be big in small spaces. Nike can only be big
in large spaces.

(3) Space is a marketing tool. A brand can convey a sense of exclusivity by the
perception of its store in the host country.
(4) 60 per cent of a business identity remains constant, while 40 per cent changes
continually.
(5) The introduction of non-commercial typologies, Cultural events could be
hosted in stores [. . .] Activities other than shopping could take place after store
hours (Prada, 2009).
With strong customer demand established by the wholesale and retail network, Prada
recognised the opportunities to be had from extending the product range. Furthermore,
its new stores required additional product lines to fill the spaces. A womenswear line,
designed by Miuccia, was launched in 1988. The design handwriting of the womenswear
collection was consistent with the luggage and accessories lines. With a limited colour
palette and an emphasis upon the simplicity of the form, the range was distinctive for its
juxstaposition of fabrics and textures. The unexpected coupling of fabrics highlighted
the technical capability of the business and provided a justification for the high prices.
With its own factories and a large network of third party suppliers based across
Italy, Prada was able to extend its brand presence into adjacent product categories
with relative speed and ease.
In the five years after the launch of the womenswear line, the Prada brand was
extended to shoes, fashion accessories and menswear. By 1992, the company sought to
extend the coverage of its business through the launch of Miu Miu as a diffusion brand.
Named after Miuccias nickname, the second line comprised of ready-to-wear, leather
accessories and shoes, was targeted at a younger, fashion-forward female customer.
Less expensive than the mainline collection and with a more vibrant colour identity,
the business replicated a similar development strategy as was adopted for the Prada
brand. Leading fashion stockists were recruited as wholesale stockists and an
international retail network of stores was rolled-out.
The push for growth was given further pace in 1997 with the launch of the Linea
Rossa (Red Line) collection. Ostensibly a leisure and sportswear line, Linea Rossa (the
premium line of the Prada Sport range) provided a showcase for Prada to showcase its
technical dexterity through the use of advanced performance fabrics created through
complex production techniques. This range, sold within Prada mainline stores, provided
a vehicle for the business to engage in sports participation and sponsorship, specifically
in the area of competitive sailing. By the end of the 1990s, Prada had transformed from
being a marginal, domestic and small-scale firm to a multi-national, multi-segment
business with a reputation as a leading influence upon fashion trends and consumer
taste. This transformation gave the business confidence and appetite to enter a further
phase of development one driven by the aspiration to become a global luxury
conglomerate.
Third phase: aspiration and acquisition
An early indicator of Pradas ambitions was evidenced in its acquisition of just over
9 per cent of Gucci shares in the summer of 1998. The company had no intention of
securing a control of Gucci but instead was participating in a defiant alliance with the
mighty Louis Vuitton Moet Hennessey (LVMH) group in the latter firms attempt to
secure Gucci. Prada sold its shares to LVMH the following January at a profit exceeding

