In September 2018, Ralph Lauren celebrated his 50th Anniversary with a fashion show and black-tie dinner in Central Park’s Bethesda Fountain and courtyard, not far from the twin Ralph Lauren mansion stores flanking the corners of Madison and 72nd Street. Models descended the 1842-era stone steps to enter the courtyard lined with Persian carpets for the occasion. Guests were seated in rows configured so that somehow it seemed that everyone had a front row seat. The couture fashion was well received: women in patchwork velvet, bejeweled and embroidered suede — quintessential Ralph — men suited in tweed, followed by a multiracial, multi-generational, colorful production of 100 models (and employees and their families) wearing a mash-up of everything Polo. Ralph emerged at the finale and spontaneously took the hand of an adorable six-year-old girl, dressed in a red Polo coat, and walked through the audience, music playing, tearfully greeting family and guests. All clearly moved by the spectacle and Lauren’s half-century legacy.
The dinner party, an invitation-only tasteful extravaganza included steak flown in from Ralph’s Double RL Ranch in Colorado. It was attended by celebrities of all stripes – Oprah, Hillary, Kanye, De Niro, Spielberg, Anna Wintour — and the American fashion establishment including Calvin Klein, Donna Karen, Michael Kors, Carolina Herrera, Diane Von Furstenberg and Tommy Hilfiger. An assortment of movie stars, power brokers and Ralph’s family, all dressed to the nines, paid homage to Ralph’s 50-year-old vision and personal articulation of American style.
Ralph Lauren’s Next Great Chapter
The 50th anniversary (marketing costs were increased by 30 percent this year to leverage the milestone) was a chance for Ralph Lauren to showcase his achievement and also to signal that his brand has turned the corner of what many observers have viewed as a steady decline. After the hiring and subsequent firing/resignation of Stefan Larsson 18 months later – a result of differences with Ralph about the creative and consumer-facing direction of the company — business had been on a steady downtrend. People wondered whether Ralph, (now 79 and still very alive and active in his business) who, along with family members, controls 82 percent of the company stock could do what was necessary to keep his brand viable and polish his future legacy.
Not long after Larsson’s exit in May 2017, Ralph Lauren named Patrice Louvet, a French native and 25-year-veteran Procter & Gamble executive who’d led P&G’s global beauty business, as the new CEO and President of the company. Louvet, who had no fashion experience, but, did have the global brand discipline of a near-lifetime career at P&G, has kept a low press profile but seems to be executing the company’s “Next Great Chapter” strategic plan. The corporate objectives include winning over a new generation of customers, energizing core products while increasing underdeveloped categories, targeted regional and channel expansion, leading with digital and operating with fiscal control.
Louvet reported better than expected second-quarter results based on strong growth in China (revenue up 20 percent with overall revenue growth in Asia 13 percent) and digital sales (up 10 percent) along with improved adjusted gross margins (up 100 basis points) and a reduction of promotional activity — despite the 30 percent increase in marketing costs for the 50th Anniversary year. Analysts greeted the news warmly, if not enthusiastically. “While we applaud the company on their progress, and don’t see any real fundamental ‘holes’ today, we feel shares are fairly valued,” said Wells Fargo. Morningstar said, “Second-quarter results evidence that the firm continues to execute its brand revitalization strategy.”
The Ralph Lauren Brand
I am a long-time Ralph Lauren shopper (although only on sale!) and brand enthusiast. Of all the fashion brands, Ralph Lauren has been the most solid in its consistency of vision, voice and imagery — if not always in execution especially in terms of distribution and product proliferation. Some of those issues seem to have been reined in – so much so I find it difficult to get the pair of black pants I want!
Still, 19 percent of net revenue is based on wholesale sales in 12,000 doors. Sales to Macy’s alone represent 8 percent of net revenue. Ralph Lauren is subject to the overall weakness and stagnation in retail, but retailers in the top and mid-tier do look to Ralph Lauren for its brand strength and differentiation.
The domestic website has been improved. “North America directly-operated digital flagship returned to growth with a 9 percent comp, driven by strong brand building, an enhanced consumer experience, and higher quality of sales, all enabled by our new platform,” the company recently reported. In my view, it is not the easiest, most engaging or efficient online shopping experience. But, I am a sample of one, fairly low tech and while I’m an Amazon Prime member, I still do most of my shopping in stores.
The Ralph Lauren Experience
At Ralph Lauren stores, whether shops within shops or company- owned stores, service is very good, if not excellent to superior. The brand is always well articulated at store level. Bloomingdale’s New York flagship’s Ralph Lauren Men’s shop – outfitted with an ice skating rink and hot chocolate for the holiday season, has a direct, convenient entry and exit from 59th Street. Ralph Lauren’s Women’s Madison Avenue flagship now has a bespoke coffee shop, Ralph’s, for more customer engagement. Inventory seems tighter, although at this writing in mid-December 2018, there are bargains to be had. The website features a sale up to 30 percent-off plus an extra 40 percent- off on selected styles. Ralph Lauren stores are now consistent with online promotions; they weren’t always.
I asked sales associates at the Madison Avenue Women’s store how they felt about the 50th Anniversary. All were enthusiastic, ecstatic even. Product sells well. Associates seem happy, well rewarded and most importantly, proud of their affiliation with the store, the company, the brand and with Ralph Lauren himself. The company appears to have built a strong, positive, familial culture. That goes a long way I think in today’s often boring and confused retail environment. Continuing good service at store level is a significant differentiator.
Ralph Lauren Turning the Corner
Brand fan that I am, I root for Ralph Lauren’s turnaround. I am hopeful that it will inspire a new generation to want to be a part of the World of Ralph Lauren – now updated to be more inclusive and multi-cultural, but, still one that promotes the American dream of a better life through an aspirational brand of clothing and accoutrements. Whether this new generation can be inspired by the World of Ralph Lauren is still a question. Millennials may be more interested in creating and curating their own worlds than participating in one created by someone else. But, affiliation and belonging to something aspirational is still a strong lever and competitive advantage, and one not easily copied. While the corporate strategy makes sense, and, at least for now, growth in China can provide revenue needed to stay the course, it will take a good amount discipline as well as creative inspiration, vision and control moving forward to thrive. Whether it can be done for another 50 years, in the absence of Ralph’s extraordinary genius is something that is hopeful, certainly possible, but not necessarily, or easily, a sure thing.