NEW GEOGRAPHICAL EXPANSION INITIATIVE FOR PRADA

NEW GEOGRAPHICAL EXPANSION INITIATIVE FOR PRADA

745 Global Distribution for Luxury Brands Professor: Alessandro Cannata Group: Wendy Bonilla, Andrea Benzo Interior Designer: Sheridan Markham

CONTENTS

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FIRST PROGRESS REPORT: COMPANY OVERVIEW

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RETAIL BRAND IDENTITY

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COMPANY ANALYSIS

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PROMOTIONAL ACTIVITIES

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SECOND PROGRESS REPORT: GEOGRAPHICAL EXPANSION

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MARKET ANALYSIS

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TARGET CONSUMER

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STORE LOCATION, DESIGN PRODUCT

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THIRD PROGRESS REPORT: COMUNICATION AND PROMOTION

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FINANCIAL PLAN

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EXECUTIVE SUMMARY

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BIBLIOGRAPHY

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FIRST PROGRESS REPORT

COMPANY OVERVIEW

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Prada is an Italian luxury fashion house, founded in 1913. The brand is recognize for designing cutting-edge style pieces and

focused

on

experimentation.

Ownership Structure: Prada’s parent company is Prada Holding Spa., a group that carries a list of different subsidiaries and branches worldwide: P r a d a , M i u M i u , C h u r c h ’s , C a r S h o e ,

The brand is centered on combining concepts, structures and images that go beyond trends.

Prada specializes in the making of leather handbags, travel accessories, shoes, readyto-wear collections as well as other fashion accessories. The largest part of the company’s net income is generated by the sale of leather goods. The company has grown to become one of the most valuable brands worldwide.

Pasticceria Marchesi.

The board of directors is conformed by: Miuccia Prada Bianchi, Chief Executive Officer, Executive Director; Carlo Mazzi, Chairman & Executive Director; Patrizio Bertelli, Chief Executive Officer, Executive Director Business Model “The success of the Group’s brands is based on the original business model, which combines skilled craftsmanship with industrial manufacturing processes. This unique integration enables the Group to translate its innovative fashion concepts into viable commercial products while retaining flexible capacity and technical control over knowhow, quality standards and production costs” Sales Over the past couple of years, Prada has seen a dip in its global net sales, operating income

Prada also operates businesses that include: runway shows, the designing of flagship boutiques in various locations and the production of watches, perfumes and—in conjunction with LG Electronics—mobile phones.

and net income. At the the same time, there has been a growth in the number of Prada employees over the years. This growth comes along the number of stores opened, which also have increased considerably.

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Prada. “Net Sales of Prada Worldwide from

successful. In fact, comparing the first half of

2013 to 2017 (in Million Euros).” Statista - The

2018 to the first half of 2017, sales increasing

Statistics Portal, Statista, www.statista.com/

have grown by 3.3% and the forecast for the rest

statistics/582466/global-net-sales-prada/,

of the year is optimistic.

Accessed 10 Nov 2018 In 2017 Prada Group generated global net sales of about 3.01 billion euros, and Prada, the brand, net sales worldwide were 2,461 million euros.

Prada is the strongest brand from the group, representing 82% of the total revenues in 2017.

Prada. “Net Sales of Prada Worldwide from 2013 to 2017 (in Million Euros).” Statista - The Statistics Portal, Statista, www.statista.com/ statistics/582466/global-net-sales-prada/, Accessed 10 Nov 2018 Prada lost ground to both new and old rivals in

Future growth projections:

an increasingly competitive industry dominated

The results from the first half of 2018 confirm

by LVMH and Kering. However, the company

Prada Group’s successful transformation

acknowledged the need for a change of strategy.

pointed at meeting fast-changing consumer

So, it started to focus on shops, products, and

expectations while respecting the unique DNA

online sales in order to reshape the brand:

of the brands.

“visible and supported by positive signals from the market.” Prada has been investing in its retail network, with shops being renovated and moved to trendier locations, and with pop-up stores to increase customer interest and push traffic towards nearby shops.

Segreti, Giulia. “Prada Shows off New Growth Phase with Rising Sales, Profits.” Reuters, Thomson Reuters, 1 Aug. 2018,

Now, the Prada is focusing on the integration of all channels and communication tools on a single digital view, integrating the entire business from designers right through to store staff.

The group strongly believes that the disciplined execution of the straightforward strategy will unlock the full potential of the global retail network and will drive long-term sustainable growth.

The change of strategy has been quite

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The distribution model of the group includes directly operated stores by Prada, independent customers and franchisees; and licensees. As for Prada net sales by distribution channels, In 2017, the net sales from Prada’s directly operated stores amounted to approximately 2.44 billion euros, 564 million euros were attributed to Independent customers and franchisee and 48 million euros to licensee royalties. Moreover, 82% of net sales were from retail sales and 18% from wholesale, excluding royalties from licensee agreements.

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Prada sells its products in the most prestigious locations, across historic boutiques, epicenter stores experimental stores, like Pop-up stores and shop in shops, traditional retailers, department stores, such as Nordstrom, Neiman Marcus, Bergdorf Goodman, and Selfridges; and through E-commerce platforms and, e-tailers. The brand is very consistent with the image, heritage, and exclusivity in every single channel, and it is focusing its efforts on building an omnichannel strategy.

Prada has also centered on its digital evolution,

Prada. “Number of Prada Employees Worldwide from 2013 to 2017*.� Statista - The Statistics Portal, Statista

partnering with major online retailers like

In 2017, net sales of Prada in Europe amounted

Matchesfashion.com, Mount Street, Mayfair

to approximately 1.17 billion euros, making this

London, and also redesigning its website in

region the largest market of the brand, with the

mainland China with a personalized concierge

majority of stores: 228

in the form of a chatbot.

Asia Pacific, excluding Japan and the Americas, follows the European market in sales, with a figure of 973 million and 181 stores.

DISTRIBUTION: The Group is present in over 70 countries, through a distribution network comprising directly owned stores, e-stores for each brand, a selection of large luxury department stores, independent retailers and the most important

Furthermore, the company has a presence in 70 countries with approximately 613 stores in 70 countries across different regions: Europe, Asia, the Americas, Middle East, Africa, and more.

e-tailers. These are places for continuous experimentation that offer customers alwaysnew experiences.

Licensee agreements: In order to ensure top manufacturing quality, the Prada Group has developed license agreements with partners that are leaders in their respective sector and are able to translate and apply the brands’

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creative identity to specific products.

of next year, they added.

Eyewear The Prada Group introduced the pioneering concept of eyewear as an actual fashion accessory, including it in its brands’ collections. In 2000, the Group launches the first Prada and Miu Miu eyewear collection and, in 2003, a licensing agreement with the Luxottica Group, world leader in the eyewear sector, is signed. Along these years, the avantguard creativity of the Prada Group together with the manufacturing experience of Luxottica

Prada has decided against renewing its

has given birth to iconic collections such as

perfume license with Puig in a major setback

Prada Minimal Baroque, Prada Swing, Miu Miu

for the Spanish perfume company, according to

Noir, Miu Miu Rasoir and strong communication

industry sources with first-hand knowledge of

projects, amongst which we mention Prada

the matter. The decision marks the second time

Journal, Prada Cinèma and Miu Miu Scenique.

a mega fashion brand has parted ways with Puig this year as it comes after Valentino ended its contract in May with Puig to work instead with French cosmetics giant L’Oréal.

Fragrances - Prada In 2003 Prada signs a collaboration agreement with Puig Beauty & Fashion Group for the creation, production and marketing of Prada perfumes. Throughout

“One possible explanation for why Prada did not

the years, under the creative supervision

renew the license with Puig is that they were

of Miuccia Prada, the brand has launched

disappointed by the level of sales,” one of the

fragrances that remain to this day staples of

sources said. He estimated that annual revenues

international perfumery.

generated by the Prada perfume business stood in the region of 100 million euros, significantly below the 200-million-euro target Puig gave the press when it won the Prada license in 2003.

