"Middle class three treasures" Ralph Lauren can't be sold?
Ralph Lauren, one of the "Three Treasures of the Middle Class", couldn't sit still on the "altar".
Recently, the US fashion luxury group Ralph Lauren Corp (Ralph Lauren, hereinafter referred to as "Ralph Lauren") released its financial results for the first quarter of fiscal year 2024 ended July 1, 2023, during which Ralph Lauren sales increased by only 0.4% compared with the same period last year.
While rival CK and Tommy Hilfiger's parent company PVH Corp increased total revenue by 3.5% year-over-year (second quarter of fiscal 2023 ended July 30).
Specifically, North America, Ralph Lauren's largest market, underperformed, with revenue down 10%. The European market, Ralph Lauren's second largest source of revenue, slowed down, recording 7% growth on a constant currency basis. In Asia, revenue grew 18% in constant currency. The best performer was China, where revenue grew by more than 50% year-on-year on a constant currency basis. But according to public data, China contributes only 6% to Ralph Lauren's sales.
In the eyes of industry experts, Ralph Lauren's performance is "very average" in the luxury industry, and its performance has also caused investor concerns, and the company's stock price has fallen for several days after the earnings report.
Source: Weibo@RalphLauren Ralph Lauren
In fact, as early as 2007, when the TV series "Struggle" was a hit, Tong Dawei's wearing a Ralph Lauren Polo shirt and a collar made this brand a wave. In recent years, Ralph Lauren has become popular in the fashion industry with the "old money style", and the sales of Ralph Lauren, who recovered from the impact of the epidemic in fiscal 2022, increased by 41%.
But the momentum did not last, and its sales growth fell back to 3.6% in fiscal 2023. So, how far can Ralph Lauren go with the Chinese market?
Ralph Lauren's "Old Money Wind"
Why is it popular in China?
"Old money" or "old money", as opposed to "middle-class upstarts", refers to people who have been rich for generations. They are usually simple and understated, but textured and effortless.
In recent years, fast fashion fever, young people prefer to buy less and buy better, the texture and design of clothing have become the most important factors when buying clothing. At the same time, with the return of retro style, choosing classic styles is considered a return to taste.
And Ralph Lauren, whether it is the usual dignified and calm brand tone, or the enduring classic pieces such as polo shirts, cable sweaters, and oxford cloth shirts, have become a weapon to effortlessly concave the old money shape.
Source: Weibo@RalphLauren Ralph Lauren
In recent years, from international superstars such as Anne Hathaway, to popular flowers such as Zhao Lusi, Ouyang Nana, Yu Shuxin and so on, they are all Ralph Lauren's "wild endorsements". On the Xiaohongshu platform, Ralph Lauren has become a representative of the "old money style", with more than 500 million views on related topics.
But in fact, Ralph Lauren is not the first time in China, and many post-80s and 90s generations are no strangers to this brand. Like the French Longqiang, Ralph Lauren's polo shirt became a souvenir for people returning from studying and traveling to the United States around 2005, so it entered the circle of the rich as soon as it entered China and became the standard for "rich people".
Source: TV series "Struggle"
But soon, Ralph Lauren's development in China encountered a setback. Because Ralph Lauren's polo shirt is fashionable and expensive, there are many copycats on the market, and early agents do not pay attention to brand building, opening a large number of stores and frequent discounts, making the brand image plummet. For a long time, grandpas and aunts from three-year-old children to fifty or sixty years old wore polo shirts with pony logos, and the "polo shops" on the pedestrian street were difficult to distinguish between real and false.
It was not until 2011 that Ralph Lauren completely took back the agency rights in the Chinese market and switched to direct management, and in the following years closed a large number of stores, cut redundant sub-brands and product lines, and began to high-end and digital transformation in 2017.
Offline, Ralph Lauren has opened a more high-end and better experience Ralph Lauren House in first-tier cities such as Beijing, Shanghai, Chengdu, and Shenzhen. Online, Ralph Lauren has ramped up marketing efforts for millennials. Combined with the prevalence of simple retro style, genderless dressing, and intellectual clothing (college style) in recent years, this makes Ralph Lauren, who started in this style, become the new favorite of Chinese young people.
The wool came out of the sheep, marketing investment increased, and the price of Ralph Lauren increased. It is reported that since 2018, the brand has increased the average price of its products by about 80%.
Is Ralph Lauren a luxury?
But the price hike doesn't convince young people to identify with Ralph Lauren's luxury brand identity.
TAKING THE RALPH LAUREN CABLE KNITTED SWEATER AS AN EXAMPLE, THE OFFICIAL FLAGSHIP STORE OF TMALL RALPH LAUREN COSTS 1990 YUAN, THE MATERIAL IS 90% WOOL, 10% CASHMERE, AND MANY NETIZENS SAID THAT THE SAME PRICE IS NOT AS GOOD AS BUYING 100% CASHMERE ORDOS.
In addition to the material, the bigger doubt comes from the gap between Ralph Lauren and domestic and foreign prices.
Before 2018, Ralph Lauren had long worked with wholesalers and discount retailers such as Macy's and TJ Maxx, so many people in the United States thought that Ralph Lauren was not high-end.
