Prada: The Science Of Desire

 
 
By John McCormick  |  Posted 2002-12-16
 
 
 

When you're selling a $500 scarf, the scarf is the last thing you sell. First, you persuade the customer your products are worth that kind of price. After that, you never let the customer go. But apparently Prada forgot to convince its floor sales force to use the technology that would do that.

A handful of customers saunter into the stately, redbrick Prada store on the corner of New York's Prince Street and Broadway. It's November, the beginning of what many merchants are hoping will be a happy holiday season. On this cloudy, cold fall afternoon, Prada is attracting a crowd.

On the lower level, a woman is standing next to a shelf of gift items—key chains, change wallets and a pair of sterling silver money clips. She picks up the smaller of the two clips as a black-clad saleswoman approaches. The shopper turns and asks: "How much is this?" The Prada employee flips over the money bag to see if there's a price tag on the back. Not finding one, she asks the woman to wait. She will go to the back to check on the price.

View the PDF -- Turn off pop-up blockers!

The sales associate disappears behind a door and the customer is left cooling her heels. The aisles nearby are relatively bare—which is part of the store's clean, minimalist look. With little to attract or distract her, the shopper soon appears bored.

A few feet away sits a Prada "staff device," a wireless computer terminal that is designed to give Prada salespeople immediate access to inventory data—including prices.

The device is almost a magic wand. The handheld unit allows salespeople to retrieve information from the store's database with a few taps of a stylus or a quick swipe of a garment tag.

Each tag in this Prada store includes a thin copper antenna plus a memory chip that holds information about the item. With a simple wave, the wand reads a radio signal from the tag and makes a wireless connection to the store's database. This gives salespeople not just prices, but colors and styles available. In addition, the wand serves as a remote control, activating videos on thin screens hanging from clothes racks or sitting on table displays, to promote the fashions on sale. With a few taps of a stylus, the sales associate can enter information on the customer as well, from name and address to style preferences.

It's in keeping with Prada's ahead-of-the-curve reputation in fashion. According to several experts in the field of Radio Frequency Identification (RFID), this use in Prada's path-breaking Epicenter store is the first on a sales floor anywhere. But, on this raw day in New York, where shopping inside is preferable to wandering outside, the wand goes unused.

After about 10 minutes, the sales associate re-emerges. Instead of consulting the store's computers, she has rummaged through several boxes of money clips in an attempt to find one with a price. She tells the customer the smaller money clip is "about $100" while the larger item is "about $200."

The shopper thanks the salesperson, puts the money clip back on the shelf and walks on.

It's a result the wand was specifically designed to prevent.

The idea of putting an always-on information system in the palm of one's hand was that, once engaged with a customer, a skilled Prada sales associate would never have to leave the customer's side. So says Heather Martin, an executive at IDEO, the London-based industrial design firm that built the wands. Envirosell, a retail research firm, citing industry studies, says up to two-thirds of retail purchases are discretionary buys. And, generally, the more contact store personnel have with shoppers, the larger the sale.

Dan Stanek, an executive vice president with Retail Forward, a global retail and consumer products consultancy, says Prada is missing a golden opportunity. The wand gives salespeople a chance to close a sale while the customer is in the store, immediately suggest related products in stock and set the stage for follow-on sales in the future. Capturing information on the sales floor is a lot easier than collecting it when the shopper just wants to pay and get out the door.

For Prada, such apathy could be a problem. The company spent $40 million on the store, with an almost fantastical combination of elegant design and innovation in technology aimed at rejuvenating the image and sales of this purveyor of expensive fashion goods. The plunge came in a year (2001) Prada recorded $28.6 million in net profit on world sales of $1.5 billion.

The SoHo store, which celebrates its first anniversary on Dec. 14, houses an estimated $10 million of gee-whiz information systems and in-store gadgetry. Besides the wands, the dressing rooms include interactive screens that allow shoppers to call up and see details about the clothes they're trying on, or other clothes they might want to. An atlas that responds to hand movements allows customers to find Prada locations around the world. A 23-panel "peep show" mixes fashion videos with location shots and other footage. A $900,000 glass cylindrical elevator transports shoppers from the street level to the basement, and then back again.