L’Oréal and US rival Coty, which owns the perfume license to Miu Miu (Prada’s more youth-orientated collection) since 2013, will be frontrunners to snatch the Prada license from Puig, the sources said. Prada has time to review bids since its license with Puig runs until the end

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Fragrances - Miu Miu In 2013 the Prada Group enters into an agreement with Coty Inc. for the distribution and creation of Miu Miu perfumes. They launch the first Miu Miu fragrance in August 2015 through the brand’s boutiques and a selected distribution network. L’Eau Bleue, Miu Miu’s second fragrance was introduced on December 2016 followed by L’Eau Rosée eau de toilette, presented in January 2018.

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RETAIL BRAND IDENTITY ANALYSIS

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Retail brand identity analysis The Group conceives its stores as eclectic spaces where customers are offered a unique experience, while establishing a contact with the universe and the products of every brand.

The distribution network of the Group, which includes historic boutiques, experimental stores and more traditional retailers, is completed with a selection of dedicated spaces at department stores, e-commerce for each brand and e-tailers.

Product Prada’s retail assortment is conformed by: Ready to wear collections. There is an Accelerating performance in both men and women categories.

Also, a successful reception of lifestyle collections .The brand keeps a balanced mix of newness and heritage. Prada struggles a battle against other brands looking forward to winning younger customers attention, trying not to lose the brand’s DNA. In almost all of their stores Prada keeps a RTW collection for women and men, except for in some Pop-up stores or shop in shops that are aligned to a certain campaign or strategy that wants to impulse other categories. They also carry collaborations and Drop collections driving consumer excitement: Linea Rossa, Prada Nylon Farm, among others.

Footwear: There is a leveraging strong identity in classic and sportswear. Moreover, the brand have experienced strong success of new sneakers for both men and women.

Accesories : Accessories are key for aspirational customers. The brand carries a selection of travel accessories, key chains and more.

Property Prada Marfa: Prada Marfa was meant to be a “pop architectural land art project.” Built of a biodegradable adobe-like substance, the building is meant to slowly melt back into the Earth, serving as a surrealist commentary on Western materialism. Interesting, then, that Miuccia Prada herself was consulted on the project, handpicking the merchandise for the store’s interior and allowing Elmgreen and Dragset to use the Prada logo. Costing a sum total of $80,000 - or, put another way, about 40 Prada handbags Prada Marfa’s grand opening occurred on October 1st, 2005, and the perplexed press spread the news all across the country.

Prada Pop-up Retail Pop-up stores are on the rise in China, where they are typically located inside shopping malls rather than, as is often the case in Europe and the US, outside on the street. High-end luxury brands are

Leather Goods: Prada carries a balanced mix of

starting to roll out their own take on the pop-up

newness and heritage in the bags category,which is

format, seeking to cut costs and generate interest in

the strongest of the brand. There is a broad-based

their pricey offerings.

organic growth,, Bags and Viaggio outperforming.

Moreover, the brand have successful new product launches along with contemporary reinterpretation of iconic lines.

China with a compound annual growth rate of over 100 percent since 2015, and are projected to total more than 3,000 stores by 2020.

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PRADA EPICENTERS In 1999, Prada embarked on a unique project in combination with AMO, the design think-tank arm of the Office for Metropolitan Architecture (OMA), and architect Rem Koolhaas.

“Architecture must represent modernity,” Patrizio Bertelli observes, “and I believe Rem Koolhaas has been able to engage modernity better than anyone.”

Miuccia Prada and Patrizio Bertelli charged AMO with the task of analyzing trends in global shopping, conceptualizing new retail tools, and applying those findings to new kinds of stores. (Koolhaas was at that time conducting a seminar on retail architecture at the Harvard University Graduate School of Design.)

The result was a wide-ranging project that included three new special Epicenters, stores designed specifically to provide a working laboratory for experimental shopping experiences. The project included innovative programming ideas such as exhibitions, film screenings, concerts, and other public events.

EPICENTER NEW YORK

After three years of research and development in

display cages that travel on tracks in the ceiling, and

all areas, Prada opened the first Epicenter in the

a flip-out stage for special events.

Guggenheim Museum Soho on Broadway in New York City in December 2001.

The spectacular design by Rem Koolhaas / OMA features a zebra wood wave that undulates from street level to the floor below, motorized hanging

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The design was an immediate sensation and remains one of the most successful of all contemporary Prada stores worldwide.

EPICENTER TOKYO Almost concurrently with the opening of the New

This means that every single visible part of the

York Epicenter, Prada embarked on its second in

building (except for the glass) operates as structure,

Tokyo with the Swiss architects Herzog & de Meuron.

space, and façade all at the same time. The façade

The six-story stand-alone building, situated in the

is conceived as a porous spatial structure: one could

Aoyama district, is one of the most distinctive works

almost say the building does not even have a façade.

of architecture in Tokyo.

Its glazing is only an external shell, comparable to a

The green glass façade bulges from a diagonal

contact lens resting on the pupil of an eye.

grid that forms its structural skin. Inside the building

Like contact lenses the façade’s glazing of the

houses retail floors, lounges, and event spaces.

building is merely here to enhance and focus optical

Prada Aoyama Tokyo is the first building by Herzog &

processes.

de Meuron in which the structure, space, and façade form a single unit. The vertical cores, the horizontal tubes, the floor slabs, and the façade grilles define the space but at the same time provide the structure and the façade.

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PRADA Los Angeles OMA followed the success of the New York Epicenter with a new space on historic Rodeo Drive in Beverly Hills.

The design in some ways is the inverse of New York: a wave starts at street level and rises to the second floor before dropping back down again. The façade is formed from a single slab of aluminum and the display windows are submerged below the sidewalk with floor-

II, Milan. Inside the store, a large wooden stair forms a hill.

A counterpart to the wave in the New York store, this supports an aluminum box. Floating above the entrance in the mirrored alcove beneath the stair-hill, the black and white marble floor and the vitrines make reference to the first Prada store from 1913 in Galleria Vittorio Emanuele II, Milan.

mounted glass apertures. Many of the inside

The aluminum box is lined with a new material

walls are composed of a specially fabricated

specifically developed for Prada: half matter,

resin sponge that lend a strange, porous quality

half air, the ‘sponge.’ The stair provides a porous

to the space.

artificial background for the merchandise and

Inside the store, a large wooden stair

further expands Prada’s physical identity in its

forms a hill.

stores.

A counterpart to the wave in the New York store, this supports an aluminum box. Floating above the entrance in the mirrored alcove beneath the stair-hill, the black and white marble floor and the vitrines make reference to the first Prada

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store from 1913 in Galleria Vittorio Emanuele

The aluminum box is lined with a new material specifically developed for Prada: half matter, half air, the ‘sponge.’ The stair provides a porous artificial background for the merchandise and further expands Prada’s physical identity in its stores.

It is framed with laminated glass fading from translucent to transparent, seemingly shrinking or enlarging the store’s size in response to the presenceof customers. A roof structure spanning the entire third floor admits daylight to the space.

The Los Angeles Epicenter has been restored in 2012.

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PRADA TRAIN TRIP: Prada is hopping on a train this holiday season.

The brand unveiled an itinerant retail project in Macau’s Galaxy shopping mall on Dec. 15, named “Prada Silver Line,” installed until Jan. 14. To mark the project, the brand delivered a range of products, including women’s bags and accessories, exclusively available at the Macau destination.

In particular, the Prada Cahier bag is reinterpreted in three new styles made of exotic leathers.

A different selection of items will be developed for each future city of the itinerant retail space.

The pop-up re-creates an illuminated train platform reminiscent of those of the American Streamliners the high-speed railway train sets of the Thirties to Fifties.

The imaginary railway station includes a train’s coach with a metal outer shell, which houses the products’ main display space. Floral-patterned red silk brocade tapestry and black-and-white marble checkered flooring, which appears in all the brand’s boutiques, embellish the space.

Around and outside the train’s coach, a series of installations including life-size Prada robots and a ticket booth — which serves as a concierge service’s booth delivering purchases to customers’ homes — complete the setting.

A “Macau St.” sign marks the retail space, as to reference the first stop of the train trip around the world. Throughout 2018, the “Prada Silver Line” retail project will travel to other destinations worldwide. After Macau, it will stop at the Dubai Mall, followed by Asia, Europe and the U.S.

