Watching Where You Step-Prada Prada estimates its sales per year at $22 million. The luxury retailer recently spent millions on IT for its futuristic "epicenter" store, but the flashy technology turned into a high-priced hassle. The company will need to generate annual sales of $75 million by 2007 to turn a profit on its new high-tech investment. When Prada opened its $40 million Manhattan flagship, architect Rem Koolhaas promised a radically new shopping experience.
He kept the promise-though not quite according to plan. Customers were soon enduring hordes of tourists, neglected technology, and the occasional thrill of being stuck in experimental dressing rooms. A few of the problems associated with the store This was not exactly the vision for the high-end boutique when it debuted its new high-tech store. Instead, the 22,000-square-foot SoHo shop was to be the first of four "epicenter" stores around the world that would combine cutting-edge architecture and 21 st century technology to revolutionize the luxury shopping experience. Prada poured roughly 25 percent of the store's budget into IT, including a wireless network to link every item to an Oracle inventory database in real time using radio frequency identification (RFID) tags on the clothes.
The staff would roam the floor armed with PDAs to check whether items were in stock, and customers could do the same through touchscreens in the dressing rooms. However, most of the flashy technology today sits idle, abandoned by employees who never quite embraced the technology. On top of that, many gadgets, such as automated dressing-room doors and touchscreens, are either malfunctioning or ignored.
Packed with experimental technology, the clear-glass dressing-room doors were designed to open and close automatically at the tap of a foot pedal, then turn opaque when a second pedal sent an electric current through the glass. Inside, an RFID-aware rack would recognize a customer's selections and display them on a touchscreen linked to the inventory system. In practice, the process was hardly that smooth. Many shoppers never quite understood the pedals and disrobed in full view, thinking the door had turned opaque. That is no longer a problem, since the staff usually leaves the glass opaque, but often the doors are stuck.
Some of the chambers are open only to VIP customers during peak traffic times. With the smart closets and handhelds out of commission, the wireless network in the store is nearly irrelevant, despite its considerable expense. As Prada's debt reportedly climbed to around $1 billion in late 2001, the company shelved plans for the fourth epicenter store, in San Francisco.
A second store opened in Tokyo in 2003 to great acclaim, albeit with different architects in a different market. Though that store incorporates similar cutting-edge concepts, architect Jacques Herzog emphasized that avant-garde retail plays well only in Japan. "This building is clearly a building for Tokyo," he told The New York Times. "It couldn't be somewhere else." The multimillion-dollar technology is starting to look more like technology for technology's sake than an enhancement of the shopping experience, and the store's failings have prompted Prada to reevaluate its epicenter strategy
Questions
1. Would you consider Prada's use of technology cutting-edge? Why or why not?
2. Prada's attempt to use RFID to check inventory in real time failed because of the staff's refusal to use the system. What could Prada have done to make the implementation of RFID successful?
3. Identify an additional strategic use of RFID for Prada's high-tech store.
4. What should Prada do differently when designing its next store to ensure its success?
5. Identify a new use of wireless technology for Prada's next store.