Prada Group CEO: The Old Normal of Luxury, the Bet on Versace and Why Patience Beats Trends

0:00Hi everyone, today I'm in Milan, the heart of the Italian fashion, and I'm in an extremely good company with Andrea Guerra, CEO of the Prada Group. Now, Andrea took over three years ago, stepped into the Prada shoes, and at that time the group has grown quarter by quarter. Mio Mio is arguably now the hottest brand in luxury, and you just bought Versace, so well welcome. Welcome and happy you're here.

0:35Now, Prada is more than 100 years old. What's the DNA of Prada, in short? You know, Prada is a unique brand. Prada is a point of view. Prada is an opinion. Prada is culture. Prada is totally winded in certain cultural pillars, such as art, architecture, literature, and has always an opinion. And how do you see that in the brand? You can see that in a brand, you can see that in a brand in any aspect, in any location, in anything we do. There is nothing which is not thought. There is nothing which you can spot details which are out of place. There is nothing that we do by chance and not linked to a thought and to an opinion about what's going on in the society.

1:43So what's constant and what is changing in the realm? Nothing is changing. Nothing is changing. Obviously, the world is changing. the trends are changing fashion is changing but the brand is always that same thing how is fashion changing now? how is the luxury? you know I think this industry is upside down what does that mean? this industry has gone through a couple of decades of constant growth let's go to any textbook that's not possible. That's not feasible. And I think we were all happy. And this industry has grown by three times, four times, five times in the last only 10-15 years. So I think that now we have to go through a period of normalization.

2:52We have to go through a period where maybe we've been a little bit spoiled, so we have to go back to certain, uncertain aspects of the business. So what's normalization? What's the new normal? I think it's the all normal. This is what we have to look for. It's not the new normal, It's the all normal. Luxury is exclusivity, selectivity is value, is dreams, it's experience, it's hospitality. This is what we have to do. And this is what it has always been. So how are you adapting to the new, the new old? You know, I can tell you that there are certain things which are very visible. we have gone through a refurbishing of a huge store in Hong Kong where we would have followed our usual logic of one floor for men, one floor for women, one floor for accessories.

3:58Instead, we have decided to allow one entire floor to be an apartment, to be a place which is totally dressed by our creative directors. So it's a unique spot where you can spend time, where you can have friends for dinner, for lunch, spend time for your birthday. And we're happy about that. And we're happy to offer you very special and exclusive products. And this is the all normal. Right. You talk about change at the same time I hear you talk about the importance of patience. Just how does patience play? You know, I think that the winning brands are those brands where there is a constant positive tension between brand management and creative direction.

5:11And this means patience. This means listening. to each other. This means debating. This means taking the proper time to take decisions on how and where the brand is going and where creativity is going. And this is long-term. It cannot be short-term. In which brands in the world are you seeing that creative tension? I can talk about my brands. And we have it. We have it. We have long-term solutions. We don't have a creative director coming in and going out. We have long-term commitments. And that's the only thing that the consumer will pay in the long term. Then you can have a success here, a success there, but that's short term talking of creativity you started Miu Miu from scratch right in 93 and it's an extraordinary brand growing very very fast why is it so successful?

6:15you know Miu Miu has I always say Miu Miu is an inclusive brand Miu Miu is is women only it's imprinted in a young lady but it's inclusive you don't feel wrong in wearing Mew Mew on a Monday morning or on a Saturday night you don't feel wrong being 25 years old and 50 years old you don't feel wrong with Mew Mew you say that it's rebellious how it's out of the schemes. It's out of the fashion logic. How large can a brand and still be rebellious and out of the fashion? You know, I think it's, if we look to ladies-only brands, there are brands which are four or five times bigger than us. So I'm not alluding that we have to be there, but there is space to grow.

