The family-owned Italian luxury brand – Prada – generated over four billion euros in revenues for 2022. Among Prada brands, Prada made more than 87% of the company’s revenues, followed by Miu Miu and Church. Prada also owns Marchesi 1824 (a luxury bakery) and Car Shoe (a shoe company) made about half a percent of the total revenues.
Prada Origin Story
In 1913 Mario Prada opened a store in the exclusive location of the Galleria Vittorio Emanuele II in Milan.
He mainly sold handbags, travel trunks, beauty cases, jewelry, and a few other, other luxury items. Prada boutiques rapidly became the favorite of the aristocracy and bourgeoisie in Europe.
In 1919 Prada also became an official supplier to the Italian royal family. That made the Prada brand one of the most exclusive at the time.
The encounter with Patrizio Bertelli
Bertelli started his entrepreneurial journey as a teenager, primarily making and selling bags and belts.
When he was 20, he already had three people working for him. After years of gaining experience in shoes and leather goods, he sold them under the names Sir Robert and Granello.
Already in 1967, when Patrizio Bertelli was just twenty-one, he had acquired 1967 Sir Robert and, in 1973, the Italian company Granello until he consolidated them under the name of Ipi.
The real turning point for both Prada and Bertelli came when he met Miuccia.
As reported on Fortune, back in 1999, Bertelli met his future wife, Miuccia Prada, at a trade show in 1978.
The first encounter might not have been very friendly. In fact, according to the Fortune account, when Miuccia Prada saw the goods sold at Bertelli’s stall, she yelled! “you copied my stuff.”
Bertelli was selling fashion goods that resembled Prada designs.
But as the story goes, the design was so good that Miuccia Prada eventually licensed her bags’ production.
Eight years after that weird first encounter at the Bertelli stall, Miuccia Prada and Patrizio Bertelli got married.
The two groups merged within Prada Holding, which is how the Prada expansion started.
While Patrizio Bertelli focused on the innovation of Prada’s business model; Miuccia Prada focused on the innovation of its products.
Bertelli relentlessly concentrated on gaining complete control over all processes, from creation to retail. Miuccia Prada’s talent focused on creating innovative products that got the attention of a global audience.
The years of expansion
The year that represented Prada’s expansion was 1983, when Prada opened up a second store on Milan’s main street for shopping.
While around the end of the 80s, Prada started an internationalization process by opening stores in New York and Madrid, followed by London, Paris, and Tokyo.
The Gucci war and the consolidation of the Luxury industry
In 1998-9, the luxury industry lived a strange moment.
Back then, Patrizio Bertelli seemed to have foreseen the future. After he had acquired a good chunk of Gucci shares, that resembled an unusual move. Gucci was a rival of Prada.
Thus, the central assumption is that Bertelli sought synergies or ways to make Prada and Gucci come together.
The paradox is that at the time, Prada was smaller than Gucci, costing $260 million, which was way more than Prada could afford.
In that period, Gucci was not just under the radar of Prada. Still, it was under the radar of two other giants looking to consolidate their empires and become the greatest global holdings in the luxury industry: LVMH and Kering.
Prada, who had acquired the shares of Gucci, eventually sold them to LVMH. LVMH came in to take over Gucci. However, the fight had just started.
The second luxury magnate in France – after Bernard Arnault – Mr. Pinault organized a consortium to take over Gucci. This consortium came to “rescue” Gucci, which called them up in an attempt to save the brand from the hostile takeover of LVMH.
The war ended in September 2001, when LVMH agreed to sell its shares in Gucci to PPR. Subsequently, LVMH acquired Fendi. This is how the consolidation in the fashion luxury industry ended up, and it all started with Patrizio Bertelli’s acquisition of Gucci shares!
The Prada expansion continued
In 1999, the Prada Group acquired Church’s, founded in 1873 in Northampton, England, which specialized in high-end, handcrafted footwear.
Church’s was a recognized symbol of British tradition and elegance.
Prada also started to build its “Epicenter” store, which first opened up in New York City. The purpose was to redefine the shopping concept.
Tokyo and Rodeo Drive followed in 2004. Prada also continued its acquisitions with Car Shoe, a classic Italian brand famous for its exclusive driving moccasins.
In 2011, Prada was listed on the Hong Kong Stock Exchange. In 2014, Prada acquired control of Angelo Marchesi S.r.l., a historical Milanese patisserie founded in 1824.
In 2017 the Prada e-commerce platform was launched in China. This step was critical as it represented the consolidation of the company’s digitalization process.
As Miuccia Prada and Patrizio Bertelli noted:
Thorough observation and curiosity for the world around us have always been at the heart of the creativity and modernity of the Prada Group. In society, and thus in fashion, which is somehow a reflection of it, the only constant is change.
The transformation and innovation of references, at the core of any evolution, led us to interact with different cultural disciplines, at times apparently far from our own, allowing us to capture and anticipate the spirit of the times.
Today this is no longer enough: we must be the actors of change, with the flexibility required to translate the demands of the market and the society into tangible actions that inform our way to do business.
While Miuccia Prada is, by definition, the innovator of the two, Bertelli is famous for observing contemporary lifestyle trends, which he uses to understand how to capture the spirit of the times in Prada collections.
The family of brands part of Prada
Prada comprises five primary brands:
According to the company’s identity, Prada is to be perceived as the “best of Italy’s design and manufacturing tradition, sophisticated style, and outstanding quality.”
Created in 1993 by Miuccia Prada, Miu Miu is a way for Miuccia to keep giving the best of her creative and unconventional spirit to the overall brand.