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PRADA SPIRIT (ITALIAN CAFE): Prada’s newest pop-up store, Prada Spirit, will be installed for a month in the Promenade Shops’ Pearl Lobby area of the Galaxy Macau in Cotai district, the company announced. The space, featuring an exclusive product selection of leather goods, resembles an Italian traditional café with a central, squared counter, high wooden stools, and marble checkered flooring.

The project is a continuation of Prada’s train-themed pop-up store at the same venue, which operated from December to mid-January. Prada Spirit will begin its tour to other major Asian cities, including Beijing, Shanghai, Hong Kong, Taipei, Singapore and Seoul, during the traditional holiday that begins on February 16, the company said.

Pop-up stores are on the rise in China, where they are typically located inside shopping malls rather than, as is often the case in Europe and the US, outside on the street. High-end luxury brands are starting to roll out their own take on the pop-up format, seeking to cut costs and generate interest in their pricey offerings.

According to Chinese commercial property research agency RET, pop-up stores have proliferated in China with a compound annual growth rate of over 100 percent since 2015, and are projected to total more than 3,000 stores by 2020.

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COMPANY ANALYSIS

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Most important elements of product presentation Hand-bags and leather goods are displayed in frontal presentation on the green walls of the store with green lighting, creating a contrast with the merchandise.

Most of the stores have style/item presentation, where handbags and shoes are together, clothes are in the same area and travel accessories are located together as well.

Ready to wear collections are presented in mannequins according to concepts and ideas, and they are also positioned in separate spaces next to leather bags and accessories in curated racks Windows can be close back or open back with straight front window.

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PROMOTIONAL ACTIVITIES

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Technology: Stores have VR-based apps that takes shoppers to an interactive digital journey, through a transitional series of scenes and experiences. The stores also have in-store Wifi where customers can sign in, and Prada matches each customer device with a unique digital identity to create a new customer profile, providing a personalized experience.

Moreover, Prada offers Apps to interact with customers in the store; different payment options: Credit Card, Store Credit, Apple Pay, Wallets. Magic mirrors: allows customers to see themselves both from the front and the back at the same time, Web-closet and RFID [radio frequency identity] antennas: registers merchandise brought into the dressing room and displays an inventory of icons on a touch screen.

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People: People are the driving force of the Company.

The Prada Group is represented all over the world by a mixed universe of cultures, skills and nationalities. Employees are an indispensable source of richness and a fundamental strategic factor for the competitiveness in an ever evolving global market. The Group is committed to respecting ethnic, gender, age, sexual orientation diversities, personal characteristics and opinions, seeking to recruit collaborators from local communities in order to incorporate their cultures to company practices, making the Prada Group a globalized business. In this

preserve the excellence of the manufacturing know-how and develop industrial processes.

The Group also relies on a network of external suppliers, mostly craftsman’s laboratories, with whom it builds long-lasting collaborations.

Style The creative department of the Prada Group see things from always-new perspectives and exercise highly critical thinking, driven by a relentless desire to discover new things in all areas.

Manufacturing

scenario, the passion, skills and intellectual

Excellent know-how, manual abilities, passion

curiosity of each person lead the Group

and desire for experimentation are the core

throughout all its activities. The uniqueness of its

values of the Prada Group. New talents,

heritage and the various abilities consolidated

constantly supported by long-standing

through the years allow every process to be

experience figures are at the heart of the

executed with great dedication and care.

manufacturing processes inspiring innovative reinterpretations of excellence.

Retail Production Patrizio Bertelli’s innovative approach led the Prada Group to internalise the strategic production stages in order to acquire and

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The interest to broaden the knowledge of the product and the market, the aptitude to connect with an international clientele are, along with the passion for sales, essential requirements to work in the stores of the Prada Group.

Competitive analysis and Current positioning in the market Conglomerate Competitor

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Brands Competitors

Sales of the leading luxury companies worldwide from 2012 to 2019 (in billion euros)

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This statistic shows the sales of the leading luxury companies worldwide from 2012 to 2019. LVMH, Kering and Richemont are the strongest groups of the industry in terms of sales.

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SWOT

Opportunities

Strengths

- Streetwear is becoming more popular. Prada

- Prada is one of the most established and recognized luxury fashion houses worldwide - Historical worldwide fashion house with high quality and unique designs (innovative/elegant style)

is shifting their designs to more contemporary streetwear.

- Omnichannel - Capturing the younger generation - Prada can collaborate with leading hotel

- Family business: close control over the entire

chains, elite clubs, etc where rich people could

value chain

become customers

- Prada delivers clothing and accessories very

- Prada could collaborate with other retail,

quickly after a design has been presented on

fashion or beauty brands through partnerships

the runway

to increase awareness

- Prada has excellent advertising and branding

Threats

campaigns, through print ads, online ads, online magazines, celebrity endorsements, social media, influencers, among others.

Weaknesses

- C o u n t e r f e i t m a r ke t a f f e c t s P r a d a ’s brand reputation.

- Intense competition: Prada has to compete against other established luxury brands in a

- Financial planning is not that effective. It could

market where Kering, Richemont, and LVMH

be more organized.

are leaders.

- Lacking a future long-term plan for Prada image

- Recessions can affect the market share of the

- More than 42% sales come from Asia,

luxury fashion industry

specifically China. If the Asian market falls, Prada

- Since it is a global brand, its business is subject

will be affected.

to a recession, economic conditions, political

- The change of strategy that strongly targets

issues, natural disasters, among others.

millennials could affect the loyalty of older consumers.

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Situation analysis: Prada struggled in the past few years for their sales and product issues, because the brand were confused how to grasp the customer taste changing rapidly. Moreover, Prada has to fight against older luxury brands as well as newer brands that are gaining momentum which bring stronger competition into the market.

The brand understands the panorama, and it is changing its strategy. Prada is innovating, keeping the brand’s DNA, in order to increase sales and market share.

Also, part of the strategy is expanding globally and integrating technology into their omnichannel marketing. Such as Il Palazzo – launched a mobile app that featured its

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latest collections. Prada 365 – challenged conventions with an innovative digital campaign.

Parallel Universes – animated its accessories for promotions. Wechat domestic in China market, Prada selling products via Wechat.

Advantages and development: - Experience of luxury fused with artistic creativity - Combination of innovation, quality and time - Strong control of the entire value chain - Powerful retail network

The new Prada is onboard for streetwear which we see in its latest fashion show in Milan, with fluorescent colours and big sporty pieces, Prada is seeking more younger generation clients with casual and sporty style. “Cloudburst” sneakers well popular by consumers and Prada ready to launch a new vision for Linea Rossa sports line.

Although the clothes look different, Prada never forgot it’s iconic nylon material heritage, it’s collaboration with three architects to redesign the bag.

Moreover, the new global digital director, Chiara Tosato, Prada is on the right track with Omnichannel. With the trendy style welcomed by under 26 years old segments, they also are the fastest growing groups of the luxury market.

This is supported by BoF saying, “Management, supported by the encouraging results achieved in the first months of 2018, is confident that the year to come would mark the beginning of a new sustainable long-term growth period,” Prada said in a statement.

Chief Financial Officer Alessandra Cozzani said

MANIFESTO: Pioneer of a philosophy of action that transcends fashion, the Prada Group inquisitively observes the contemporary society and its interactions with the most diverse and apparently distant cultural spheres.

A fluid perspective that becomes the manifesto of the Group suggesting a new approach to doing business by placing at the core of ethical and action principles essential values as freedom of creative expression, reinterpretation of the existent, preservation of know-how and valorisation of people’s work.

Mission Statement: Since 1913, Prada has been synonymous with cutting-edge style. Its intellectual universe combines concept, structure and image through codes that go beyond trends. Its fashion transcends products, translating conceptuality into a universe that has become a benchmark to those who dare to challenge conventions focusing on experimentation.

“mid-to-high single-digit” sales growth in 2018 was “reasonable” after the Hong-Kong listed group said pro-forma sales last year were down 3.8 percent to 3.01 billion euros and core profit fell 7.3 percent to 588 million euros.

Cozzani added that the operating margin would improve 50-80 basis points this year and the group could strongly benefit from a potential patents deal with Italian tax authorities”.