7:24But what is important is that we have somehow attracted a lot of brands in our field, we don't have to move from our field. Typically, you see these three-year cycles. Do you think we'll see that? You know, this is a five-year cycle, which has lasted longer than what we expected. And we need to be ready for normalization. We need to be ready for normal growth. And, you know, you're never ready for that. but we have to be ready for that we don't have to be complacent it's a tough we have to be pretty masochistic what are the what are the tools you use to be masochistic you know it's it's no uh my my usual answer is no uh we're offering you another store no we're offering you this opportunity no so this is what we do we had 170 stores three years ago i think we got 176 today with the kind of growth we had.

8:29So I prefer to enlarge certain stores, but I don't want new stores. In five years' time, maybe we will have 180 stores, 185 stores, but that's it. And that gives you the idea that we have not opened the gates to success. We have not gone in in new categories. We're not open to men. It's us. This is what we are. This is who we are. and these are who we want to talk to. Tell me about emotions and dreams. It's all about emotions and dreams. If I'm, you know, I'm always, and this is happening since I was selling white goods. Can you imagine? Because I have known you for 20 years.

9:20And you have talked about this all the time. And this is it. If I'm able to tell you a story that makes sense, if I'm able to get your emotions going, it's much easier to have your hand going to the pocket and getting the wallet out. But I need to be absolutely credible and I have to be into the brand and I have to engage you. And this is everything we're trying to do. Where did you learn storytelling? You know, I think it's, I think that in management. Like, did you have a grandfather who were telling you if I take my father, my father probably was saying five words in a day. So it was not a storyteller.

10:12I can tell you that there are two things in management which I particularly trust. One thing is that people and emotions are the vehicle to everything. The second is when you're able to manage the mix, your profit and loss is solid. And these two things go much together because when you're telling a story, you need to understand if you're going towards an enterprise or if you want to dream of 100 ,000 euros. And it's not anymore how you're dressed, how you are entering a store, who you are, because, I mean, tech has totally revolutionized the society and how people are coming into stores. And sometimes you can be really misinterpretating what's happening in the store right now.

11:09The world is changing and the media picture is changing and we've got social media and we've got attention spans like ants. how does the storytelling art change? You know, I think there are two things. First of all, when people are asking me how are we using artificial intelligence, the main part we're using artificial intelligence is in our CRM. Customer relationship management. Yes, we are working like hell, hours and hours to really understand which message to which people and how to personalize that message to that person in that moment. And the more you're able to do that, the more business becomes hot.

12:03Okay, so I'm coming into your store. You know my background. You know what I bought with you. But even before you're coming to my store, that's where everything starts. What do you sell me? What dream do you sell me? So, you know, I think artificial intelligence today allows you to go into your data and really what I always say look alike. So you bought these things to me. I'm coming out with this new drop, this new package, these new ideas. And I think these new ideas have these characteristics. how can I match these things and how can I match how hot you are in that moment to come into my brand and buy and when I'm able to connect this wow I have conversion rates which I've never seen in my life well I intend to buy a shirt in Milan so let's see whether it's going to be a Prada shirt or not let's do where does this fit in with quiet luxury?

13:06You know, I don't know what if it is. What is quite... What is quite large? You know, I'm not able to answer to this question. I don't think, I mean, there is brands which are... The real thing is how credible is a brand. I mean, we're seeing brands going up, brands going up. What does it take for a brand to be credible over time? You know, it's what I was saying at the beginning. It's that respect of the brand with a creative job, which makes sense at that moment. How do you get young people attracted to the brands? I think that this is the biggest concern, the biggest opportunity, and it's a great amount of our job.

13:55We're out today, exactly today, with a re-nylon period, which is this. So, as you know, Prada has been known for its nylon products since 80s. then sustainability comes and we have recreated a nylon which we call re-nylon which is totally sustainable and anything you look at you can read something about that fiber we are out with a communication today which is around the education around pollution in oceans, nylon and plastics. And we are in our stores with a completely and unique collection of re-nylon, which we have linked to a communication to the younger generations. So using those media, attracting those kind of, let's call influencers, but also having certain price points.