Church’s is a handcrafted shoemaker whose tradition dates back to 1675.
The first factory opened in 1873.
Over time, Church’s fits well into Prada’s overall strategy as a popular luxury footwear company.
Founded in 1963 by Gianni Mostile, this iconic driving moccasin is an Italian classic, known for three main aspects:
- high-performance design
- high-quality leathers
- and handcraftsmanship
Pasticceria Marchesi, founded in 1824, embodies the Milanese style regarding artisanal taste.
Prada business model in a nutshell
Since the start, Bertelli has been obsessed with control. Prada had to be able to control each stage of the process.
From creativity to manufacturing, distribution, and retail experience.
This implies an integrated business model that follows each step, from creation to retail, to keep the quality of the products as high as possible while being able to control the customer journey via its directly operated stores, representing most of Prada’s revenues.
That also requires vast resources.
In 2022, Prada spent over a billion and a half euros in selling costs.
When you decide to control the whole chain, you either give up a part of the revenues or you create an infrastructure that distributes the product.
None of those choices is inexpensive, yet the latter also implies more control of the brand, pricing, and customer experience.
- department stores,
- multi-brand stores,
- and e-tailers
Prada business in numbers
Prada generated over four billion euros in revenues in 2022.
Europe represented over 30% of the total revenues, surpassed by Asia Pacific.
Among Prada brands, Prada generated most of the company’s revenue, followed by Miu Miu.
Instead, Marchesi 1824 and Car Shoe generated about half a percent of the total revenues.
Among its products line, leather goods represented more than fifty-six percent of Prada’s revenues. Followed by Footwear and Clothing. More than eighty percent of Prada’s revenues got generated via its directly operated stores.
Who owns Prada?
Via a series of corporations, Patrizio Bertelli and Miuccia Prada combined own eighty percent of Prada Holding S.p.A., the company that controls PRADA S.p.A.
Interestingly, Miuccia Prada holds most of the stake, with sixty-five percent of Prada Holding, compared to Patrizio Bertelli’s thirty-five percent holding company.
This makes Prada a family business.
- Prada Overview and Revenue Breakdown:
- Revenue in 2022: Prada generated over four billion euros in revenues in 2022.
- Revenue Distribution: Prada’s revenue distribution for 2022: Leather goods – nearly 50%, Clothing – 29%, Footwear – over 18%.
- Prada’s Brands and Ownership:
- Primary Brands: Prada comprises five primary brands: Prada, Miu Miu, Church’s, Car Shoe, and Marchesi 1824.
- Ownership Structure: Patrizio Bertelli and Miuccia Prada, through a series of corporations, own eighty percent of Prada Holding S.p.A., which controls PRADA S.p.A. Miuccia Prada holds sixty-five percent, and Patrizio Bertelli holds thirty-five percent.
- Prada’s Origin and Expansion:
- Establishment and Legacy: In 1913, Mario Prada opened a luxury store in Milan, gaining favor with aristocracy and becoming an official supplier to the Italian royal family.
- Encounter with Bertelli: Patrizio Bertelli, an entrepreneur, met Miuccia Prada in 1978 and later married her, leading to the expansion of Prada.
- Innovation and Business Model: Bertelli focused on control and innovation of Prada’s business model, while Miuccia Prada focused on product innovation.
- Expansion Milestones: Prada expanded with stores in New York, Madrid, London, Paris, and Tokyo. It created the Miu Miu brand in 1993 and acquired brands like Church’s and Car Shoe.
- Prada’s Role in the Luxury Industry Consolidation:
- Gucci War and Consolidation: Patrizio Bertelli acquired Gucci shares, leading to a larger war for control over Gucci between LVMH and PPR (Kering). This marked the start of consolidation in the luxury industry.
- Prada’s Role: Prada sold its acquired Gucci shares to LVMH, contributing to the war for control. PPR eventually gained control of Gucci.
- Prada’s Business Model and Distribution Strategy:
- Direct Distribution Strategy: Prada follows a direct distribution strategy, with over 90% of its revenue coming from direct sales through its own stores.
- Integrated Business Model: Prada’s integrated business model covers creation, raw materials, sourcing, production, and distribution to maintain quality and control.
- Distribution Channels: Prada’s distribution channels include department stores, multi-brand stores, franchisees, and e-tailers.
- Prada’s Financials and Geographic Revenue Distribution:
- Revenue Sources: Prada’s revenue sources: Leather goods (50%), Clothing (29%), Footwear (18%).
- Geographic Revenue Distribution: In 2022, Prada’s revenue distribution: Asia Pacific (33%), Europe (32%), Americas (21%), Japan (10%).
- Prada’s Vision and Innovation:
- Miuccia Prada and Patrizio Bertelli’s Vision: Prada’s founders emphasize observation, curiosity, and adaptation to changing times as essential for business success.
- Innovation and Modernity: Prada’s creativity and modernity stem from its ability to transform and innovate across various cultural disciplines.
- Prada’s Family-Owned Structure and Brands:
- Family Ownership: Prada is a family-owned business, with Miuccia Prada holding the majority stake (65%) and Patrizio Bertelli holding the remaining (35%).
- Brands within Prada: Prada’s brands include Prada, Miu Miu, Church’s, Car Shoe, and Marchesi 1824.
- Sustainability and Responsibility:
- Continued Growth and Adaptation:
- Ongoing Expansion: Prada continues to expand its brand portfolio and operations while adapting to changing consumer demands and market trends.
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