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SECOND PROGRESS REPORT

GEOGRAPHICAL EXPANSION

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Analysis of the Alternatives After a benchmark analysis, reviewing where the competition is located, we found that Prada does not have a presence in countries where other luxury fashion houses already have opened stores. The following called our attention the most: Santiago de Chile, Chile Bogotá, Colombia Beirut, Lebanon Tel Aviv, Israel Lima, Peru New Delhi, India Considering the A.T Kearney Metrics, and Prada’s expansion strategy and interests, we narrowed down that list to four countries.

India: According to the Global Retail Development Index (GRDI) by A.T Kearney Metrics, India tops the Global Retail Development index, thanks to a more favorable foreign investment environment, strong economic growth, and a consumption boom. In the 2017 report, India overtook China for first.

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Moreover, the GDP is forecasted to grow 7.6% in 2018 which is helping boost the middle class and increase consumer spending beyond the essentials.

Also, in 2016 international retailers entered the market including Armani Exchange, Cole Haan, Heatwave, Muji, Massimo Dutti, Kate Spade and Neil Barret.

India is also in the maturing phase of the GRDI window opportunity, which means the consumer spending has expanded, and local competition has become more sophisticated.

Some of Prada’s competitor have a presence in India: LV, Chanel, Gucci, Hermes, Dior, Armani Finally, India’s risk is not as high as China’s, but the country still has some federal and state rules that curtail development; even though the government is taking steps to eliminate them.

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Colombia: Colombia is the number 10 in the rank and it’s the fourth largest market based on household spending, making it more attractive to retailers.

Some fast fashion retailers are opening operations in Colombia, and also luxury brands have entered the market, like Jimmy Coo and other brands like LV already have a presence in the capital city, Bogota. It has a good market attractiveness.

Colombia has experienced a stable and solid growth for most of the past two decades and the GDP has grown by 1.7% in 2017. But, the peace agreement with the rebel group FARC brings uncertainty.

In terms of risks, Colombia’s risk of doing business is considerably high, 12 points above India.

Chile: Chile is an attractive destination for investors, boasting an open market economy, welldeveloped institutions that support financial growth and strong rule of law. The country has a positive disposition toward foreign direct investment (FDI), Moreover, in terms of window opportunities, Chile is already in the closing phase, which means consumers are accustomed to modern retail, spending in high, competition from local and foreign retailers. Also, Chile’s Income group is High Income, while India is Lower middle income, and Colombia’s Upper Middle Income.

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PESTEL ANALYSIS POLITICAL

from centre-left Michelle Bachelet. No significant policy shifts are expected by the new government, and therefore political stability remains high, supporting Chile´s creditworthiness and positive financial markets sentiment. However, addressing bottlenecks in human capital and social inequality are persisting challenges for the new administration.

Government Policies Level of government intervention in the economy The government is strengthening financial regulation. The government’s role in the economy is mostly limited to regulation, although the state continues to operate copper giant CODELCO and a few other enterprises

foreign direct investment (FDI), despite the relatively small size of its domestic market. For over three decades, promoting FDI has been an essential part of the Chilean government’s national development strategy. The country’s market-oriented policies have generated and supported significant opportunities for

Economic legislation and regulations provide

foreign investors to participate in the country’s

a level playing field for domestic and foreign

economic growth. While Chile’s business climate

competitors.

is generally straightforward and transparent,

Barriers to international trade and capital flows are negligible, and international competitiveness, adjusted for labor productivity, is relatively high.

These policies have enabled a relatively high level of growth, and poverty rates have fallen substantially in the last few decades.

Political Stability Sebastián Piñera of the centre-right “Chile Vamos” coalition won the run-off presidential elections in November 2017. He took over 44

Chile has a successful track record of attracting

environmental permitting processes, indigenous consultation requirements, and court proceedings are increasingly unpredictable, especially in cases with political sensitivities.

Taxes: Corporate A foreign company residing in Chile is subject to income tax on its worldwide income. The branch of a foreign company is required to pay tax only on income derived from Chile. A 2014 tax reform increased corporate tax from 20% to 27% under the “partially integrated” system, which allow to use 65% of corporate tax paid by shareholders as credit into their personal income tax. An “attributed system” is available for SMEs, setting tax at 25%. In 2017, a reinvestment incentive was introduced, by

account for nearly four percent of the labor force.

Chilean workers are adequately skilled and some sectors such as mining, agriculture, and fishing employ highly skilled workers. In general, there is an adequate availability of technicians and professionals. Data on informality are not available for Chile in the ILO databases, but different estimations made by academics situate informal employment in Chile, depending on the specific data and methodology utilized, between 10 percent and 20 percent of the nonagricultural workforce.

which companies with full accountancy and

Article 19 of the Labor Code stipulates that at least

sales of up to CLP2,400 million (USD3.9 million)

85 percent of the staff hired by one and the same

can deduct up to CLP100 million (USD166,000)

employer must be Chilean, except in the case

on profits if this is reinvested. There are tax

of firms with less than 25 employees. However,

exemptions investment in forestry projects, and

Article 20 of the Labor Code includes several

firms exploring and exploiting fossil fuels, as

provisions under which foreign employees can

well as for firms operating in the northern-most

exceed 25 percent, independently of the size

and southern-most parts of the country via two

of the company. The percentage of foreign

free-trade zones authorised in these areas.

employees is calculated as a fraction of an employer’s total staff throughout Chile, rather than in each branch separately. Technical staff who cannot be replaced locally are not included when calculating the percentage of foreign employees. In addition, a foreigner whose spouse or children are Chilean, or who is the widower or widow of a Chilean, is counted as Chilean.

Labor Policies and Practices Unemployment in Chile averaged 6 percent of the labor force during 2017. The labor participation rate was 62.7 percent of the working age population in 2017. Immigrants

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Free trade agreements Chile is often considered a model for free trade, having signed agreements with 60

copper. Chile has been diversifying its industrial base and it has become a success case in the production of salmon and wine.

countries. Due to the large number of Free Trade Agreements, Chile’s trade-weighted average effective import tariff rate is less than 1%; more than 90% of trade is conducted on a preferential basis. Currently, Chile has free trade agreements with Canada, the US, the EU, Thailand, the European Free-Trade Association, China, Mexico, Japan, South Korea, Australia, Vietnam and Peru.

Inflation Rate Inflation rate in Chile increased to 3.1 percent year-on-year in September of 2018 from 2.6 percent in the previous month. It was the highest inflation rate since September 2016. Prices went up faster mostly for: food & non-alcoholic beverages (3.7% vs 2.7% in August), namely ECONOMIC Grow rate: The economy of Chile advanced 0.7 percent on quarter in the second quarter of 2018, following a 1.2 percent growth in the previous period.

GDP Growth Rate in Chile averaged 0.87 percent from 1997 until 2018, reaching an all time high of 4.30 percent in the second quarter of 2010 and a record low of -2.70 percent in the fourth quarter of 1998.

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tomato (29.7% vs 10.4%) due to its greater demand during Fiestas Patrias; transport (3.4% vs 2.9%), of which gasoline (13.8% vs 13.6%) and housing & utilities (5.8% vs 4.8%), such as rents (4.9% vs 4.7%) and electricity (6.1% vs 2.8%).

Inflation also picked up for education (4.1% vs 4.0%); recreation & culture (2.5% vs 1.3%) and health (3.2% vs 2.8%). Annual core inflation, which excludes volatile items, rose to 2.3 percent in September 2018 from 2.0 percent in August, hitting the highest level since May 2017.

On a monthly basis, consumer prices edged up 0.3 percent, following a 0.2 percent increase

Chile has been one of Latin America’s fastest

in the previous month. Inflation Rate in Chile

growing economies mostly due to exports of

averaged 41.64 percent from 1951 until 2018

reaching an all time high of 746.30 percent in April of 1974 and a record low of -3.40 percent in November of 2009.

Exchange rate: Peso Chile CLP Dollar to Chilean peso 1 USD = 684.19 CLP EURO to Chilean peso 1 EUR = 775.71 CLP

In Chile, the main components of the consumer price index are: Food and Non-Alcoholic Beverages (19 percent of the total weight); Transportation (14.5 percent) and Housing, Water, Electricity and Other Fuels (13.8 percent).

