Market Analysis of Luxury Industry

Case of Prada GroupLi Wenwen (I34030)

Outline

I. Industry Background and Trends

II.Prada Group Financial Statements

III.Prada Group Brands’ Analysis

IV.CompetitorsV.Challenges and Chances

What is Luxury goods?

Luxury good make up a larger proportion of consumption as income rises.

Characteristics:• Scarcity, (natural or artificial)• High price • Recognition of distinguished

quality

Global luxury market nine segments

Luxury Goods Worldwide Market Study | Bain & Company, Inc.

Luxury-spending trends 2014

Personal Luxury Goods

Overview• Facts:

70 countries;

556 directly-operated stores• Brands:

Prada; Miumiu;

Church’s; Car Shoe

• Prada was founded in 1913 by Mario Prada in Milan.

Financial Statements

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Assets

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Cash Flow

Cash Flow

Brands Analysis

Miu Miu unveiled 12 new DOS covering Far and Middle East, Europe, Japan and US and reaching a total number of 162 at July 31, 2014. At the same time the brand continued investing resources in the communication activities to enhancing its identity.

Miumiu- Total Net Sales (€mn)-9 months

Strategies

Competitors

Ratio AnalysisLvmh Moet Hennessy Louis Vui (MC) VS. Prada S.P.A.(1913)

LVMH: More than 50 brands. Such as LV, Dior, Givenchy, Marc Jacobs, Bvlgari 1700 stores

Challenges and Chances

Risk factors regarding the international luxury goods market

• General state of the economy and international environment.

• Protection of IPR• Brand image and recognition• Ability to anticipate trends and

respond to the changing of customer preferences

Risks for Prada Group

• Exchange rate fluctuations• Importance of key personnel• Outsourcing of manufacturing

activities• Liquidity risk• Legal and regulatory risks

Gucci shoulder bag 82% +LV handbag 65% + Grey Market Chanel: Cut Price in China Price Difference ＜ 10% 20%-

Mar.18th

The End

Bibliography1. Luxury Goods Worldwide Market Study Fall-Winter 2014,Bain and

company, Claudia D’Arpizio, Federica Levato, Daniele Zito and Joelle de Montgolfier2. Luxury goods industry 2013, Stephanie So, Vanessa Yau, Richard Kan and Trevor Li.3. Luxury goods report, HSBC Luxury goods team, Antoine Belge, Erwan Rambourg, Sophie Dargnies4. Annual report 2011, 1012, 2013, Interim financial report 2014, Prada-grouphttp://www.pradagroup.com/en/home 5. 3rd Quarter results as of October 31st, 2014, Milan, December 5rh, 2014, Prada-rouphttp://www.pradagroup.com/en/home 6. Consumer discretionary sector, textiles, apparel & luxury goods industry,Prada S.P.A; Lvmh Moet Hennessy Louis Vui (MC), Bloomberg business, http://www.bloomberg.com/7. The Wall Street Journal; Why Chanel’s Price Cuts in China Could Boost Its Brand http://www.wsj.com/