Miu Miu Creeping Towards Luxury

Have you noticed something funny at Miu Miu these days? (Or, not so funny, depending on the size of your wallet.) It's the prices. They've been going up and up, and now, if memory serves, are pretty damn close to what Prada's prices were in 2000. Back in those crazy pre-euro days, we on the fashion show circuit would buy Miu Miu in Italy as if it were Banana Republic. ( Of course the 30 percent discount for press helped too.)

But not any more. When it launched, Miu Miu was meant to be a traditional 2nd tier brand, like D&G to Dolce and Gabanna or Emporio Armani to Armani. Same name, cheaper price points, different fabrics, lower profit margins (20 percent versus 40 at the luxury level) but many more sales, was the theory. But while other second labels are trying to cut costs by moving production out of Europe to compete with the likes of Zara and Topshop, Miu Miu is going the other way.

Its existing stores have been refurbished (in rich dark hues which completely distinguish it from Prada -- the newly made-over store in Soho, New York opens this week), the prices pushed up (though still shy of Prada's, which were also pushed up), and the quality of the products improved. But perhaps most tellingly, the new Miu Miu stores rub shoulders with the Prada's and Gucci's of the world, not with the D&G's and the Emporio Armani's. I mean, the new Miu Miu store on 57th Street in New York which opens in November is in the old Jil Sander space--how much more luxury do you get? In LA, it's opening on Rodeo Drive by the end of the year. And a Prada Group executive told me that when they find a space, Miu Miu London will move from the unfashionable end of Bond Street near Oxford Street to a larger space on a chic street. And why not? With an ostrich bag selling for £1,675 -- it is certainly a brand in the big leagues.

Photo by Chris Moore/Catwalking/Getty Images

Burberry is currently cautiously testing bags at £1095.

If they can pull it off brining it up to par with Prada it will be quite a coup for the group. Of course they still have a ways to go. Prada revenues in 2006 were $1.6 billion and Miu Miu's just $208 million. But in the meantime, it has already helped the group hold their own against the consumer malaise in Japan. Japan is Miu Miu's biggest market, thanks to its cute and trendy focus that appeals to consumers burnt out on big brands. Prada Group saw sales grow 6 percent in Japan from February to May, versus a decline in sales at most other brands.