This Fashion Month has just gotten started and besides the beauty and glamour we’re about to witness for the days to come, it’s time we celebrate what’s coming in the future for our most favorite brands.
Last night was one of the most iconic fashion shows in history. Ralph Lauren sent its ready-to-wear collection down the runway in the occasion of turning 50 years in the fashion industry. As we all have a clear idea of how much the brand has brought into the lives of so many since 1968 with its American-style influence, it’s crucial to recognize the brand’s undeniable entrepreneurial spirit that has characterized it from the very first beginning.
Before Ralph Lauren’s public strategic plan “Our Next Big Chapter” was announced in June of this year, the brand was earning a negative revenue growth. This was of course recognized on time mainly because, in fashion, you can’t expect to keep growing naturally without considering what’s changing in the market, and Ralph Lauren was the best example for that. Founded on its nature of always being keen on penetrating new segments, the brand has always had an entrepreneurial nature and the capacity to expand since it first did to Europe at the beginning of the 80’s. Moreover, Ralph Lauren is one of the brands that truly represents the true American lifestyle and its marketing and production strategies have always been structured to represent that. But after 50 years of having worked incessantly, Ralph Lauren is now another brand putting digitalization as the main priority in its new strategic plan consisting on some essential marketing and financially based points to consider.
Create a sustainable long-term growth and value creation
In a world of digital-influenced consumers, what does sustainable long-term growth even mean anyway? The truth is, while we can assure our society that the digital life is here to stay, nobody can assure you that your growth will be sustainable long-term. It’s like we’re faced with constant digital updates at the edge of our toes and so a brand needs to be strong enough to preserve its value. Ralph Lauren has highlighted four interesting points that are undoubtedly going to add up to its value preservation:
- Focus on the icons: This was deeply appreciated by all the 500 guests (and the digital audience) during the fashion show from last night. It never hurts to keep highlighting a brand’s history, especially if the tale is being told by the one and only Ralph Lauren all over the place. Moreover, it’s important to keep reminding your customers that you’re not only buying an item, but also a pile of work that has 50 years of history.
- Renew core items to make them more appealing to the today’s costumer: We are in the generation that appreciates quality and sustainability more than anything in the world now, so expect Ralph Lauren to improve product quality by reallocating production volumes to a network of factories that deliver a better quality. Should we also expect the price of items to go up? Maybe.
- Provide limited editions, capsule collections, and personalization items: The big purpose of offering something limited to customers is for them to get excited about the brand. The customization of items is just starting to become a pattern in more iconic brands such as Dior and that has been proven to be the best recipe to improve a brand’s value.
- Enter under-developed categories with great potential: We have been already noticing Ralph Lauren’s attempt to penetrate the denim category in the past year, so we should expect to see more denim in the collections to come. In addition to that, Ralph Lauren intends to expand more its accessory collection as well as penetrate the category of women’s work wear in the future.
Ralph Lauren and the digital-first mindset
We already have been experiencing seasons in which Ralph Lauren has showcased its fashion shows online for the digital audience with initially the purpose of promoting it's “See Now, Buy Now” concept (which is still ongoing), but this time the brand is turning into a more engaging concept of digitalization.
- Shopping experience: We should be expecting to see huge changes on the Ralph Lauren’s site regarding the online shopping experience, which is going to become more functional by improving the customer’s navigation and the check-out process.
- Shift to more digital and social platforms: This must be one of the most important points in Ralph Lauren’s digital restructuration. We have already witnessed the brand getting direct exposure from celebrities, but what’s more, it has been reaching out to famous influencers, who are supposed to be the ones who bring more traffic to e-commerce channels. As of now, it has been said that Ralph Lauren has made important contact with more than 100 influencers who are willing to represent the brand on social media platforms. The bigger reason to put influencers into the strategic figure is mainly to put more effort into market measurement and analysis in order to develop a deeper knowledge on consumer behavior and how to engage specific consumers of the future such as Gen-Z.
Ralph Lauren’s Financial Points
Moving into financial figures, a restructuring of a strategic plan means an expense for the company, which according to Seeking Alpha, the plan is supposed to give a significant financial effect by the end of 2019 worth a charge of almost $150 million. The main consideration here is that Ralph Lauren is set to drive a huge amount of expense into its marketing department which will be the one entitled to grow 5% of the revenue. Regarding its stocks, throughout the 5-year plan, we should expect to see a 25% growth in regular quarterly cash dividend, which means a $2.50 annual dividend per share (the last dividends were paid in July). Finally, Ralph Lauren is having a $1 billion stock repurchase program, which is supposed to help boost the earnings of the company.
When it comes to market penetration, although the company expects to penetrate regions by segments, it’s undeniable that the best-recorded choice is China. In the last Fiscal Year, the country has shown an increment of 25% in sales, so Ralph Lauren should expect to receive at least $0.5 billion in the next five years only coming from China.
It’s evident that Ralph Lauren’s new strategic plan proves to be inspiring to the fashion industry. Last night will be one to remember for years to come for the company. Ralph Lauren was one of the pioneers of creating something from nothing and his work in fashion will always be remembered.
“I WENT THROUGH THE EXTREMES OF AMAZING NOTIORITY AND ALSO THE DREADED THINGS THAT YOU NEVER THOUGHT YOU’D HAVE TO LIVE THROUGH. NOT EVERYTHING WORKS THE WAY YOU WANT IT TO, BUT IF I SIT BACK AND THINK, ‘AM I HAPPY ABOUT THIS?’ YEAH. I WOULDN’T HAVE DONE ANYTHING BETTER.”
– RALPH LAUREN