Prada's conundrum is this: Retail experts say—and sales associates show by their actions—that wands and high-tech equipment aren't needed to close a sale. But luxury retailers from Gucci to Neiman Marcus are being forced to deploy ever more sophisticated means of collecting and exploiting data about customers, if they are to bring through their doors that rarefied slice of consumerdom that is willing to pay $350 for a pair of statement sneakers—or $500 for a black scarf.

For its part, Prada is finding that putting technology to work can be as difficult to pull off as an outdoor fashion show in New York's Bryant Park during a windswept rain.

The Cultivation of Desire

Simply put, Prada sells the desire for fashionable goods as much or more than the goods themselves.

This SoHo store is a lab for tapping into that desire. It is the first in a line of what Prada calls Epicenter—focal point—stores. What works will be deployed next in Beverly Hills, San Francisco and Tokyo.

For the SoHo launch, Prada brought in world-renowned Dutch architect Rem Koolhaas, and his Office for Metropolitan Architecture (OMA). The entire team consisted of 20 design firms, media companies and technology suppliers, about 500 people in all. Their mission: to conceive and build a 23,000-square-foot retail space that would do nothing less than reinvent fashion retailing.

After all, the purchase of a $500 scarf or a $3,000 dress is not just about the material or design. It's about the experience.

"Prada relies a lot on the value of its brand. And by having a store experience that is innovative and uses advanced technologies … it [positions] Prada as a leader in the whole retail experience category," says Bruce Eckfeldt, engagement manager for IconNicholson, a technology consulting company that handled the launch of the Epicenter store.

Indeed, what separates retail winners and losers doesn't always come down to price, or quality, or efficiencies, says Retail Forward's Stanek. In Prada's case, it comes down to creating a lust for style.

"Everyone can tell you're wearing Prada merchandise," Stanek says. "Therefore, you're saying something about yourself—you're saying that you're with it, that you know what the hot brands are. It also says, 'I've got money,' and for some people, that's very important."

Prada, to date, has excelled at tapping into consumer desires. While it has been in existence since 1913, it has achieved most of its notoriety in the past 20 years, since scion Miuccia Prada—a leftist who studied politics and once trained as a mime—introduced a line of women's clothing and accessories that made fashionistas gasp, even in its homeland of Italy. Miuccia's first big success—a small, metallic, triangular bag of black nylon—became a cult item in the 1980s. By 1998, there were more than 100 Prada stores. Sales nearly doubled from 1994 to 1996, and then nearly tripled from 1996 to 1998, reaching $798 million, as she cultivated markets from Europe to Asia to the United States.

But a few years ago, profits began to wane as the global economy stalled. Eckfeldt and others close to Prada said the company was looking for a way to "reinvigorate the brand" and came up with an idea to build a store loaded with the latest, coolest retail technologies.

"It was time to move to another space. To experiment," says Peter Dixon, the director of the retail practice at branding consultant Lippincott & Margulies.

Ms. Prada and CEO Patrizio Bertelli (her husband) decline invitations to talk about how the experiment is going. In the meantime, much of the equipment in the laboratory is not working or not being used as intended. A dozen visits by Baseline to the Epicenter prototype store in SoHo over the past two months, along with interviews with suppliers, contractors and store staff members, finds:

