Luxury goods maker Prada has just purchased a vintage French tannery in a bid to set itself apart from the competition. The company did not disclose how much it paid for the Tannerie Megisserie Hervy.
According to Prada CEO Patrizio Bertelli, the tannery is a place where people who are highly skilled follow a long tradition of making quality goods. The work cannot be outsourced or easily replicated.
Tanneries are typically located along the banks of rivers. Work there is largely done by hand. Tanneries are a major barrier to entry in the luxury fashion industry.
Tanneries are becoming less and less common. In the 1980s, there were 60 tanneries in France, but there are now less than 20, according to France’s National Leather Council.
According to Marino Marin, head of the strategic advisory business at boutique investment bank MLV, the new tannery will give Prada supply-chain certainty. It will enable the fashion house to differentiate itself from other near-luxury houses that are also selling leather goods. Marin thinks the purchase is one of the best things Prada could have done to promote its brand.
The timing will help Prada avoid pressure from rising material costs. It will also give the brand provenance, a valuable piece of history that can be included in a marketing campaign and used as a justification to raise the prices of its handbags and other products. Other handbag makers, such as Coach, do not employ their own tanners. That point could distinguish Prada from the competition in the eyes of consumers.
Prada has been trying to separate itself from the rest of the fashion industry by reducing wholesale distribution and opening more stores. CEO Bertelli dislikes department stores.
Other luxury goods makers have been taking steps to bring their supply chains in-house. Hermes and Kering, which owns Gucci, have recently purchased French tanneries, and in 2013 LVMH Moet Hennessy Louis Vuitton bought an 80 percent stake in Italian textile maker Loro Piana, which specializes in sourcing extremely rare materials.
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