Prada’s Patrizio Bertelli says luxury sector will strengthen post-Covid, forecasts 30% growth
The luxury industry will strengthen post-Covid, with a growth that is forecast to reach 30% by 2025. The prediction was made by Patrizio Bertelli, CEO of the Prada group, speaking at the opening of the third day of the Fashion Global Summit in Milan. A growth spurt that will be dominated by the sector’s big names, while smaller ones will find it increasingly difficult to keep up with the pace: “many SMEs have great capabilities and good products but do not have the chance to become successful because the costs involved, for example of digital tools and e-commerce, have become too high. Smaller businesses will always have more problems finding an identity, and will have to rely on bigger names,” said Bertelli.
The pandemic has accelerated the natural selection process, putting at risk the survival of the countless small companies that form the backbone of the Italian fashion industry, whose cultural heritage is essential for “preserving the identity of labels that today have reached very high levels and require considerable investment,” added Bertelli. Where possible, the Prada group itself has intervened financially to acquire minority stakes in small businesses that often represent the work of a lifetime, through which artisans develop their own know-how. “We need to reward these people, who can then see their business grow as they themselves get involved in product development within a broader corporate context,” he said.
An identity that needs also to be cultivated in the workplaces “where we spend the better part of our days, in order to make employees feel that they are involved with brands. In the 1970s, the factory concept was predicated on the boss/employee dialectic, as a result of which many justified grievances emerged. Nowadays, this dialectic has changed, and people tend to be more wholly involved with their work,” said Bertelli.
A collective effort is therefore needed to exit the economic crisis. “In recent years, we have made a great deal of progress with the notion of made-in-in Italy products, where we once thought that it was enough to apply a label on a product, without considering the entire process,” said Bertelli. There have been positive signs, even from the political sphere, in recent years, and Bertelli underlined that the Italian government “has become more interested in fashion, an industry that accounts for a major share of exports and national GDP. The government can help in terms of labour dynamics, but not on the industrial front.”
Even the relationship with trade unions has changed. With regards to Covid-prevention measures, “the [group’s] employee representatives, in agreement with the management and unions, decided that factories could be accessed only if workers were vaccinated or tested, with weekly tests paid for by the company. I understand the individual freedom objections, but in this emergency situation it is necessary to set aside individualistic considerations and to respect others,” stated Bertelli.
Bertelli has clear ideas on the sector's outlook. “In the next 10 to 20 years, the demand for quality materials and more high-end products will increase, and all industry players will benefit from it, while households will want to access a different consumption mode.” China will be at the heart of this evolution, a country “where young people use new technology ‘excessively’, and in three to four years a currency will no longer exist, even in the poorest markets, because people will make payments with their phones.”
Family is at the heart of the Prada world, said Bertelli, “a world that was born as a shared journey with my wife Miuccia, who represents 60% of the project, while I’m the remaining 40%. Today's Prada is the fruit of our boldness, of our never thinking about negatives and always having a positive approach.” When asked whether in future the group will be run by their son Lorenzo, Bertelli said that “it will depend on him,” revealing that “Lorenzo is the most critical head in the company, and he is much more demanding than me. We have a relationship that is almost adversarial. Now he is learning a lot, and working hard to achieve this role.”
A pioneer in fashion retail, Prada opened its first monobrand store in 1983. “By 2011, 80% of our retail network consisted of monobrand stores, and currently we have reached 90%. But the wholesale channel too has evolved, and having a business relationship with independent retailers is useful for receiving feedback from outside the group.”
Finally, Bertelli reiterated his doubts about the possibility of creating a major Italian luxury group in the future. “Our attempt with Jil Sander and Helmut Lang paid the price of leaving too much independence in the day-to-day running [of the business], especially on financial and distribution aspects. In Italy, the creation of conglomerates is uncommon, because individualistic behaviour is widespread. To set up a group in Italy, one needs to work with aggregation rather than predominance in mind,” concluded Bertelli.
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