15:20And it's working really well. Is sustainability dropping down on people's preference lists? Not on young. No? Not on young people. Not at all. For young people is, you are, you don't have to think about that. You are in that sustainable world. You are in digital. You don't have to think about it. Then, if we go in government and politics, maybe yes.

15:54Moving on, Versace.

15:59Iconic has been owned by Americans for seven years now, and you are buying it back to Italy. Why did you buy it? It's an opportunity. we were not out for acquisitions we feel that the two engines we had can take us somewhere close to 10 billion euros as an ambition what's the DNA of Versace? Versace is something we like because again it was born in culture. It was born in this Magna Grecia. It has this ancient Greek influence on Italian culture. And it's winded in pop. Versace invented glamour. Versace invented pop. Versace invented the great models. Versace invented music in the shows. So it's this spin, which is very different from our portfolio, but it's in our DNA that we love that everything goes and starts from culture.

17:28So when you have these things with Glowmore and the things you mentioned, and you take Donatello Versace out of it, does the brand still contain it? I think that Donatello Versace is not out. It's part of our team in giving an image and networking, which we love. This is the first. Second, I think that Versace has incredible long routes that you need to respect, that you need to keep as a saint with that kind of tension and being proper in 2026. I just read an African proverb this morning that if you've got long roots, you can take more wind. You know? I agree. Now, what did you see in Masachi that other people didn't see?

18:29I think that many people have seen what we have seen but we are ready to take the tackle we are ready to take the challenge it's not an easy job has been a little bit mismanaged as a brand, not as a business and we're ready to go and we feel that we know how to do a brand business, we are patient. We don't think that we have to be successful tomorrow morning, but we need to plant seeds. We need to nurture. We need to have the right people in place and the team is ready to go. So that is something that we have done pretty quickly. And you have a new creative officer, Peter Moliere. Yeah, and this is a game.

19:28This has to be a really long-term relationship. How do you think he will change the expression of the brand? We will see. We will see. Around creativity, there is never anything that is already designed or written down. So, is there like a uniform creative process across the brands? How does a creative process work? No, I think that there is people who are working and taking a lot of times to prepare. There are people who are impetuous last minute. There is people who are doing things and crushing them, they're redoing things and then crushing them, they're redoing things and crushing them. And finally, the last day, they have what they want.

20:22Are Italians more creative than other people? I wouldn't say so. But if we go statistically, Basically, for sure, since 1500, I think we have been pretty creative. Yeah, both in art and in music. You mentioned 10 billion. Why is it important for you to grow the size of the total group? You know, we have... You had a stint at the LVMH group. Are you trying to recreate the big conglomerate? Absolutely not. and the way we work, the way we are organized, it's pretty different. But we're not in a niche business, so we need some scale. And we think that on one side, being very distinctive with our brands and having a certain kind of scale allows us to protect ourselves.

21:22This is what we think. how do you think about uh you know pricing when something is hot and you know it's tempting to price it up just how do you think about it because i'm seeing some brands and i'm just i'm just amazed by the price points my first answer would be i don't care That is, am I able to get you your heart, your passion, your dreams, your emotions somewhere? If I'm able to do that, full stop. Each one of us is spending, I don't want to say money, could be money, could be time in so many different things we love. on a bottle of wine. I mean, let's discuss it. Or on an incredible room in front of the ocean.

22:19There are many different ways we can spend our money. And the issue is, once you talk about price, it's evident I made a mistake in whatever I'm doing in luxury. What do you mean? I mean that you should never talk about pricing because you should be so happy that you give me your credit card without even asking what is the price. This is what we have to do. Yeah, it happens with some people, but it doesn't happen with everybody, right? Sure, and maybe, maybe, this is why I'm saying all normal, maybe this industry has gone a little bit too far out. This industry has lost one consumer out of five in the last four years, three years.

