The biggest power behind the price tags of luxury fashion brands is the heritage behind their surnames. These dynasties, which are nothing short of small fashion empires of their own, provide great trust for both their investors and loyal customers.
Family members take part in the board of directors not only in luxury fashion houses but also in fast fashion brands such as GAP, H&M, Uniqlo, and Zara. Like all families, it's crucial for fashion dynasties to deal with the changing dynamics in solidarity, to make joint decisions, to preserve unity, and to create sustainable values for the brand as a family. While parent groups such as Kering and LVMH have a bigger area of movement with the diversity of the brands in their portfolio, family brands such as Prada, Salvatore Ferragamo, Hermès, and Tod’s are intrinsically more susceptible to risks. Offering a long-term perspective on one hand, they also possess the potential for a conservatism deep enough to bypass the fact that being stuck in the past in a fast-changing world can lead to deadly results
THE RETURN OF PRADA
Italy is surely one of the first countries that come to mind when talking about fashion and family. Prada is arguably the most famous one among many family businesses which constitute the foundation of the country’s national economy. Founded under the name “Fratelli Prada” by brothers Mario and Martino Prada in Milan in 1913, Prada is one of the longstanding fashion houses in Europe. Prada, which initially manufactured high-quality leather accessories with a classical style, was granted the title “Official Supplier to the Italian Royal Household” in 1919 along with the permission to use the coat of arms of the then-sovereign House of Savoy, which inspired the rope in Prada’s current logo. Who really carried the brand and its heritage further was Miuccia Prada, the youngest grandchild of Mario, who took the business over from her mother in 1978. Today, Prada has over 300 stores all around the world. Even a gigantic long-standing brand like Prada has taken some miscalculated steps in recent years and has had to review its position in the market. While aiming to grow by adding new brands to its portfolio, the brand’s confusion in defining its strategy prevented it from revising its range of products, marketing approaches, and sales channels. Prada Sport created a wave in the U.S. market with its medium price ranged mostly nylon collection, especially with its backpacks; it achieved an above-average sales rate with “Cloudburst” sneakers. However, the brand’s bag collection, which was launched with a high price tag by ignoring its own DNA, had to face the reality that “Prada is no Chanel!” Another problem that signifies Prada’s desynchronization with the market is that it was too late to realize the opportunities of the “new age” and, hence, for digitalization.
RALPH LAUREN’S AMBIGUOUS FUTURE
Other brands who have been struggling with low sales rates continue to put their comeback plans into motion. In addition to Prada, Ferragamo, Giorgio Armani, and an American classic Ralph Lauren also had to implement strategies with complex results. Although Ralph Lauren financially benefited from these strategies, it still hasn’t solved its problems with product and brand integrity. The biggest predicament for Ralph Lauren may be his abstention in planning the future of the dynasty. The 81-year-olddesigner who’s still known to visit the office four days a week, actively plays a role in both creative and executive wings. The question of who his successor will be still remains unanswered. Giorgio Armani is another name who’s not willing to let go off the reins. The sole shareholder of the multi-million-dollar fashion house, Armani avoided this question for years but preferred an unusually proactive method by starting a foundation and made it very difficult for other groups to purchase the brand’s assets in the future. The fundamental success factor for a family business seems to be for third and fourth generations to understand the company’s DNA and to build upon this with the challenges of the new market and its necessities towards revision. Knowing one’s essence and being able to transform it, means ensuring continuity by including external managers or shareholders into the process as the company grows. Being an heir and keeping your heritage alive or even rebuilding it by entirely changing when it’s necessary are essential responsibilities of being a family member, and it applies to fashion houses as well.