Education account for 8 percent; Miscellaneous Goods and Services for 7.2 percent and Furniture and Household Equipment and Conservation for 7 percent. Others include: Leisure and Culture (6.7 percent); Health (6.4 percent); Communications (5 percent); Clothing and Footwear (4.5 percent); Restaurants and Hotels (4.4 percent) and Alcoholic Beverages, Narcotics and Tobacco (3.3 percent). The national index has a base of 100 as of 2013. The CPI reflects the prices and spending patterns registered in the regional capitals and suburban areas of the fifteen regions of the country.

Interest rate: The Central Bank of Chile raised its benchmark interest rate by 25 bps to 2.75 percent on 18 October 2018, matching market expectations.

The decision was unanimous to ensure that inflation perspectives remain close to the target of 3% over the two-year horizon. Policymakers also mentioned that global and regional growth prospects deteriorated since the last minutes, while consumer prices jumped to a two-year high in September, underscoring rising yields.

Inflation in Chile increased to 3.1 percent yearon-year in September of 2018 from 2.6 percent in the previous month. It was the highest inflation rate in two years. Interest Rate in Chile averaged 4.66 percent from 1995 until 2018, reaching an all time high of 14 percent in September of 1998 and a record low of 0.50 percent in July of 2009.

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most any other country in Latin America due to their industrious culture and resource-rich land and sea. The Andes mountains predominate the landscape, making the country’s highland culture, with nexus in Santiago, is the most influential and powerful in Chile.

Disposable Income Disposable Income In Chile, the average household net-adjusted disposable income per capita is lower than the OECD average of USD 30 563 a year.

The Organisation for Economic Co-operation and Development an intergovernmental economic organisation with 36 member countries, founded in 1961 to stimulate economic progress and world trade.

Social Cultural influences and beliefs Spanish in the official language of Chile. There are also quite a few indigenous languages such as Mapudungun (spoken between the Itata and Tolten rivers) and Aymara (spoken in the mountains of the north).

Genetically, Chile is approximately half of European descent and half of Native American descent (with about 4% African). Chileans are genetically and culturally less indigenous than neighboring Andean nations to the north, being similar to Argentinians in most respects. Chileans have gained more economic prosperity than

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Fine Arts & Literature Thanks to the support from world-renowned universities and art institutions, contemporary art has flourished. Perhaps the most famous Chilean painter was Roberto Matta, whose surrealist and abstract techniques became popular throughout the 20th century. Other artists include the neo-cubist painter Carlos Sotomayor and the sculptor Rebeca Matte, among many others.

In addition to these rich arts, Chile’s turmoiled past has bred some of the most rousing protest literature in the Spanish language. Isabel Allende is arguably one of Chile’s most important authors, with progressive novels that showcase the social and political conditions during the Pinochet regime and feature feminist themes that highlight the way women were treated in a world dominated by men.

Another noteworthy Chilean literary master is Nobel Prize winner Pablo Neruda, whose poetry in the early and mid-20th century captured both the country’s political atmosphere and defined a unique style of erotic romanticism in his early works. Gabriela Mistral was also awarded the Nobel Prize in literature for her poetry on death,

Most Chileans are Roman Catholics.

The religion has played a large role in defining social and political life.

Religious instruction in public schools is almost exclusively Roman Catholic.

childhood, and maternity, making her the first

Abortion is actually illegal due to the influence

Latin American woman to win the Prize.

of the Church.

Divorce was illegal until 2004.

Most national holidays are religious in nature.

Chileans of more mature generations still celebrate their saint’s day as much as they do their own birthday.

Religion Religious Beliefs. A large majority of Chileans (73 percent) are affiliated with the Roman Catholic Church. Some 15 percent of the population identifies itself with several Protestant groups.

This includes Anglicans and Lutherans, but the vast majority of Chilean Protestants (90 percent) belong to the Pentecostal Church. Another 4 percent of the population belongs to other religious groups (Jews, Muslims, and Greek Orthodox), while 8 percent claim not to profess any religion. Chileans profoundly respect the religious beliefs of others, and religion seldom constitutes a source for conflict or disagreement.

The Role of the Family The family occupies a central role in Chilean life.

Extended families are very close and will frequently congregate for major occasions and celebrations.

Family and business are intertwined to the extent that nepotism is seen as a positive concept.

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Class Structure Chilean history has had a large influence on modern day class lines.

Generally speaking, class in drawn along financial lines.Today’s wealthiest class are more or less the same land owning families of before.

social backgrounds are very conscious about the importance of providing a good education for their children. As a rule, parents are geared up to make immense financial sacrifices to send their children to good schools and to finance their further education. The number of higher education centers in Chile has dramatically increased during the last decade. In 1980 Chile

A middle class has developed of late and now

had eight universities, while by 1990 this number

accounts for nearly a half of the population.

increased to sixty, most of them being private

Classes are fluid and it is possible to move either upwards or downwards depending on your salary.

Social Profiling

institutions. In addition, the country has eighty professional institutes and 168 technical training centers. Among young people aged eighteen to twenty-four, 19 percent attend an institution of higher education.

Due to class structures it is commonplace for people to try and deduce another’s position in the social rank.

This is primarily done through external appearances, i.e. dress, etc. As a result they present themselves in the best possible way.

Education Children are not explicitly encouraged to learn to become independent but rather are coaxed to remain close and loyal to the family whatever their age. So youngsters in Chile tend to become independent at a relatively

Chile’s expanding and growing market has

late age, as they often leave home only when

resulted in a boom in consumer demand.

they marry. Parental authority remains even

Likewise, improved living standards have

after children have an independent life, as

resulted in rapid growth in spending on

parents believe they have still the right to get

consumer appliances over the past few years.

involved in important decisions and personal problems. Higher Education.Chileans from all

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Demographic trends

Chile is said to have entered an ‘era of consumerism’ in which consumption is seen as a form of gratification and social status, beyond just meeting consumer needs. Chileans also value their purchasing experience.

Chilean society is reported to be the most environmentally aware in Latin America. The Chilean consumer is increasingly conscious of food calories and nutrients due to the Food and Advertising Law (2016) changes to labeling

Interests Soccer is the national sport.Outdoor activities such as hiking, running, mountaineering, rafting, skiing, swimming, hang-gliding, scuba diving.

It is very common to go out to drink a coffee or to a park, to go to the mall, do sports or short trips to the beach.

Opinions of the society

(36.5% of Chileans admit to changing their food

A society in movement. The sustained economic

choices after labeling changes).

growth for more than 20 years, along with globalization, has transformed the Chilean society has transformed the Chilean society, invigorated the middle class and improved the general expectations of the population.

They don’t trust anyone, they feel Chile is a dangerous city Chileans frequently perceive that their country is more dangerous than it actually is. They believe they are better than Argentina.

In terms of online purchasing decisions, Chileans look for good prices (79%), quick delivery (58%), return policies (48%), and delivery tracking (48%). Ecommerce platforms are complementary to physical stores since Chileans often look for products online before making a physical purchase (Adimark study). Chilean B2C (business to consumer) e commerce represented 3 billion USD in 2017, a 15% growth compared to 2016.

Chile has 12.4 million users and 5.7 million e-shoppers (Ecommerce Foundation).

Technological Research and Development The World Bank Research and Development Center in Chile was established by the Government of Chile and the World Bank Development Economics Vice-presidency in 2017.The financial sector work focuses on conducting research related to financial sector development relevant to Chile, the Latin America region, and other economies. The goal is to generate and disseminate knowledge that will inform policy makers, practitioners, and the academic community.

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Production of goods and services Chile’s export earnings are dominated by mining products (around 64% of all exports), followed by industrial goods (about 28%), and agriculture, forestry, and fish (6.3%). In turn, Chile’s imports are dominated by intermediate goods (around 53% of the total), followed by consumption goods and capital goods, which account for around 23% and 17% of the total, respectively.

copper mining. Mining production will continue to lead Chile’s economy with significant foreign and domestic investment in developing new mines and modernizing and expanding existing ones. The state-owned mining company, CODELCO, is the world’s largest copper producer, but privately owned mines (including those with international ownership) account for about half of Chile’s copper production and look to increase their share of the market steadily.