  • Dressing rooms are often out of commission. Even though they are what customers rave about most, the store's fitting rooms weren't operating on three out of Baseline's dozen visits in October and November. "Remember, it's experimental," says Martin of IDEO, which designed the closets.
  • Customers can't figure out how to operate them. Even when the dressing rooms are functioning, customers express frustration at figuring out how to work the in-stall screens—or even turn the glass wall opaque so that passersby on the retail floor can't see them.
  • Screens are not working. The video displays that hang on clothes racks are not always connected to the store's database about its merchandise. On a recent visit, one monitor simply displayed the words: "PC Anywhere has had a compatibility problem with your system."
  • Poorly chosen locations work against image-enhancing equipment such as "aura displays.'' The interactive atlas and the 23-panel "peep show" are located in front of a sewer line, which can be odorous. These systems, too, were sometimes down, during Baseline visits.
  • Customers have yet to see chip-based loyalty cards. These cards are keys to creating add-on sales in future visits. Deployment is behind schedule.
  • A complementary Web site has yet to be officially launched. If it were, shoppers would set up virtual closets of clothes they have bought or would like to buy. This, too, is behind schedule.
  • The showcase elevator remains "temperamental." The machine's single-piston design makes it hard to maintain. Tim Archambault, a project manager at OMA, says that the lift is out of service about twice a month and "there's always going to be something" since it is a prototype elevator.

Even the simplest of information systems—directions on how to use things—are missing. Which can spur embarrassment from, rather than desire for, Prada's wares.

Take the dressing-room doors. These are clear doors formed from two sheets of glass pressing against an opaque, liquid crystal center. They seem to magically fog over when a person enters.

The fog is produced by electrical reaction, after the customer presses a foot pedal. But there are no signs directing the attention of first-time users to look down at the floor and press the pedal. The result? Customers—assuming the glass is working—start to disrobe in full view of other patrons, sales associates say.

Rethinking, Reinterpreting

The technical problems, however, don't detract from the store's interior beauty. The most striking visual feature is "the wave," a wooden staircase, amphitheater and shoe department in the center of the store that would make a great half-pipe for skateboarders.

That is the kind of rethinking of space that Bertelli and Miuccia Prada sought when they called on Dutch architect Rem Koolhaas in the fall of 1999 to produce a wholly original form of fashion and fashionable retailing.

Koolhaas is progenitor of such controversial structural ideas as the jaw-like Seattle Public Library and author of a sort of retail architecture bible called The Harvard Design School Guide to Shopping (Taschen America, 2002). Here's an excerpt of this thinking: "So even if shopping is constantly facing crisis and decline, it is also being constantly (and artificially) reinvented, reinterpreted, refashioned, reborn, rechanneled and repackaged. What allows this is an apparatus—a survival mechanism—that can seize on any technique for squeezing out a pathway toward life: modulation, constant change, camouflage, mutation, predation, sabotage, parasitism and surveillance.''

Prada needed such a "pathway toward life." Profits peaked at $163 million in 1999, were nearly cut in half in 2000 and were falling another two-thirds in 2001. Already competing on the high end with other luxury brands such as Gucci and Dior, Prada found buyers of its $400-a-pair shoes mixing them with $10 skirts from Kmart.

Bertelli, the businessman and passionate pursuer of victory in world-class yacht races such as the America's Cup, "was very interested in putting Prada in a new light. He was worried about the store [and] the brand name becoming very tired," says Reid Freeman, a principal with ARO, which coordinated several architectural, design and engineering firms for the first Epicenter store. "He wanted to stay on the cutting edge."

So Koolhaas challenged accepted notions of space, populating the first floor of the SoHo store with oversized mannequins and evoking the spirit of New York street art with a long open wall that could be constantly repainted or reshod—the first covering was a fabric—to create new moods and selling environments.

At about the same time, the company was "reinterpreting" its information technology strategy.

According to Oracle Vice President Tom Madigan, Prada started adopting technology such as his company's database software to more rapidly gauge market demand, reduce inventory and serve customers.

The idea was to be "in a better position to monitor product demand, personalize customer offerings and services," he says, "and take advantage of developing market trends."

According to a variety of Prada's technology suppliers, the company has gotten serious about crunching customer data and now employs a sophisticated set of analytical tools, including software from Business Objects, which the company brought in about two years ago.

With Business Objects, "you can segment customers and find out who's buying what. Look for a purchasing pattern," says Adrian Reynolds, the company's London-based director of marketing applications. That way a retailer such as Prada not only can figure out what to put on hangers or shelves, but what promotions to launch, and which customer to target those promotions at.

