Luxury Brands' Dirty Little Secrets - International Edition
Updated: Nov 14, 2018
Part II: Gucci & Prada Group
This is the tale of two brands. One that is the hottest selling brand of the moment and another an ailing brand.
So what do the these two brands share in common?
Gucci and Prada Group whose umbrella of brands includes Miu Miu, used to be the epitome of luxury and quality. However, these days they no longer carry the same reputation as they used to.
Luxury is synonymous with impeccable service and utmost quality.
Creativity of a fashion product is but a plus. If service and quality are compromised, one need not imagine why that would contribute to the steadfast rising year-on-year sales of high street brands such as Zara from the Inditex Group and H&M from Hennes & Mauritz AB.
Before we share our story and personal experience, here is a little into the background of the two companies.
The Prada Group
The family-owned business dates back to 1913 where Mario Prada founded the company with his brother Martino. From a humble family business named Fratelli Prada (Prada Brothers), the company has since evolved under the leadership of Mario's granddaughter Miuccia Prada.
Prada group's brands Prada, Miu Miu, Church’s and Car Shoe operates in 70 countries through 618 DOS (Directly Operated Stores), 36 franchised stores as well as wholesale sales through a network of high-end multi-brand stores and luxury department stores.
According to Bloomberg in late September, shares of Prada and other Italian luxury leather goods company such as Salvatore Ferragamo and Tod’s..." have all posted double-digit declines in the past six months as profits fall, while privately held Giorgio Armani SpA is pruning its lineup after a 5 percent drop in sales last year."
While Prada and most Italian brands face ever-shrinking profits, French luxury powerhouses LVMH (Moët Hennessy Louis Vuitton) and Kering who own Italian designer brands Fendi and Gucci are going full throttle ahead despite a slowdown in the China market.
Prada's Problems - No Longer Made in Italy
Prada products are made in Europe. However, nothing is said about the other brands. Miu Miu does have some accessories made in Turkey.
Regardless of whether Prada or Miu Miu products are made in Turkey or Italy, Prada sources most of their leather from Turkish leather factory DESA, which was found guilty by the Turkish Supreme Court of illegally firing workers who joined a union.
Sexual Harassment and Gender Discrimination at Prada Group
Prada Group started out as an accessories brand even back in the heydays of the nineties where clothing only represented 20% of sales.
While Prada Group has made headlines for notorious cases such as poorly designed heels (Spring Summer 2009 runway where professional models could not even walk in 6-inch skyscraper heels with slippery sock linings, the luxury goods company was also involved in a gender discrimination and workplace sexual harassment lawsuit involving ex-Prada employee Rina Bovrisse.
In 2012, Tokyo District Court Judge Reiko Morioka ruled in favor of Prada, saying their alleged discrimination was “acceptable for a luxury fashion label.”
Prada proceeded to counter sue Bovrisse in Japan for $780,000 as they claimed she had damaged the Prada brand.
"Anyone who buys from the Prada and Miu Miu brands are supporting a culture of discrimination and power harassment. With the power of social networking, powerful companies can no longer hide their dirty secrets. I am taking a stand, but I have gathered strength from the support I get from around the world." - Rina Bovrisse in an interview with Salon
In 2013, the United Nations (UN) backed Miss Bovrisse over her four-year-long lawsuit with Prada Japan. The UN Office of the High Commissioner for Human Rights has called for Japan's State party to introduce basic workers rights. Prada has declined to comment.
Sexual harassment at the workplace is not illegal in Japan.
Underperforming E-commerce channels
In Prada Group's 2015 annual report, it was found that retail "...generates 87.3% of the PRADA Group’s consolidated sales while the remaining 12.7% comes from the wholesale channel."
In 2016, the retail channel shrunk by 3.4% to 83.9% of Prada Group's consolidated sales while wholesale channel sales grew to 16.1%.
The shift towards outsourcing sales through third-party distribution channels despite the fact that Prada launched their first e-store in 2010 and subsequently Miu Miu in 2011, is evident luxury department and multi-brand stores have better e-commerce or retail sales channels than Prada Group.
In July 2016, Prada clothing became available to purchase online for the first time through leading online retailers Net-a-Porter and MyTheresa.
We shall touch onto Prada Group's lackluster e-commerce channels in a bit.
Cozened at Prada Group's Miu Miu
In August, after purchasing an accessory from Miu Miu, it broke within a couple of weeks of just two uses.
Upon examining the hinges of the product, is was rusty and the hinge was covered in what looked like leftover stains from transparent glue. The product was not as brand new as the store claimed it was. In fact, it was a faulty product that had been glued together again the sold to customers.
After e-mailing Miu Miu's customer service at email@example.com, there was close to zero response on the progress of the case. We were redirected from one department to another.
About two weeks later, we received a text message from an unidentified number from someone who claimed they were from the Miu Miu store.