23:09It's a lot, eh? How is the dynamics? I mean, how are the dynamics in China changing? I don't know if they are changing. For sure, we have gone through this unbelievable evolution. Then North America stopped. Consumer digested. and then we have seen a kind of new dynamics, new positive dynamics. Same thing is happening in China today. So maybe we have gone a little bit too far out. Two years of digestions and now we are seeing a kind of plateau and slightly positive dynamic. And I would say that even because of the wars, Of course, Europe today is the animal or is the region that is digesting the great growth herd.

24:11Europe is, by definition, a touristic market. And today, I mean, Americans are coming because they think the war is in Europe. Asians cannot come because, I mean, it's so difficult today to fly over east-west. So Europe, I think, will have a little bit of normalization. Any reflections on the future of Europe? Complicated. I mean, today Europe is in the middle of... It's in the middle of... It's the week in between big powers. I mean, it's unbelievable to see that our economics, our macros, it's probably the slowest but we have the heaviest currency today I mean it's complicated I don't think I am the person that can tell you what will happen macro to Europe but for sure what I can tell you from our point of view that I hope that we are still able to demonstrate to the world that coming to Europe makes sense in a touristic manner But today, Asians are really, I mean, compared to 2019, probably we are at 50 % of what it was.

25:35Compared to 2022-23, Americans are probably minus 20, minus 25 compared to that. So I think that we need to rethink.

25:51move on to leadership how would people define your leadership style mine yeah ah you know uh when they write a book i don't usually think the i don't usually read the business books at all but there was a lady that was giving us a kind of session in the United States and I read her book and she was talking about resonant leadership which I love what is it? which is convincing your mind and convincing your heart that we are all in a journey with a very clear mission and allowing everyone to express to their best. This is what I think I'm doing every day. Are you as immersed in Prada as you were in Luxorica, in Italy?

27:00No, I think more ABMH. Why? Because we are in a long generation evolution phase. So we have a very solid founder's mindset, very strong. And on the other side, we also need to prepare the company for the long term. And what is fantastic by this Italian founders and family in Italy, that they have said, this is the route. Never seen in Italy. This is the route. It's very clear Lorezo will be the leader in the long term. Andrea is helping this journey and everyone knows it and this is what we're trying to do and how is it to be a leader then when people know that you are kind of the bridge between generations I don't care either you are or you're not and I don't think I have any issues with that why were you so keen to take this job you know I know the family since 20 plus years we have built the brand in eyewear from scratch to over a billion it's a big number for eyewear and I love the way Mr.

28:50Bertelli was working on the products and collections. I love the way they spin on certain image events and coming into these places and looking on how Mrs. Miucia was working. So I always loved them. So you got to know them through the eyewear at Luxorica? Yeah. And we knew each other very well. And we had other opportunities to come to work together earlier, but somehow I always said that I was not ready for that kind of cultural landscape that Prada Group was. Then Lorenzo joined in 2017-18, and we had this conversation again in 2022, and a lot of things started to change. such as the way the brands were much more clearly positioned, a completely new mission on sustainability, a completely new mission on the consumer, and cultural behaviors in the group.

30:16so we were really evolving in that way of working and way of relationship between people in the company and I have seen it and I said I'm ready to help when it controlled relationships what was changing there?

30:37Prada Group as you know and it's very well known in the industry has been quite a hard group which is fine which I like but then I love to allow people to express themselves and I didn't think at that time that was feasible when I joined I thought it was feasible and I was right so what decisions made? it's fine if you participate to certain meetings you say these guys are crazy the debate is strong but I love it it's real expression and can even last 10 days of you need to be strong in this group and once you understand the logics it's really nothing personal not as the Americans say frequently nothing personal then they kill you But it's more a, it's really a kind of opinion debate.

31:55Does that kind of decision making lead to better results, you think? I think so. Why? Because it takes the best. It's not a lower compromise, it's an upper compromise. Compromise is one of the most fantastic behaviors of human beings, but it has to be in the upper side. How are you a different leader now compared to when you were younger? How old are you now? You are 60. You're in your prime. You know, I've been lucky. It's 25 years I've been a CEO of public companies. And today I'm quicker. Unfortunately, in so many meetings, I already know what people are going to tell me. But this is part of the age.