Good analytics can help a retailer with "a little bit of everything," says Peter Abell, an AMR Research analyst who has consulted with Prada. "If there's limited shelf space in the store, you need to pay real close attention to what's out there. You don't want to delete an item that might have slow sales but a huge profit. And you don't want to remove an item that some of your best customers buy."

Good analytics helps sales associates get closer to customers. Prada targets 20- and 30-somethings with cash to spend. "The young and the affluent," says Arnold Aronson, a retail strategist at Kurt Salmon Associates and former CEO at Saks Fifth Avenue. "Isn't that a wonderful combination?"

These people expect to have a more personal shopping experience, than say, a harried parent running through an aisle at Kohl's. "When you're paying the prices you are at Prada, you are not just paying for the material that goes in the clothes, you're paying for the level of service that comes with it … the attention," says IconNicholson's Eckfeldt.

And, in retail, constant attention means constant selling.

Christine De Givenchy, 39, is a married mother of two who visits a Prada shop in the U.S. or Europe at least once a month. On her last visit, she picked up two pairs of shoes, "one casual, one dress—both kind of sporty," for about $570. De Givenchy says she likes the personal touch of the store. She's also aware that, when they're with her, the sales associates are always ready to entice her with more Prada merchandise. "That's all part of it," she says.

But whether Prada's information-system-based "up-selling'' is working is open to question, after the first 12 months.

According to several industry executives familiar with Prada's operations, the Epicenter sells more goods each month than any other store in the United States, save one. An independent financial analysis of the store pegged Epicenter sales at about $2,660 a square meter while finding that a traditional Prada store rakes in about $3,450 a meter. But an Epicenter store is more open and this one occupies more than twice as much space as a traditional Prada store. The bottom line, according to the independent financial estimate, is: earnings before interest, taxes, depreciation and amortization at the Epicenter store is running at about $5 million for the year, compared with $4.3 million at a typical Prada boutique.

Given rents in Manhattan and the $40 million up-front investment, retail experts doubt Prada will see a return on its investment for more than five years, however. "It will be a long time, let's put it that way," says retail strategist Aronson.

But, IconNicholson's Eckfeldt says Prada is looking for more than just a hard-dollar return. He says there are "three legs" to the retailer's ROI expectations:

  • Better sales effectiveness and efficiency. The store and its systems are designed to improve the sales process. If sales associates use the staff devices, they spend less time worrying about what's in stock and more time selling merchandise.
  • Better branding. The Prada name must stay synonymous with style and affluence. New ideas and new technologies stamp the brand as hip and innovative.
  • Better customer information. With accurate and up-to-date information on customers, salespeople are able to offer shoppers better service and better in-store experiences.

     

For Prada, it all comes down to, "understanding who their customers are," according to Eckfeldt.

Filling the Blanks

But building a store that's innovative, that can project a brand image, and that can still serve as a place of commerce, isn't easy. Vendors that worked on the Prada store said it was among the most complex and demanding projects they've ever participated in.

"It's not often you come across a project—and I've been in the business for 20 years—where there are so many things, so many parts of it, that are new and different," says Josh Weisberg, president of ScharffWeisberg Inc. (SWI), which helped develop the store's audio and video systems. "You really have to throw away the book and look at a blank piece of paper and figure out how to do it."

Technology development was led by three companies; AMO, a Koolhaas company that explores architectural ideas; IDEO, an industrial design firm in the United Kingdom; and the New York office of IconNicholson.

IconNicholson had the biggest job. In addition to its role as program manager, IconNicholson was the main software developer and systems integrator. The company built the store's database, wrote the code that linked the wands and other computers to the store's sales and inventory tracking software, and, the code that sits behind the screens in the dressing rooms.

