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.
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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.
In 1993 Miuccia Prada created a new brand, Miu Miu, as a sophisticated, stylish women’s brand. Miu Miu today is a critical contributor to Prada both in terms of financials and branding.
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 2003, Prada licensed its eyewear manufacturing to Luxottica, the Italian vertically-integrated global leader in the eyewear industry.
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.
Prada Vision
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:
Prada
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.”
Miu Miu
Miu Miu is a crucial brand part of the Prada Group. Miu Miu generated €431 million in revenue in 2022, compared to €346 million in 2021 and €329 in 2020.
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
Curch’s footwear is a brand part of the Prada Group. The company generated over €29 million in revenue in 2022 and 2021, compared to nearly €37 million in revenue in 2020.
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.
Car Shoe
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
Marchesi 1824
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.
Indeed, Prada follows a direct distributionstrategy to keep this tight control over the perception of the brand.
Prada follows a direct distributionstrategy, where most of its sales happen through its direct stores. This is a critical strategy for a luxury group like Prada as it enables the company to have tight control over the perception of the brand for its customers, at each step of the way. Indeed, in 2022, Prada generated over 90% of its revenue from direct distribution.
Prada’s business model goes from the creative process to the selection of raw materials, the sourcing, and production, up to distribution.
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.
This business model proved effective and critical for Prada’s growth across the globe.
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.
In 2022, Prada Group generated most of its revenue from leather goods. Indeed nearly 50% of the company’s revenue came from leather goods, for €1.86 billion. Followed by clothing with €1 billion in revenue and 29% of its revenue, and footwear with €690 million in revenue and over 18% of the total revenue.
Prada generated over four billion euros in revenues in 2022.
Europe represented over 30% of the total revenues, surpassed by Asia Pacific.
In 2022, Prada generated most of its revenue from Asia Pacific, which represented nearly 33% of the total revenue, followed by Europe, which represented nearly 32% of its revenue; Americas, which represented nearly 21% of its revenue; and Japan which represented nearly 10% of its revenue.
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.
Key Highlights
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 distributionstrategy, 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:
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:
Sustainability Focus: Prada’s business model emphasizes control and quality, contributing to its sustainable growth.
Direct Distribution and Sustainability: Prada’s direct distributionstrategy also aids in maintaining sustainability and brand perception.
Continued Growth and Adaptation:
Ongoing Expansion: Prada continues to expand its brand portfolio and operations while adapting to changing consumer demands and market trends.
Slow fashion is a movement in contraposition with fast fashion. Where in fast fashion, it’s all about speed from design to manufacturing and distribution, in slow fashion, quality and sustainability of the supply chain are the key elements.
Patagonia is an American clothing retailer founded by climbing enthusiast Yvon Chouinard in 1973 who saw initial success by selling reusable climbing pitons and Scottish rugby shirts. Over time Patagonia also became a fashionable brand also for its focus on slow fashion. Indeed, the company sells high-priced clothing items built to last which it will repair for free.
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Fash fashion has been a phenomenon that became popular in the late 1990s and early 2000s, as players like Zara and H&M took over the fashion industry by leveraging on shorter and shorter design-manufacturing-distribution cycles. Reducing these cycles from months to a few weeks. With just-in-time logistics and flagship stores in iconic places in the largest cities in the world, these brands offered cheap, fashionable clothes and a wide variety of designs.
With over €27 billion in sales in 2021, the Spanish Fast Fashion Empire, Inditex, which comprises eight sister brands, has grown thanks to a strategy of expanding its flagship stores in exclusive locations around the globe. Its largest brand, Zara, contributed over 70% of the group’s revenue. The country that contributed the most to the fast fashion Empire sales was Spain, with over 15% of its revenues.
LVMH is a global luxury empire with over €79 billion ($83 billion) in revenues for 2022, spanning several industries: wines and spirits, fashion and leather goods, perfumes and cosmetics, watches and jewelry, and selective retailing. It comprises brands like Louis Vuitton, Christian Dior Couture, Fendi, Loro Piana, and many others.
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Kering is a luxury goods multinational founded in France by François Pinault in 1963. The company, which initially specialized in timber trading, grew via acquisitions and was listed on the Paris Stock Exchange in 1988. Two years later, Kering merged with a French conglomerate interested in furniture, department stores, and bookstores.
The Ultra Fashion business model is an evolution of fast fashion with a strong online twist. Indeed, where the fast-fashion retailer invests massively in logistics and warehousing, its costs are still skewed toward operating physical retail stores. While the ultra-fast fashion retailer mainly moves its operations online, thus focusing its cost centers on logistics, warehousing, and a mobile-based digital presence.
ASOS is a British online fashion retailer founded in 2000 by Nick Robertson, Andrew Regan, Quentin Griffiths, and Deborah Thorpe. As an online fashion retailer, ASOS makes money by purchasing clothes from wholesalers and then selling them for a profit. This includes the sale of private label or own-brand products. ASOS further expanded on the fast fashion business model to create an ultra-fast fashion model driven by short sales cycles and online mobile e-commerce as the main drivers.
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SHEIN is an international B2C fast fashion eCommerce platform founded in 2008 by Chris Xu. The company improved the ultra-fast fashion model by leveraging real-time retail, quickly turning fashion trends in clothes collections through its strong digital presence and successful branding campaigns.
Zara is a brand part of the retail empire Inditex. Zara is the leading brand in what has been defined as “fast fashion.” With almost €20 billion in sales in 2021 (comprising Zara Home) and an integrated retail format with quick sales cycles. Zara follows an integrated retail format where customers are free to move from physical to digital experience.
Wish is a mobile-first e-commerce platform in which users’ experience is based on discovery and customized product feed. Wish makes money from merchants’ fees and advertising on the platform, and logistic services. The mobile platform also leverages an asset-light business model based on a positive cash conversion cycle where users pay in advance as they order goods, and merchants are paid in weeks.
Poshmark is a social commerce mobile platform that combines social media capabilities with its e-commerce platform to enable transactions. It makes money with a simple model, where for each sale, Poshmark takes a 20% fee on the final price for sales of $15 and over and a flat rate of $2.95 for sales below that. Its gamification elements and the tools offered to sellers are critical to the company’s growth as a mobile-first platform.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