An exchange was requested if they could find a brand new piece. If not, a refund would be appropriate. Miu Miu said they could not find any replacements even when there were stock readily available on their e-store.
It was evident that Prada Asia and Miu Miu Singapore employees could not be bothered to secure any available stock in the region.
Miu Miu Singapore store managers ignored my request for a refund. Instead, they offered a store credit for a faulty item they had sold.
There was no way one would make a repeat purchase with a brand that has unresponsive, unprofessional customer service and worse still, poorly-made products which were patched up and resold again - all in the name of ruthless profits and poor staff management.
Since they refused a refund which is expected of any honest retailer, especially in this situation, an e-mail to Prada Group CEO Patrizio Bertelli was called for. He promptly had our e-mail address blocked after an attempt to send him a follow-up e-mail failed.
Shortly after, we received a phone call from Miu Miu after sending the e-mail. They refunded us immediately.
Prada Group e-commerce experience and review
Prior to purchasing the accessory from the store, an attempt was made to purchase it from the Miu Miu UK online shop where the item was fully stocked.
Upon receiving an order confirmation, they promptly cancelled the order and told us that they only ship to residential addresses and asked us to try repurchasing again.
Instead of requesting for another address, they had completely cancelled the online order and have the customer make a brand new order from the start again.
A second attempt was made with the right address this time. However, strangely within less than a day after receiving the e-mail from Miu Miu Europe's customer service, the item was out of stock.
This bad online shopping experience shows their inventory management system for their e-commerce site has failed and/ or the staff managing the website is incompetent.
After the failed online and in-store purchase attempt, a last try was made on the Miu Miu Japan e-store.
The online purchase from Japan was a success. However, the item received was a far cry from the brand new product pictured on their website. It was badly scratched and worn-out. It seemed that Miu Miu employees had been using or renting out the accessory repeatedly over a long period of time.
It was shocking that the parent company Prada had so little management and control over their staff. Miu Miu Japan was allowed to repackage and sell used and abused products as new ones.
The lack of basic quality control for a so-called luxury brand is indeed grotesque.
Gucci's Gruesome service
In the first quarter of 2017, Gucci, posted a continuous strong performance in the past two years, with revenue soaring 51% in the first quarter of this year.
However, if they want to keep up their formidable revenue records or gain back additional profits they could have earned but ultimately lost out in the end, they would certainly need to improve their service levels.
Apparently, Gucci has poor e-commerce expansion plans as they struggle with ill-quipped staff who can barely manage customer service online.
Customers and potential ones have plenty to say about the Italian luxury goods retailer on gucci.pissedconsumers.com too.
Gucci customer service in Asia
From Gucci to Fendi, sometimes inexperienced staff or staff hired from third-world non-English speaking countries just do not make the cut for customer communication or service standards of renowned brands.
While trying to pre-order an item from a pre-fall collection which is usually released in early August or September, the Gucci Singapore staff said it would arrive only in December or next year in January.
This surprisingly staggered 3-4 month delay in items that would have already made it to the bargain bin by then is an area Gucci Asia still needs to work on.
In our observation at the Fendi flagship store in Singapore, a staff watches on in silence, unable to assist a customer who is trying to work out how to put on an item.
At Givenchy store at Paragon mall in Singapore on Sunday afternoon, a middle-aged female Malay staff member greeted me with silence but a horribly skeptical face, wondering what I was doing in the store. When I walked towards her to inquire about a product in the completely empty store, she responded with "Can I help you?" in a very defensive voice and disdainful expression.
I promptly walked out of the store, knowing I would step into a store with such disgraceful service.
Above are just some encounters of serious service lapses that could hurt luxury brand sales.
Gucci customer service in Europe
If you think the service in Gucci Asia is poor, try Europe where the mercenary-like staff know they can get away with scumbering all over walk-in customers' heads, or overseas customers, thinking it is perfectly fine.
And they are right, Gucci is happy to keep such staff until the next job that pays them a bit more shows up.
Racist, ignorant and full of themselves
In September on a call to Gucci London's flagship store, an Eastern European lady made a comment that an Asian name sounded funny.
Jokes aside, she did not get back on the product enquiry.
On the phone to Gucci's flagship store in Milan, it was on hold for a long time. When a sullen-voiced male picked up, he said "Now isn't a good time."
True to what we predicted, half an hour when a call-back was attempted, no one picked up the phone.
A call to the Gucci accessories department in Munich where we spoke to a gentleman, there was laughter in response to where the customer was calling from.
"Are you our customer?" was the answer to a product enquiry. One would be if they were served with something other than a good dose of complacent attitude and arrogance.
He took my number, made me repeat it several times and like the Gucci London store, never called back.
An overhaul of in-store and online customer service is needed. If not this would have a long-term, detrimental effect to these brands' e-commerce experience and revenue performance.
Are you currently managing a web store or looking to expand the horizons of your current e-commerce operations?
Contact us before it's too late.