IDEO designed the wands and made a point of including a camera in the fitting room, so shoppers can see an "instant replay" of how they look from all sides in their new garments, in a "magic mirror." The rooms also have small closets that read the tags on pieces of clothing and display information on them and similar goods on an interactive touch screen. The radio frequency identification system itself was installed by KTP, a London-based company that specializes in RFID.

Each and every vendor was pushing the boundaries of knowledge. IDEO's Martin says, "it became clear, I think, to everyone on the team that even when the store opened, you could not guarantee that everything would work perfectly."

Developing the systems presented problems. For instance:

  • Wavelength distortion. The building on the corner of Broadway and Prince contains a lot of metal, from studs in walls to cabling connecting computer and video equipment. KTP found that the metal was distorting or destroying the transmission of radio waves.
  • Interference. Each dressing room now contains enough high-tech equipment to power a small office—two computers, two video displays, a camera and RFID equipment. The result: additional havoc with the RFID signals.
  • Hand-feel. IDEO went through several prototypes to get the wand to meet the size, shape and aesthetic goals of Prada and Koolhaas.
  • Not available. Prada wanted video equipment that was not just interactive, but displayed information in an unusual, edgy way. So ScharffWeisberg developed a system on its own.

     

Then, there was the bane of all unusual and unusually big technical projects: a deadline. Work began in January and Prada wanted the store open before Christmas of 2001.

Tuning a radio frequency identification system, according to KPT managing director Jon Lowe, is similar to tuning an old car radio. You move the dial—or frequency—a little bit until it latches onto the signal you want it to read.

Antennas and Texas Instruments radio equipment were constantly rearranged and then fine-tuned. The original cabling of computers was replaced with metal-coated cables, to contain static and noise. Components in dressing room closets were shielded in wire mesh.

"There was a learning curve," Martin says.

The team also pressed repeatedly to make the wands smaller. The first prototype contained just the basic guts of the machine. One promising model was called "the brick,'' with a screen placed on its flat bottom.

IDEO isn't exactly sure why Prada rejected the brick. But the final design is more like a flat, plastic goblet with a screen in the handle. The radio frequency reader is in a cup at the top. When not in use, the wands sit on shelves, cup-side down.

Call it the Prada iPaq. The wand basically is a Compaq handheld computer running a Microsoft Pocket PC operating system. Since IDEO only needed enough for the New York store—less than 100—it had to produce the units itself.

On the video side, ScharffWeisberg had to find a way to get processors to present pictures the Prada way.

Clothing manufacturers like to show off their products in portrait mode, akin to an 8-by-11 photograph. Most computer and television monitors, however, display more information across than down, in what's known as landscape mode.

Even so, Prada wanted a wide screen. It wanted to display oversized images that could be seen from far away.

If SWI were just working in portrait mode, that would have been relatively easy to overcome, says SWI president Weisberg. If they were working just in wide screen, that also would have been relatively easy to overcome, he says. "But we're working wide-screen portrait mode, so we have to rotate and rescale the image to fit a nontraditional [screen].''

SWI tried to use portrait software and video cards to do the rotation, but it found that playing back the high-resolution video files in rotated portrait mode fashion— with interactivity—was too much for the processors to deal with and parts of images were being dropped.

So, like IDEO, SWI was forced to build a custom unit. They use standard processors and standard memory. And even though the company had to design circuits and write code, the screens were ready to be installed at Prada.

Or so Weisberg thought. Once installed in the store, the demands were too great. A fault in the central processors meant they kept blowing out.

"We didn't have the time to do the hard-core testing on all of these devices that we would have liked," Weisberg says. "A lot of this stuff came fresh out of the oven. You put it in the store, you turn it on, and if it goes ka-boom, you take it out, fix it, put it back."

The company eventually worked out all the bugs. The screens are a big attraction. But the store didn't open by its October launch date.

The Serendipity of Delay

On Sept. 11, the World Trade Center towers fell from terrorist attack. Lower Manhattan was shut down.

The delay pushed back the target opening date two months, to December. That may have helped the project. Several participants told Baseline they doubt they could have completed their jobs without the additional time.