Forestry: Chile has extensive forests, estimated at some 15.5 million hectares (38.3 million acres), or about 20.7% of the total land area. The establishment of radiata pine and eucalyptus plantations, largely as a result of government assistance, has helped Chile to become an important supplier of paper and wood products to overseas markets. Chile is a major source of hardwood in the temperate zone, softwoods include alerce, araucaria, and manio; hardwoods include alamo, laural, lenga, and olivillo. Native forests are as yet underutilized and could become an important factor in Chile’s growing competitiveness. Most wood products from

Key sectors analysis Mining: Chile has considerable mineral resources. The country is the global leader in copper production, with an estimated annual total production of 6.2 million in 2015. Second to copper is the production of iron, followed by silver, molybdenum, gold, zinc, manganese, and lead. Chile’s exports are supported by the output of a well developed industry, which uses stateof-the-art production technology, particularly in

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Chile are exported as logs, chips, and lumber.

Fishing: expanded rapidly starting in the late 1970s. By 1983, Chile was ranked fifth in the world in catch tonnage and had become the world’s leading exporter of fish meal. Despite naturally caused year-to-year variations, the volume of the total fish catch had increased over the long term.

phones has declined since the start of the

Distribution Establishing a local subsidiary or branch office in Chile offers would-be U.S. exporters the best guarantee of efficient service and appropriate product promotion.

Corporations legally

constituted abroad may form, under their own name, an authorized branch (agencia) in Chile.

This method of market penetration involves an additional investment, but is justified if sales are large in volume or when local service support and/or inventory are keys to success.

The telecommunications sector in Chile is one of the most modern and developed in Latin America. The liberalisation of all telecoms

century. The mobile phone market is dominated by three companies: Entel (34,45% market share

by September 2016); Movistar (33,31%); and Claro (23,99%). Minor players include WOM (formerly Nextel) and Virgin. By September 2016, there were 22.8 million registered mobile phones in Chile, a penetration rate of 1.25 per inhabitant.

By late 2014, 62% of Chilean homes had a permanent internet connection, the highest rate in the region, according to the Ministry of Transport and Telecommunications. Internet access in Chile reached 14.2 million connections the first half of 2016, a 16.3% increase compared to the same period in 2015.

markets has created a highly competitive environment. In fixed-line telephony, the main players are Movistar, VTR, and GTD although, as elsewhere, the use of public and fixed-line

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Enviromental Resource management Environmental A Ministry of Environment was established in 2010, as well as a Superintendency for the Environment (Superintendencia del Medio Ambiente: SMA), an Environmental Assessment Service (Servicio de Evaluación Ambiental: SEA), and three specialised environmental courts – one in the north, one in the centre and one in the south of the country – to deal with environmental disputes. Companies proposing projects that are potentially damaging to the environment must seek regulatory approval from the SEA. The SMA’s role is to sanction infringements of environmental law. Environmental activism has grown considerably in Chile in recent years, and has successfully campaigned against several major energy and mining projects.

Energy availability Wave energy is Chile’s largest renewable resource, totalling 240 GW according to a study

by Baird & Associates, and wave activity is high enough for power production. Currently, 3 % of Chile’s current electricity matrix comes from NCRE sources, 34 % from hydroelectricity and 63 % from thermoelectric plants.

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Natural resources Chile stretches over 2,880 miles north to south, but is only 265 miles at its widest point east to west. It encompasses a remarkable variety of landscapes. Its natural resources are copper, timber, iron ore, nitrates, precious metals, molybdenum, and hydropower. Southern Chile is rich in forests and grazing lands, and features a string of volcanoes and lakes. Chile’s coastline extends 6,435km, encompassing a rich variety of fish.

The country is prone to earthquakes and erupting volcanoes, with the most recent and strongest activity having been recorded in 2010 and 2011. Volcano Villarrica in the Araucania region erupted in March 2015, posing a severe risk for agriculture in the nearby area.

Legal Product Safety A trade mark owner has the exclusive right to use the trade mark, either directly or through a licensee, and to prevent others from using an identical or confusingly similar mark in connection with the same or related products

to the Civil Code under contractual and noncontractual liabilities provisions.

In the case of fraud, criminal sanctions can be imposed. If a defective product affects the health of a person, the legal representative of the company can be prosecuted under the Criminal Code and/or the Sanitary Code.

or services covered by the mark.

Equal opportunities

Protection. An application to register a trade

Foreign investors receive treatment like Chilean

mark must be filed with the Inapi. Guidance

nationals and laws and practices are not

on application procedures is available on its

discriminatory against foreign investment.

website. A prior foreign application can be invoked in Chile within certain period of time.

Unregistered trademarks are only protected under unfair competition law.

Health and safety Governance and regulation are overseen by the Ministry of Health, which establishes the regulatory framework. The universal provision of public health services is handled by the health authorities, which include the regional ministerial secretariats of health, the Institute of Public Health, the Ministry of Health, and the Superintendency of Health, all of which are financed by general taxes. The system provides essential public health services and other interventions, such as immunization and

Regulations on: -Consumer rights and laws-

the supplementary food program. The National System of Health Services (SNSS) coordinates

Legal consumer relations in Chile are regulated

the functions of public sector providers,

by the Consumer Protection Statutory Law (Law

comprising 29 decentralized service providers

No 19,496), which aims to regulate relationships

across the country’s 15 regions, along with the

between suppliers and consumers. Consumers

primary health care system, which operates

are defined as natural persons or legal entities

principally at the municipal level.

who, by virtue of any onerous act, acquire, use or enjoy goods or services. Disputes between consumers and suppliers can also be subject

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MARKET ANALYSIS

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Consumers, particularly women, look for designer as well as functional apparel at reasonable prices, and it is in this area where non-specialised sports brands are expected to find space to grow.

Apparel and footwear in Chile registered modest growth rates, both in quantity and value, during 2017. Whereas demand continues to grow and, accordingly, the number of garments purchased each year continues to rise.

After a pessimistic outlook for retailing earlier in the review period, consumers and companies began to gain confidence and have moderately changed their opinion for the forecast period. This change in mentality was accentuated during 2017 due to the presidential elections in the second semester, which created more optimistic expectations, increasing expenditure in some retailing channels and recovering the confidence in investors.

Moreover, retail sales in Chile have grown over the years, especially online sales and malls. Malls are the favorite channel for Chileans to shop, and 68% of them are located in urban areas in Santiago de Chile. Shoes sales have registered 4,1% during 2017. Moreover, 70% of the fashion sales in Chile come from International brands.

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In Chile every year new shopping centres are opened, although the rate of appearance of these centres in Santiago is lower than in the past, while in the regions they continue to expand rapidly.

The main reason behind this expansion is that shopping centres encompass department stores, specialist retailers, supermarkets and services in one place, becoming in many cases the preferred place to visit at the weekend. This expansion of shopping centres has benefited mainly apparel and footwear specialist retailers that have greater space available to locate their stores and to increase their coverage to a national level.

This is reflected in the fact that department stores and apparel and footwear specialist retailers dominate distribution share of apparel and footwear, with the latter gaining the most ground towards the end of the review period, due to the entry of international brands. Additionally, Chilean shopping centres have benefited from the mass arrival of Argentinean tourists, who see more competitive prices than they can find in their country.

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THE KEY PLAYERS

Falabella: (Solari family) Falabella is a multinational chain of department stores owned by Chilean multinational company S.A.C.I. Falabella, is the largest South American department store.[6] SACI Falabella (“Falabella”) is one of the leading online and offline retail product and service companies based in Latin America. Founded in 1889 as a tailor shop in Santiago, Chile. Falabella has since grown to have a large regional presence across Chile, Peru, Colombia, Argentina, Brazil, Uruguay and Mexico. The company owns diverse categories retail services including banking, consumer credit, insurance, and travel; retail product businesses including department stores, home improvement, supermarkets, furniture, and electronics, as well as real estate. and employs more than 110,000 people.

Cencosud: Cencosud S.A., together with its subsidiaries, operates as a multi-brand retailer in Chile, Argentina, Brazil, Colombia, and Peru.The company’s Department Stores segment operates department stores, which sell a range of merchandise, such as apparel, home furnishings, electronics, and sporting goods comprising name brand and private label products. This segment operated 79 department stores in Chile under the Paris and Johnson brands; and 10 Paris stores in Peru. Its Shopping Centers segment operates shopping centers. This segment owned and managed various shopping centers, including 25 in Chile.

