Ralph Lauren’s Patrice Louvet on Elevating the Brand, Stores and Disruption
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At the Ralph Lauren Corp., brand elevation is at the core of the strategy.
“When people ask me what’s your strategy, I give them two words — brand elevation. We have the desire to be a leading luxury lifestyle company,” said Patrice Louvet, president and chief executive officer of Ralph Lauren Corp.
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Speaking at the National Retail Federation’s “Big Show” convention at the Javits Center in New York on Monday, during his conversation with Sara Eisen, co-anchor of CNN’s “Closing Bell,” Louvet said, “We have an opportunity to further elevate the way the brand is perceived. It’s very interesting to see how more and more we are selling cashmere sweaters and less T-shirts. Right now there is a whole return to occasion wear. If you are looking for a tuxedo right now, we are going to struggle to make one available, or an evening gown.” They’ve both been selling “successfully” at Ralph Lauren, Louvet said, though pent-up demand has been exceeding product availability.
“The consumer is looking for aspirational products and stories. We have a unique opportunity to continue to serve them in that space. If you look back at the history of this company, it has been a continuous journey of elevation…,” Louvet said.
“When you look at the recent stores we opened, in Beijing, Shanghai, and a few weeks ago in Milan, they are very elevated experiences. They have hospitality in them. And you look at our products available across the different selling points, they’re certainly more elevated than what we had three or four years ago.
“We still believe in the role of stores.” During the pandemic, “As soon as people were able to go back into stores, we saw traffic go up significantly.”
Louvet also said his company still believes in department stores, despite some reduction in the distribution. “In the past couple of years we have gone through a significant reset of our department store presence,” Louvet said. “Wherever we show up we want to make sure the brand is portrayed in a way that is consistent with the image. We’ve exited mid-tier department stores. We focused our brick-and-mortar presence in more elevated doors, and wholesale digital. As I look at the total ecosystem that we are building around consumers, department stores clearly have a role to play and we are very grateful for the strong partnerships we have our with department stores in the U.S. and around the world.”
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Addressing how Ralph Lauren has fared during the pandemic, Louvet, who has been running the company for four and a half years, said, “We actually feel really good about where the Ralph Lauren company stands. We certainly feel as if we are in a position of strength. We have the resources to invest in our momentum. We are opening stores around the world. We opened 80 over the past year — a combination of Polo boutiques and flagship stores. We are investing in marketing. We are investing in new digital spaces. We are investing in new categories — footwear, outerwear and home. We feel good about the energy that the company has at this point.
“The crisis has really been an opportunity for all of us to rethink our lives, what we aspire to and what we dream about. We often talk about our business as not being a fashion business. We like to say we are actually in the dreams business. As consumers rethink what living looks like and means to them, I think we are particularly relevant at this time based on what we are able to offer to consumers around the world.”
Being a company with “heritage, innovation, resources to sustain momentum” and “pretty unique relevance at this point in time” has helped Lauren navigate the pandemic, Louvet said.
The corporation bounced back in its fiscal second quarter. ended Sept. 25. Profits tallied $193.3 million, up from losses of $39.1 million a year ago when the pandemic kept shoppers close to home. Revenues for the quarter jumped 26 percent to $1.5 billion from $1.2 billion. The topline growth was supported by the efforts to elevate the positioning and increase prices where the average unit retail prices rose 14 percent.
“This company has over 50 years of heritage all driven by Ralph’s vision,” said Louvet. “It’s been driven by a very clear purpose and a very clear set of values. That has served as a foundation for us during the health crisis and also the North Star to help us on what to focus on, and on what to prioritize.
“We all know heritage by itself is not enough, and as we reflect on almost 24 months [of the pandemic] it’s really been innovating on how we engage with the consumer, innovating on products, innovating on go to market and constantly reimagining. The reason this brand has stayed so vibrant for so long is because of this muscle that has been built over time, the ability to reimagine, reinvent and innovate.”