Even then, the wands were not ready when the store opened, 11 days before Christmas. IconNicholson and the project team had to make a choice: Could the store function without the wands? The answer, Eckfeldt said, was yes. The wands were not deployed until March. A year after the opening, some pieces of Prada's plans still remain to be deployed altogether: the customer loyalty cards, and, a customer-focused Web site.

No one who worked with Prada has seen an issued loyalty card or a live version of the virtual closets, where a customer or a sales associate can place garments and the pair can discuss—and see—what works best together. The site should also be able to notify customers when goods sitting in the closet, still to be bought, go on sale.

As for the loyalty cards, one contractor that worked on the SoHo store indicates that Prada has solved the difficulties of putting an antenna and a chip in a clear plastic card, in a fashionable way. But it now is having a tough time with what would seem to be the simplest part: Finding a printer capable of putting type on the exterior of the cards, identifying the card as belonging to Prada and a particular customer.

In the meantime, the pressure is still on Prada. One rival, Gucci, has translated its repository of data on its best customers' habits and preferences—its little black book—to the Internet, according to Cathy Hotka, VP of information systems at the National Retail Federation. Gucci wouldn't comment, but, according to Hotka, Gucci sales associates can access customer information from terminals in any store in the world, no matter where the goods have been or are about to be bought. Gucci is even geared up to send desired goods to customers' hotel rooms to try on, at short notice.

Meanwhile, Neiman Marcus has connected every store to a company-wide intranet and to the Web. Sales associates can ask customers if they're purchasing a sweater because they really want it, or because they came for a different sweater but couldn't find it. Then they can search inventory to see if a particular store has what the customer needs. Sales associates can also check for items that customers have seen on the Web to see if they can be located in a Neiman Marcus store.

Pressure on retailers is intense. Mercer Management Consultants, in a recent report, said retailing "today is plagued by too many stores, a glut of products, and declining consumer confidence." Companies like Prada "that once had winning value propositions can easily die or be overtaken by innovative newcomers."

But the biggest obstacle to Prada finding its "pathway toward life" may not lie so much in creating awe-inspiring technology, building it or installing it. The biggest challenge may just be getting it used. One associate sums up what seems to be the overriding staff reaction to the wands this way: "I could use it, but I'm too lazy."

Base Technologies

Prada deployed everything from radio-wave readers to video monitors with an aura so it could tap into shoppers' wants and fulfill their desires.

PRADA (Corporate)

Data repository: Oracle 9i, Oracle

Applications server: Oracle 9i applications server, Oracle

Business analytics: Business intelligence systems, Business Objects

Logistics software: Stealth, Computer Sciences Corp.

Sales/distribution management:(*) mySAP consumer products, SAP

Applications integration software: LegaSuite, Seagull

Inventory management: IMS, in-house

Point-of-sale system:(**) Retail Pro, Retail Technologies

Hardware/operating systems: IBM server running AIX; Compaq and IBM workstations running Windows 2000 and Windows NT

EPICENTER STORE (New York)

Customer information system: Custom, IconNicholson

Content management system: Custom, IconNicholson

Radio Frequency Identification equipment: RFID Tag-it, Texas Instruments

Handheld sales terminals: Staff Device, IDEO

Video software: MediaPlayer, Microsoft

Video processors: Custom, ScharffWeisberg

Network software: pcAnywhere, Symantec

Web site:(***) virtual closet, IconNicholson

Inventory system: IMS, in-house

Point-of-sale system: IMS, in-house

Workstations: Compaq

* Used by Prada Services
** not in all stores
*** not yet active
Sources: Vendors, vendor-published reports, Baseline

Prada Player Roster

Designers

Miuccia Prada, chief designer, Prada
Granddaughter of the company's founder. Credited with transforming a leather-bag maker into one of the world's premier fashion houses. Miuccia Prada and her husband, Prada CEO Patrizio Bertelli, are behind just about every Prada move, including the decision to open "Epicenter" stores based on cutting-edge technologies.