GRUPO SAID Grupo Said: the Said Group is a Holding Spa founded by José Said Saffie. They have investments in BBVA Chile, Parque Arauco, and different industries across Chile’s economy. They are considered one of the most powerful group of the country and a key player of the retail economy. They also carry luxury brands like Dolce & Gabbana.

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Ripley Chile S.A. engages in retail, finance, and real estate activities in Chile, Peru, and Colombia.

The company is involved in the retail sale of apparel, accessories, home, shoes and bags, telephony, computing, electronic, TV audio, entertainment, furniture, sport, beauty, and children provides; provides banking products and services; and manages shopping malls. It operates 71 stores in Chile and Peru. The company was founded in 2003 and is based in Santiago, Chile. Ripley Chile S.A. is a subsidiary of Ripley Corp. S.A.

Modella / Group, is a company based in Santiago de Chile, with operations in different countries of America and permanent business interaction with Europe and the Orient.

We are focused on creating and managing brands of fashion-related products appealing to groups with different lifestyles searching for gratification, differentiation and a personal identity through their image.

Modella / Group, a clothing oriented retail company, with over 50 years of experience in the country, having managed brands such as CHRISTIAN DIOR, OSCAR DE LA RENTA, GUCCI y CACHAREL, Actually managing brands as TRIAL, PERRY ELLIS, FLORSHEIM, VERSACE COLLECTION, MAVIANNI, CANADIENNE, CELIO, BEST BRAND POINT y HUGO BOSS. OTHER BRANDS W/PRESENCE IN CHILE Adolfo DomĂ­nguez Ermenegildo Zegna, Hermes, LV, Gucci, Dior, Versace, D&G, Armani, Salvatore Ferragamo, Dolce & Gabbana, Burberry, Maxmara.

INDIRECT COMPETITORS Swarovski, Omega, Montblanc, Karen Millen, Jimmy Choo, Tiffany & Co, Tous, Montemarano.

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TARGET CONSUMER

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TARGET CONSUMER, DEMOGRAPHICS Women and men 28-55 years Old Works on the copper, retail or financial industries and international company Exclusivity in acquiring luxury goods Wealth stays in the family and is passed down generations Income: Household net adjusted disposable income of 20,000 USD-50,000 USD At least a Bachelor’s degree Comes from wealthy family

LIFESTYLE/PSYCHOGRAPHIC Favorite sport to watch and play: soccer. They enjoy outdoor activities and sports, love to travel, like to eat in restaurants, drink coffee, enjoy social drinking, family is important, status is VERY important, very conservative they like to go to the mall and go to the movies, BEHAVIORAL INFORMATION They enjoy experiences and visiting stores but also shops online (Chile has 12.4 million internet users and 5.7 million E-shoppers.) Use of social Media: Facebook, Youtube, Instagram, and Twitter. Downloads applications on their phones frequently, they own cars, they like to spend on leather goods and apparel.

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PERSONA 1, Camila 35 Status: Married to a copper export business man, three kids, she helps her husband to run the business, raised in an wealthy family.

Education: College education in the Universidad Catolica de Chile Geography: Live in Santiago, Chile with her family Interest & Leisure Activities: Educated and loves family time, caring for the husband’s business, traveling with family, fashion, yoga.

Technology Usage: Apple product user on daily basis, reply business emails and keeps in touch with friends.

Media Consumption: Online shopping, social on Instagram and Facebook Shopping Habits: Prefers shopping in-store.

Spends on fashion, jewelry, and show off her upper class identification

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PERSONA 2, Diego 50t Status: Married with four kids, comes from an auent family, self-made millionaire, lavish lifestyle Education: Bachelor’s Columbia Business School of Columbia University, Graduated MBA from University of Cambridge Employment: Entrepreneur, owns business investments in Ores, slag, ash export Geography: Settled family in Santiago, Chile Income: 700,000 US$ Interests & Leisure Activities: Traveling, loves auto racing, premium club member - Patagonia Virgin Golf Club Technology Usage: Apple loyal customer Media Consumption: Follows the Hong Kong stock market online, Twitter followers.

Shopping Habits: Luxury consumer, shops in store, fine watch collector

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PERSONA 3, Macarena 28 Status: Just married and one child Education: Civil Engineering in Computer Science bachelor of Universidad de Chile, Masters Degree ________ Employment: Latam Airlines, Income: $50, 000 per year Geography: Downtown apartment in Santiago, Chile Technology Usage: Sharing daily life via Iphone Media Consumption: Social media loyal customers,Instagram, Twitter Interests & Leisure Activities: Spa, shopping, spends time with family Shopping Habits: Online shopping. She likes fashion but can not afford luxury, so she likes to buy designer accessories. Aspirational shopper

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PERSONA 2, Santiago 30 Status: Single Education: Bachelor’s in Business from King’s College, London. Master in Marketing Manager Income: $100, 000 per year Employment: Manages family businesses and Falabella marketing director.

Geography: Apartment in downtown Santiago, Chile Interest & Leisure Activities: Hangouts with friends in bars during the weekend, loves wine tasting, likes going to shopping, enjoys outdoor activities like hiking and kayaking Technology Usage: Iphone and Mac daily, social media on Instagram and Facebook Media Consumption: Follows the CNN news, The Wall Street Journal, and Forbes network daily Shopping Habits: Interested in fashion because he likes to dress presentable for business meetings, and he also likes to show off his good taste.

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STORE LOCATION, DESIGN PRODUCT

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Parque Arauco is the third largest Chilean shopping malls company, after Cencosud’s malls division and Mall Plaza the S.A.C.I. Falabella shopping malls subsidiary. It is headquartered in Santiago. The company manages shopping malls in Chile, Peru and Colombia. It has 24 shopping malls with a total of GLA 672,700 square meters.

Parque Arauco is the only shopping mall in Chile that hosts the world’s most important brands. Luxury District is a sector that combines the best of shopping in just one street with premium stores and with the comfort of buying in a shopping mall.

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Visitors per year 3.6mil. Renewable energy

Area factors (pedestrian traffic, public transport,

24.1%. Total Population: 18,054,726. Urban

vehicular transportation/parking, infrastructure)

Population: 87.5%. Rural Population: 12.5% Parque Arauco is the third largest shopping center operator in Chile.

Revenues increased 1.3% during the second quarter of 2018 and the tenant sales were 130M US$

Mondays to Sundays and Holidays from 11am to 9pm. Luxury district.

SUMMERTIME: Mondays to Saturdays from 10:30am to 10pm. Sundays and Holidays from 11am to 10pm.

Moreover, the area is growing, during the quarter, they continued the construction of the Parque Arauco expansion, which considering the two phases will add 21,000 m2 of retail GLA, the largest convention center in a hotel in the country as well as a Hilton by Hilton hotel with 401 rooms. Additionally, they are building the Bazar Gourmet in the mall, which is located next to the luxury district. This new food concept will open during the third quarter of 2018.

Estimating competition: DIRECT and INDIRECT (at location level) Direct:

DEPARTMENT STORES

LV, CH, D&G, Emporio Armani,

Ermenegildo Zegna, Gucci, Salvatore

WINTERTIME: Mondays to Saturdays from 10:30am to 9pm. Sundays and Holidays from 11am to 9pm.

PARQUE ARAUCO PARKING: Mondays to Sundays: open from 7am; restricted access from 11:30pm. Premium and regular parking paying a fee per hour.

Travelers: Bus services. Parque Arauco Shopping Center provides you with a regular Transfer service at no extra charge, from and to hotels. This service covers the main hotels of the city 365 days a year. Private Taxis, bike racks, free and safe parking

Ferragamo, Versace Indirect: Jimmy Choo, Longchamp, Michael Kors Montblanc, Montemarano, Omega, Ralph Lauren, Tifanny & Co, Tory Burch, Tous, Bimba y lola.

Area attractions: The mall has different a t t r a ct i ons: Mov ie theater, Bou le v ar d : Restaurants and Cafes area, Theater, Art Gallery, Photo Gallery, Events.

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Human Resources

This shop will require a mix of experienced Prada employees and local staffing. Open positions at Prada will be placed on the company website, the luxury shopping mall website and Facebook.