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$100 million (Weisman, 1999; The M&A Journal, 2002). Yet, while the LVMH aspirations
to secure the Gucci brand ultimately proved unsuccessful, this did not stop Prada and
LVMH collaborating once more in a luxury brand alliance. In October 1999, Prada joined
forces with LVMH (Menkes, 1999) to purchase a 51 per cent stake in Fendi, with the
Fendi family retaining the other 49 per cent. The Rome-based luxury goods company
had originally been an acquisition target of the Gucci Group. However, the Prada/LVMH
joint bid put paid to that aspiration. Subsequently, again Prada sold its 25.5 per cent
Fendi share stake to LVMH in November 2001 to give the French conglomerate full
ownership control (New York Times, 2001; LVMH Annual Report, 2002).
In parallel with these acquisition developments, Prada, perhaps encouraged by the
conglomerate development activities of its near rivals, Gucci, as well as its allies at
LVMH, sought to develop its own multi-brand strategy to enhance, support and
compliment the Prada and Miu Miu brands. A first independent acquisition was a
51 per cent stake in the New York based Helmut Lang brand in March 1999. The rational
for this purchase which was increased to 100 per cent in 2004, was unclear. The brand
was small and relatively unknown. And while it was known for its use of high-tech
fabrics and complex designs, the value that it would bring to Prada was unclear. And
while Lang was recognised as a talented designer, other than the benefits available from
common sourcing and production, the Helmut Lang business was insufficient to provide
Prada with any meaningful protection from the vagaries of consumer taste. Further,
relations between Lang and Prada were strained from the beginning and within five
years, he had left the company. This purchase was then followed by its securing of a
75 per cent stake in August 1999 in the Jil Sander brand (Goldstein, 1999). The New York
Times reported that the acquisition would provide Prada with a stronger foothold within
the German market (Jil Sander was born in Northern Germany) and would provide an
opportunity to combine stores. Perhaps most importantly, it provided access to the
design and creative talent of the brands founder. However, in many respects, the
features of Sanders design character were very similar to that of Miuccia Prada. Both
were defined by an austerity and purity and each focused upon the use of premium
fabrics. If the House of Prada hoped to leverage Jil Sanders design talent, then its hopes
were short-lived. Internal disputes between the designer and Bertelli resulted in her
resignation in four months after Pradas acquisition. The relationship between Sander
and Bertelli improved sufficiently for her to return to the role of Creative Director in May
2003. Her return was short-lived however, and she left the business for a second time in
November 2004.
While Pradas acquisition of fashion design brands did not prove successful, its
purchase of renowned shoe brands proved more successful. In addition to its purchase
of the upmarket Italian brand, The Car Shoe Company, Prada also secured ownership of
English shoe company, Church for 106 m in September 1999 (News.bbc.co.uk, 1999).
These acquisitions perhaps made more strategic sense. Both companies were well
established, enjoyed an excellent reputation for quality and were not linked to the
machinations of any particular creative director. Arguably, given the importance of
shoes to the Prada business, these two acquisitions provided access to complimentary
design, technical and production skill set that would serve only to enhance the Prada
core shoes business. Furthermore, it also allowed for a spreading of market risk across
two other brand territories.

As an international company, operating an ever-expanding network of stores, Prada

faced an important challenge. It recognised that store expansion inevitably results in
predictable duplication and that this undermines any claim of brand creativity. This
form of incremental expansion, the company recognised, could reduces (brand) aura
and contributes to a sense of familiarity (Prada, 2009, p. 420). More positively, the
company realised that expansion may also provide for a redefining of the brand and
produces the opportunity to introduce two kinds of stores: the typical and the unique.
Its unique store concept, they named the Epicentre store. Its function, according to Prada
was to become a device that renews the brand by counteracting and destabilizing any
received notion of what Prada is, does, or will become (Prada, 2009, p. 421).
The first Epicentre commission was given to the renowned Architect Rem Koolhaas,
of the office of metropolitan architecture (OMA). Prada commissioned Koolhaas to
review trends in global shopping, provide new concepts of new retail tools and apply
these to new kinds of stores. A total of three stores were created to be distinct from the
Green Store typology. These Epicentres were to serve as a laboratory for experimental
shopping experiences, through the application of emerging technology, and the
promotion of the retail space as a civic meeting space that would contribute to the
cultural landscape of the location through the hosting of concerts, exhibitions and other
public events (Prada, 2009, pp. 420). The first of the epicentre stores was set in a former
Guggenheim museum space in New Yorks Soho district in December 2001. The
estimates for the development costs associated with this store (and the two others that
followed), have varied widely. Marcus Field, reporting for the London Evening Standard
proposed one of the more conservative levels at $40 million. In 2003, the second store,
designed by Swiss architects Herzog and de Meuron opened in Tokyo: probably Pradas
most important market in terms of revenue. The six floor building, with a green glass
facade, includes retail selling space, lounges and public event space. The third and last
thus far of the Epicentre stores was opened the following year in Los Angeles. OMA were
once again commissioned to design the store on Rodeo Drive, Berverly Hills. One of the
most distinctive features of this store is that the storefront is completely open. An air
curtain provides a climate control since the space open directly on to the street. Without
question, the Prada Epicentre stores have contributed significantly to advancing
thinking with respect to retail store design. With the direction of some of the worlds
most influential architectural practices, the Epicentres have once more set Prada
against the luxury mainstream. These are intellectual stores; sophisticated, potent and
possibility ahead of its time. However, in the decade since the first Epicentre was opened,
many of the technological inventions pioneered in these stores have been abandoned and
viewed as unworkable. Furthermore, these have architectural experiments, like the
firms acquired by Prada, have placed a significant debt burden on the company. It is
somewhat ironic that the initiatives devised to support the growth of Prada have had a
detrimental impact upon its corporate progress. Consequently, since 2005, the company
has entered a radical retrenchment and consolidation phase.
Phase 4: prada in retreat retrenchment and consolidation
Having sought to establish a luxury brand conglomerate in the late 1990s, the inability of
Prada to secure commercial success for its highest profile acquisitions required that they
radically tidy-up its balance sheet by off-loading its non-profit making businesses.
Initially, a 45 per cent stake in Church shoes was sold to private equity fund Equinox in
April 2003. But more radical action was required to reduce company debt.