On social networks, some netizens living in the United States said that the domestic price of Ralph Lauren is inflated, and a sweater in the United States can be folded for only one or two hundred yuan, also known as "Metersbonwe of the United States".
Therefore, squatting the "Black Friday" cabbage price and finding South Korea/the United States/Canada to buy for others are sought after by young people on social networks.
The fact that Ralph Lauren is not considered a luxury item abroad is also related to its brand history. Ralph Lauren is an American brand founded in 1967. Both the birthplace and the history are incomparable to the traditional luxury goods of French origin and centuries of history.
Its founder, Ralph Lauren, used to be a designer for a tie company, and although he had no money, he had a good aesthetic, and his wide, more colorful and colorful ties were popular for differentiating them.
Source: Historical data
In addition to aesthetics, Ralph Lauren has ambitions and is bent on breaking into the rich camp.
So in 1968, Ralph Lauren founded his own menswear company and launched Polo Ralph Lauren, a brand inspired by the aristocratic sport polo, because the style is between formal and casual, suitable for business casual occasions, attracted the attention of the American elite. In the same year, Ralph Lauren launched a womenswear collection, which used many menswear elements in the design, and was cut according to the female figure, and the upper body was neat and capable, attracting a large number of professional women.
In 1972, Ralph Lauren modified the polo shirt, adding a short front and back length design and a stiff collar and soft fabric, bringing polo-only clothing into daily life, which was popular among American men. At the same time, the brand also sponsored hit movies such as "The Great Gatsby", becoming the representative of the American middle-class elite.
Not only is it creative, but Ralph Lauren also knows how to package brands with attitude.
In the late eighties, the Ralph Lauren brand launched its first sweater with the American flag and achieved a big hit; In the nineties, he cooperated with Steiff Teddy Bear, a national doll teddy bear manufacturer in the United States, to launch the Polo Bear clothing line, which once became the spiritual totem of the hip-hop circle.
Source: Weibo@RalphLauren Ralph Lauren
In 1993 and 1995, the brand went even further premium, launching the high-end retro line Double RL series and now the runway collection Ralph Lauren Purple Label, respectively. In addition, Ralph Lauren has continued to expand the brand, launching product lines such as home, accessories, perfumes and food and beverage, becoming a lifestyle brand for the affluent class.
Struggling from the grassroots to the top, Ralph Lauren became the embodiment of the "American Dream" and, with that spirit, became the face of American culture. Therefore, when it is put together with real "old money" such as Hermes, there is always a "inspirational" taste.
How long can Ralph Lauren still be popular in China?
Boosting the brand's high-end image is just one of the challenges Ralph Lauren faces in the Chinese market. In the industry's view, Ralph Lauren's bigger crisis is the aging of the brand.
Zhou Ting, president of the VIP Research Institute and a luxury expert, said that compared with Capri Group, the parent company of MK, and Tapestry Group, the parent company of Coach, which also belong to the light luxury track, the popularity of Ralph Lauren is mainly the reason for the rise of sports and leisure.
The so-called "old money style" is essentially an early adopter, although there is also a certain degree of wealth upstarts yearning for the identity of old money, but this factor has little impact on the market, and differentiation is the mainstream of consumption.
In the luxury circle, Ralph Lauren's performance in recent years is actually very average, the fundamental reason is that Ralph Lauren's products are aging and cannot meet the needs of consumer consumption upgrades. Whether on social networks or Tmall official flagship stores, the hottest are still classic models such as polo shirts, cable sweaters, and oxford shirts, and in its Tmall flagship store, many new product sales and reviews are 0.
In addition to the aging of the brand, another problem that Ralph Lauren needs to face on the road to premiumization is that the brand positioning is "too clear".
According to fashion industry expert Zhang Peiying, Ralph Lauren's early success lies in finding the "middle class positioning". In the transition stage when the United States became a developed country, the middle class was the largest class of the group and grew rapidly, and Ralph Lauren's positioning was in line with the development trend of society at that time.
This can also be seen from the performance of Ralph Lauren, although its main brand is luxury goods, but the entire company's performance is still mainly from the mid-range series, according to public information, its high-end line Collection series annual sales account for less than 1% of total revenue.
There is another side to clear positioning, that is, it is difficult to do high-end. Entering the high-end market, Ralph Lauren has to compete with other brands, not only needs good quality, but also needs more fashionable elements, and fashion and product innovation are Ralph Lauren's shortcomings.
The mid-range light luxury market in which Ralph Lauren himself is located has entered a cold ice period since 2017 and has become more and more sluggish after the epidemic.
At the same time, after the epidemic, Ralph Lauren also faced challenges from cost-effective brands such as Uniqlo. On social networks, the note "Uniqlo wears out the feeling of Ralph Lauren" is quite popular, and the likes and collections have exceeded 10,000.
Even in China, there is not much room left for Ralph Lauren.
Resources:
How Ralph Lauren was made| Tokai Securities
Ralph Lauren, "Survival in the Cracks" of the old luxury house Yinghe Fashion Business Review
Ralph Lauren is still waiting for the transformation to take effect, but investors seem to be running out of patience Lady in T-shirt
Author: Jia Shihui
Editor: Tennessee
Source: Weibo @RalphLauren Ralph Lauren
Editor-on-duty: Jia Shihui