Patrizio Bertelli, CEO, Prada
Miuccia Prada may be the creative soul behind Prada, but Bertelli is the business brains. Known for his hands-on management style, Bertelli also is competitive—currently leading a Prada team competing in the Louis Vuitton Cup yacht race.

Rem Koolhaas, founder, Office for Metropolitan Architecture (OMA)
Designer of the first Epicenter store, he's won the Pritzker Architecture Prize Laureate—a sort of Nobel Prize for architects—and taken radical approaches to such projects as a central library in Seattle. He authored the "Harvard Design School Guide To Shopping," an insightful collection of thoughts and ideas on how consumers have shopped over the centuries.

Reid Freeman, senior associate, Architecture Research Office (ARO)
The man holding the reins. In addition to OMA, a number of other architectural firms were called in to help on the New York Epicenter Store. It was up to Freeman and ARO to coordinate the work of all the architects involved with the store.

Eric Chang, project architect, OMA
A soft-spoken New York architect who oversaw much of OMA's work on Prada's SoHo Epicenter store.

Implementers

Bruce Eckfeldt, engagement manager, IconNicholson
An architect turned high-tech expert, Eckfeldt was responsible for the Epicenter store's overall systems integration and software development. IconNicholson also was the lead project manager.

Heather Martin, project leader, IDEO
Steve O'Connor, engineering lead, IDEO
Martin and O'Connor had to turn technical thoughts into design and product reality. Among the IDEO results: handheld wands for sales folks and interactive dressing rooms for customers.

Josh Weisberg, president, ScharffWeisberg
A screen star. Weisberg and his team of audio and visual specialists designed and deployed small and large video displays throughout the Epicenter store, including a "peep show," consisting of 23 tiny monitors in a row, creating images just for effect.

Jon Lowe, managing director, KTP
Lowe knows how to network. The Londoner was responsible for leading the team that designed, deployed, and debugged the RFID wireless system in the new Prada store.

To protect their privacy, roster members' e-mail addresses are omitted. Send messages to baseline@ziffdavis.com. Your mail will be forwarded.

Prada Base Case

Headquarters: Via Andrea Maffei 2, 20135 Milan, Italy

Phone number: 011-39-0254-6701 (from U.S., direct)

Business: Prada designs and sells high-end men's and women's apparel, shoes and accessories. Prada operates about 300 stores worldwide and either owns outright or has a majority interest in fashion houses Church's & Co., Helmut Lang and Jil Sander

Chief Information Officer: Fulvio Grignani

Financials in 2001: Sales, $1.46 billion; earnings before interest and taxes, $119.3 million; net profit, $28.6 million

Challenges: To reinvigorate the Prada brand name; capture market share and "mind-share" in luxury goods retailing; collect better information about customers; improve store results

BASELINE GOALS:

  • Perfect new retail concept, known as Epicenter plan. Open Epicenter stores in New York, Beverly Hills, San Francisco and Tokyo
  • Improve Prada brand sales, from 2% growth rate in 2001
  • Increase Prada directly owned store sales, which dropped 6% in 2001 to $728.4 million
  • Reduce debt, from $1.2 billion at the end of 2001

     

Project Planner Overview

Customer walks in, cash register rings. One seller of luxury goods decided to find out what happens in the interim.

In this example, an international clothing brand with $1.1 billion in annual sales hopes to improve its relationship with retail customers. As part of this goal, the company wants to understand how well shoppers are being served, what displays catch their eyes, and whether the path they take through a store matches the original architectural vision.

 

The company chose to purchase a managed service that uses video cameras to track individuals within an establishment. The retailer first set up a six-month pilot in three of its 17 corporate-owned stores. In each 10,000-square-foot location, a third-party integrator installed cameras and connected them to desktop PCs. The video data was sent over a dedicated high-speed link to the service provider, which analyzed the data and served it back to the retailer over the Web.

At the end of the pilot, the company outfitted the remaining 14 stores with the same systems.

Click on the icon to download a Microsoft Excel template that also details the project's assumptions.