32:51You still listen to them. I think I'm very good in listening to what they're not telling me.

33:01The other day, I finished up a conversation with one person and we stayed together for half an hour and I was saying, I see you strange these days. And he started talking. At the end of the meeting, I say, thank you, especially for the things you have not told me now. What are the kind of things that people don't tell you? You know, sometimes people are not always ready to confront on tensions, on problems, on issues, while it's so easy to say, okay, we have a problem. I don't care where it comes from, but we have a problem. Let's face it, let's understand, and let's be quick. Let's debate as much as we want, but then let's be quick.

33:47I hate that formal slide management I cannot stand it anymore so I introduced certain in this last year certain rules so you cannot come with a budget with more than 10 pages and I love the guy very funny he came with 10 A3 pages so he could light more things in but this is what i love now do you not have overhead slides like presentations we have but short please yeah we can cut at least the first 15 minutes i don't need to go to adam and eve again every time in what other ways have you developed as a leader you think you know i think that i still think that energy beats experience and I want to prove it every day.

34:53So these things that if you don't have an experience, you cannot hold that position, I don't believe it. But on the other side, I have that experience today. I mean, being 25 years as a CEO, where every bloody day you're seeing your result of the day before, you learn so many things. and I try to use it as much as I can. Where does energy come from, you think?

35:24I think I'm pretty masochistic. So, you know, we're having a great sale yesterday and I say, oh shit, how do we come next year? So I'm a little bit masochistic, but I do my best to celebrate. that's one of my issues somebody introduced me to the concept of high agency people so people who figure out where they go and they are forceful and they use technology to get there and it's just struck me lately how big difference there is between people who actually do things and the rest you know I think that I think that technology is there I think that there is more technology than what we are able to use today.

36:17So my constant mission is to make the culture of the company evolve. The more we're able to evolve, the more we become executors and able to use all the technology available. How are you changing the corporate culture? a problem you know my desire is that one day i ask to people what has changed they say everything and then i say when i don't know so it's what i was saying before it's a self-expression this is what i'm trying to do every day what is need to be done allow people to have a real power on things, allow people to do things, allow people to make some mistakes, allow people to give their opinions.

37:18I love when people debate, then I say, let's take a decision. If you're not able to take a decision, I will take a decision. This is what I love.

37:35What should we wear this summer? Prada or Miu Miu? What kind of style? You know, again, Prada is one thing and Miu Miu is a different thing. With Prada, we have decided to go. We have taken a decision to go with the color. So we have decided that for us this summer is white and we have gone all in and this will be very visible and why is this summer white? you can ask this question to Mrs. Butch not to me and how risky is it for a firm to be all white? I don't care, it's not risky, this is our life we have a point of view it's never risky it's risky to follow the trends that's risky I guess it's less risky to be white than pink you know I think it's I think it's you need to always in your brand in your positioning in your identity I need to surprise you I need to comfort you and we need to do something new together well you're not very white yet so we'll see this summer what do you read?

39:00I read basically novels, and I go back re-reading things frequently, such as? I am rereading the metamorphosis of Kafka today and I have just finished to reread the castle I think that these guys had understood our contemporary world very well and it's fantastic to read them again you mean waking up as a cockroach in the bed yeah but I mean this is what is happening to the society. How do you relax? So easy. This is my very real talent. As soon as I'm out of here, I'm out of this. Black and white. And what do you do then? I swim, I eat, I travel, and I used to spend a lot of time with my family, but my three kids are grown.

40:26So I try to organize things so that they accept to do that with us. Do you cook? In my next life, I will be a great chef. And what are the other things you will do in your next life? you know i think that i think that

40:52life has become much longer than before so i think that my next life is behind the corner So I would love to continue to work heavily, fewer days. And my dream would love to be to mentor young, fantastic CEOs. And what would be your advice to these young people? Be patient. Be patient. this generation is not patient I love them but they're not patient thank you thank you