👉 Background: Versace is the iconic Italian luxury brand known founded by Gianni Versace in 1978. In the 80s, Versace’s brand blew up with its maximalist prints inspired by Baroque art. Think: golden swirls and intricate florals — kind of like it belongs on a palace ceiling… but instead it’s on a silk shirt.

‍👉 What happened: In 2018, Capri Holdings (the US-founded company behind Michael Kors and Jimmy Choo) acquired Versace from the Versace family for more than $2.1 billion USD. They had a vision to double Versace’s revenue in a decade by toning down the glitz and dialling up the price tags. Think: high-quality fabrics and neutral tones — a far cry from Versace’s usual gold and loud designs.

‍👉 What else: It’s been 7 years since then and Versace’s revenue has dropped below its 2020 levels. So now, Versace is coming back to Italian soil after being acquired by luxury-brand Prada for $1.38 billion USD. And analysts believe this is all because the Capri Holdings crew underestimated the negative impact of a rapid brand reposition.

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‍What's the key learning?

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‍💡When brands try to pivot too hard especially away from what made them iconic, they risk alienating their ride-or-dies. In Versace’s case, it had an over-the-top aesthetic… and that was its signature.

💡Capri Holdings tried to modernise the Versace brand by jumping on the “quiet luxury” bandwagon. In the process, they erased what made Versace, Versace. This move alienated their loyal customer base and also struggled to attract a new one willing to pay inflated prices.

💡We saw this with the British handbag label Mulberry who tried to go upmarket in the early 2010s. They raised prices significantly to compete head-on with Louis Vuitton and Prada. But in just a few years, its share price had dropped by 74% and its CEO resigned. They eventually re-introduced accessible products again which align with their customer base. Lesson learnt.