Omicron, he said, “has not materially had an impact on our business.”
He also said Ralph Lauren was prepared to meet supply chain headwinds caused by COVID-19 and increased consumer demand because it diversified its supply chain, from being dependent on a couple of markets to sourcing much more widely through Latin America, Europe and Asia, with “dual sourcing, back-up options, and the ability to move production from market A to market B very quickly.”
In addition, the company has built “strategic supplier partnerships with a limited number of suppliers,” Louvet said. “We are not just operating one-year, long-term relationships. Rather than a supplier-client relationship, it’s more about partnerships with common agendas.”
Asked about inflation, the CEO replied, “We have demonstrated pricing power for around 19 quarters in a row with average unit retail increases. It means the brand elevation strategy is working and consumers are responding to it.
“There is transitory inflation driven more by logistics challenges and access to raw materials which will resolve over time because there has been this huge pent-up demand. There is also long-term [inflationary] pressures related to wage increases. We will see within those two extremes which ones have the greatest impact, but certainly we are prepared for an environment that will be inflationary through both the pricing power we have demonstrated for the past four years, and through the supply chain capabilities we have built around the world which drives efficiency…We have a very brand range of consumers. We have around 50 million around the world.” Segments of the company’s consumer base, he said, are impacted by inflation.
Discussing the metaverse, Louvet said, “We believe in the opportunities around these new digital worlds and the metaverse. I would be misleading you if I told you exactly where all this is going to land. But there are a few things that are striking to us. One is there is a growing interest from the consumer. One of our strategies is to win over a new generation and the new generation is there. So we have to be there.
“There are parallels between the metaverse and Ralph’s vision, because we are not a fashion company. We are in the dreams business. Ralph has created different worlds. You can be projected in Colorado. You can be projected in Montauk. We think there is great consistency between our philosophy and what the metaverse brings.”
He said the company has yet to offer NFTs, though “we have a lot of conversations on how to do that well in a way that ties back to what matters to us and how we are going to project it and how we want to engage with consumers. We don’t just want to follow the trend. We want to do it in a way that’s meaningful and ties back to our strategy and brand building.”
Looking ahead, “I continue to be optimistic about where the consumer is. I know there continues to be puts and calls here and there. We are going to see omnichannel becoming more and more central to how companies need to operate and frankly historical silos go away. You are going to see increased focus on citizenship and sustainability for the consumer, across the board.”
Regarding the big changes with consumers, Louvet said there’s comfort with digital platforms, and a desire to leverage all the dimensions of omnichannel setups, and that consumers are responding to how Ralph Lauren and other companies have “pivoted” the messaging toward more purposeful communications. “We ramped down on product and focused more on optimism and family. It’s been exciting to see consumers respond to that,” said Louvet.
He also cited his company’s efforts at “playing a leadership role in the industry on sustainability,” and it launched at the Australian Open a recycled cotton polo shirt, called the Clarus, treated to be performance-oriented with breathability and wicking characteristics.
Louvet also mentioned the partnership with Dow, called “Color on Demand,” which he described as a new way to color products that dramatically reduces water use. Ralph Lauren is also part of the Fashion Pact, the industry organization that identifies areas to work together to reduce environmental impact.
The conversation closed with some brief comments on Ralph Lauren, the man. “My relationship with Ralph is wonderful. We spent a lot time before we both signed on the dotted line on the bottom of the contract getting to know each other five years ago, making sure we had a common vision.”
He said Ralph tried to recruit him seven or eight years earlier when the company was seeking someone to head up the international business, but he already made a commitment to run Gillette. But when former Ralph Lauren vice chairman Roger Farah retired and other leadership changes occurred at the corporation, Louvet was approached once again for the top job and accepted it.
With Ralph Lauren himself, “It’s been a fantastic partnership,” Louvet said. “He is still involved. He is still fully engaged.”
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