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In early 2006, Prada sold the Jil Sander business to British equity firm Change Capital
Partners. While, some three weeks later, it was announced that the Helmut Lang brand
would be sold to Japanese company, Link Theory Holdings after six years of consecutive
losses at Helmut Lang.
As a means of reducing the debt directly, a 5 per cent stake in Prada was sold to
Banca Intesa for e100 million in December 2006 (Financial Times, 2007). The extent of
the financial challenge brought about by these unsuccessful acquisitions and the
exuberant Epicentre store developments was clearly evidenced when, by the end of
2008, the company faced a net debt in excess of e1.1 billion.
As Prada has sought to recover from the crippling impact of the debt, it has focused
upon protecting, maintaining and developing its core businesses. With the buy-back of
the stake in Church shares two years after its initial partial sale, the company has
invested in its core Prada, Miu Miu and Church brands. As a relative late comer to the
lucrative fragrance market (its first ladies fragrance was not launched until late 2004
and developed in partnership with the Spanish fragrance house, Puig), the company has
significantly extended its participation in this market through development of
fragrances for men and women, as well as from the launch of cosmetics and skincare
ranges. When the perfume range was launched, Miuccia Prada told The Times
newspaper that she had resisted launching a perfume for a decade because of her
aversion to mass marketing That requires mass banality, she said (The Times, 2005).
Exploiting the potential of a strategic brand alliance for the first time, the company
collaborated with LG to launch the Prada mobile phone. Within the first year of launch,
more than one million units were sold; providing Prada with a lucrative and much
needed revenue from the license agreement (Newsweek, 2009).
In many respects, Prada, the luxury brand, that had sought to distinguish itself from
the luxury pack, by being almost anti-fashion within its nylon products, and
anti-marketing with its discrete and subtle branding, has had to embrace the essential
ingredient of the mainstream luxury business model. In order to finance design
creativity, to support the international distribution network and to make possible the
extravagant store experiences, most luxury brands must engage in some form of
product democratisation. Product democratisation: a process whereby the brand is made
more widely accessible through the provision of cheaper goods such as perfumes,
sunglasses and fashion accessories, is undoubtedly the sustaining lifeblood of luxury
fashion. For Prada, with a significant debt burden still in place and the possibility of an
imminent IPO in doubt as a result of the recession, the adoption of more mainstream
luxury marketing activities is inevitable if the company is to retain its presence in
78 countries and 7,000 employees (Prada, 2009).
Concluding comments
As the review of the main themes of the fashion retailing literature demonstrate and
the analysis of Pradas evolution from a single store business to a major global brand
indicate, the system of fashion retailing has become complex in response to changing
consumer tastes, an extended competition base and advances in marketing technology.
While the past 20 years of the IJRDM have provided a much needed platform for the
dissemination of thinking with respect to the condition of contemporary fashion
retailing, there is still a significant need for more close-case analysis of the strategic
development of the worlds most important fashion retailers.

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