The regional manager would send someone from corporate headquarters to train the local store manager and an assistant manager. After management training is completed the store manager and assistant managers will train sales associates.

Prior to arriving in Santiago, Chile, the Prada corporate hiring team will research local competitors like CH Carolina Herrera, Dolce & Gabanna, Emporio Armani, Emporio Armani Cafe, Ermenegildo Zegna, Louis Vuitton, Mont Blanc, Omega and Salvatore Ferragamo, reaching out to their current sales associates and informing them of this opportunity. Once the Prada representatives arrive, they will interview the narrowed list of candidates and hire 2 full time associates, 4 part-time associates, and 2 part-time 6 sales associates, and 2 part-time stock.

The shop’s KPI’s of focus will be managing sales and customers service. Since this shop is a test for future Prada expansion in Latin America, these performance indicators will be extremely important.

The shop will have a camera that tracks the number of people that enter the store each day, that will then be crossed with the number of transactions each day to find the conversion rate.

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Design of the actual space Free form Layout • Space allocation and productivity Elevated windows with bags, shoes and accessories • Fixtures Fixtures and isles arranged asymmetrically, it allows customers traffic to flow in an unstructured manner, ,maximum product exposure • Ambiance A choice of interior design, and store fixtures such as natural greens, lighting, checkered floor, natural greens for wall colors and furniture fabric choices. This contrasted with the steel and glass display cases, the marble and mirrors that deliver the trademark glamor of the Prada name.

• Visual merchandising, merchandise presentation Style item presentation and color organization • Window and in-store displays Straight front window • Safety, security Security for the front door Security system

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Floor plan and store design by Interior Designer: Sheridan Markham

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Based on Prada’s revenues on each category and the Chilean market, the store will have: A selection of all of the products carried by the brand, Leather goods as a priority Both, men and women collections.

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THIRD PROGRESS REPORT

COMMUNICATION AND PROMOTION

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Omni-channel marketing plan (across multiple media, across multiple channels) Print Media (Magazines): In Chile, magazines still are a strong channel. The editorial Televisa is the most important of the country, and the largest Spanish editorial of Chile and the world. It carries a wide selection of magazines suitable for different target audiences. Televisa has 10 millions of readers from a circulation of 5.5 million copies.

From the editorial, the following selection was the more attractive for the strategy: CARAS: It is known for being the leading editorial of the market. The target audience is educated women and men from high class and upper-middleclass societies, interested in the latest trends.

Its

content is focused on social events, luxury goods, travel, gastronomy, culture, lifestyle, fashion and more.

The advertising will be a double spread that will circulate for four months, starting in September, when the magazine will have a fashion special.

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Harper’s Bazaar. It is edited in Chile, and it has 13 millions of readers per month. Every month 5 million copies are sold. The target audience are women between 25 and 55 years old, core in women in their 35s. Harper’s Bazaar reader is sophisticated, trendy; she likes fashion and art, she also travels and likes to attend social events. The advertising will be a double spread that will circulate for four months, starting in September, when the magazine will have a fashion special.

Vanidades: With 55 millions of readers, is dedicated to feminine women who love fashion, beauty, social events, entertainment, fitness, and health. Vanidades is tradition, heritage and also it is 100% edited in Chile. The advertising

will be a double spread that will circulate for four months, starting in September, when the magazine will have a fashion special.

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EVENTS The Prada Gala: The opening of the store will be celebrated with a launching party. The Party will be on October 4th. Prada will send invitations to influential people from the Chilean Society, Bloggers, local celebrities and the press.

The invitation will be sent one month before the event with a small handwritten card from the brand. The party will offer champagne, canapĂŠs and the best music from the famous Chilean DJ Fantasna.

Some of the influencers invited: 1. Nico Putz: 150K, Fashion, Beauty, and Lifestyle. She gives tips, attends to Fashion events, and its a reference of the Chilean Fashion world.

2. Lefreakeschic: 36.7k followers. She created her site to showcase her work as a graphic designer, after which she became a stylist and now Valentina shares her beauty and fashion tips.

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3. Trini Gonzales: 11.5k Trini blogs everything from outfits, jewelry and beauty to a guide of the best things to do in Santiago, which is thrown in for good measure.

4. Kel CalderĂłn: 1.1million Her early career saw her as a Chilean actress and singer, when she appeared in KarkĂş at the age of 15, back in 2006. After which she released three singles and an album and became Miss Teen Chile! Since, she has enrolled as a law student at the Universidad de Chile, while maintaining her popular Instagram presence.

At the end of the party each guest will receive a gift bag with an accessory of the brand.

Models will be wearing some of the pieces from the spring/summer collection and sales associates with hosts will provide information to guests when needed.

The event will be covered through social media channels.

The Prada Gala will be recorded, and the multimedia asset will be used for Youtube Advertising. Press will receive an after-party press release about the launching of the store.

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In Store Events: Every month the store will host events. That will include art exhibitions, art and reading workshops, fashion shows, VR experiences, Styling and holiday celebrations with influencers and celebrities visits.

OUTDOOR ADVERTISING: Mall Advertising Local Billboard Advertising DIGITAL MARKETING Influencers campaign Instagram & FB Ads Youtube Ads Newsletters & CRM

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Experience design c o m p o n e n t : Customer Experience Design

KANO

Model tti Threshold attributes: Knowledgeable sales associates, customer service, fitting rooms Cashier with dierent payment options: Visa, Mastercard, Apple Pay, stock room

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Performance Attributes: Excellent customer service, convenient return policies.

The Prada Gala will intrigue and attract customers that follow the brand and influencers on social media. Innovative and attractive store design.

In-store Wifi and styling support Excitement Attributes: The VR Experience Ta b l e t w i t h c o l l e c t i o n displayed, where customers can browse and order items to the fitting room.

Localized

design

collaborating with Latin American artists and incorporating the silhouette of the mountain of the city.

Special events every month including art and reading workshops, styling, exhibitions and more.

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FINANCIAL PLAN

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The total estimated revenue for the first year of operations will be US$ 13,633,940. The store will be expected to sell 5,572 items, which its majority, 1,987 will be from Leather Goods purchases. The average basket was calculated according to different scenarios we created based on the consumer personas. For example, we estimated that Camila, the first buyer persona, would buy a dress for an event she has and decided to spend a little bit more on an accessory for her husband.

BUDGET

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The operations expenses are distributed between rent, the largest expense in this category; utilities, maintenance, Insurance, and security. The last three will be outsourced.

The salaries are paid every half of the month and end of the month. Employees will receive a fixed salary and every employee but the Stock associates will receive a commision of 1%, which is already included in the budget, according to the sales forecast.

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EXECUTIVE SUMMARY

Opportunities.

Chile is excellent for doing business in South America. Retail companies, mining companies, and agriculture companies are key components to the growth in Chile’s economics. Moreover, Parque Arauco luxury shopping district offers a great location for Prada’s new retailing initiative.

Chileans love to show their status, and they are used to buying from international retailers.

There is a small luxury goods market for Chile’s upper class; a wealth of shopping malls and department stores catering to Chile’s middle class that they can purchase luxury small goods and accessories.

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Threats: The country’s economy is based on natural resources and is highly dependent on copper exports for growth. Also, Chile’s economic growth has been decelerating as a result of decreasing demand for copper.

Chile has as a small population of 17.6 million.

Furthermore, it’s challenging to overcome regulatory, cultural, and language barriers.

Finally, counterfeits are in mass production and it may affect the brand positioning in the Chilean market.

CONCLUSION Prada is an Italian luxury fashion house, founded in 1913.

Additional to this, Chile is a country very rich in

The brand has always been focused on experimentation

natural resources especially in the mining and copper

and innovation “which draws inspiration from an

sectors which attract foreign investors that boost the

unconventional analysis of society”. As you know Prada

country’s economy.

specializes in the making of leather handbags, travel accessories, shoes, ready-to-wear collections as well as other fashion accessories.

Since Prada keeps expanding and entering to new markets, we saw a great opportunity to expand in South America specifically, Chile which has a mature market and it has the Latin America’s fastest, established and growing economy.

Moreover, the Chilean market likes to buy luxury products, they seek for a status and luxury products give them that.

Considering that Prada represents, luxury and status the Chilean market perfectly aligns with the concept.

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