NEW YORK — Ralph Lauren is about to enter a new, private world.
Today, the Polo Ralph Lauren Corp. is expected to unveil the formation of Global Brand Concepts, a group that will focus on developing lifestyle brands in exclusive partnerships with department and specialty stores. The collections could range from women's and children's wear to accessories and home furnishings. But make no mistake: They will not carry a Polo label, nor will they in any way be marketed to suggest Ralph Lauren is behind them.
But Polo would own the trademarks developed under any deals, giving the corporation the potential to significantly boost its revenues and gain control over more real estate in department and specialty stores. And in another unusual twist, the stores would own the product, sparing Polo any headaches over inventory.
The new division's mission is to develop non-Ralph lifestyle brands that are exclusive to its retail partners using Polo's extensive resources and brand-building expertise, from design to manufacturing, marketing and advertising. After 40 years in business, there is no doubt in Lauren's mind that he has what it takes — the Rx — to give a boost to department and specialty stores.
"I look at this industry and walk around the stores to see what is going on," Lauren said. "I think one of the things stores need is an ability to be individual, the ability to say, 'This is mine.' They have to be able to say, 'Come to my store because we have something you don't have.'"
The idea for Global Brand Concepts came from the designer's recent observation that many large stores are plagued by sameness, with little to set them apart from one another.
"In this day and age, there are a handful of designers and brands that are very strong," Lauren observed. "They can grow, but at a certain level, they start to overlap. Consumers are looking for something new, retailers are looking for something new and the brands are looking to grow their business."
With Global Brand Concepts, Lauren is making an aggressive push into the arena of exclusive retail brands. The move raises the question whether talks with J.C. Penney for an exclusive lifestyle collection under a different name, first reported in WWD last June, triggered this new concept, which could set the stage for a deal with the mid-market retail chain in the near future.Lauren is tight-lipped about any such partnership, other than to say, "I have spoken to them, and I have spoken to other companies. I have companies that wanted me to do the whole store and give them a whole image."
The designer has already had a taste of exclusive retail brands with Chaps. Polo inked an exclusive deal with Kohl's to sell Chaps branded apparel in 2005. Until 2003, Chaps was marketed as Chaps Ralph Lauren, but although it still embodies the preppy, Anglo-Saxon sensibility Lauren has made his trademark, there is no longer any indication the designer is behind the brand. The introduction of Chaps was the biggest launch in Kohl's history.
More recently, exclusive retail brands have been gaining traction elsewhere, even though almost all of them carry an established designer's name. This spring, Oscar de la Renta is relaunching his better-priced O Oscar sportswear collection exclusively at Macy's, which is already home to the T Tahari line that is exclusive to Federated. And Vera Wang signed a deal last year to create an exclusive line for Kohl's.
Observing the retail scene overall, Lauren said, "There are a lot of things that need to be addressed. The large stores...sometimes don't see what they need or they want a new brand that says something about their company and gives them an identity, the way you need a face that says, 'Who am I, what do I stand for and what separates me from this other guy across the street?' We are big enough and have a team that is strong enough to develop individuality for these stores."
By creating Global Brand Concepts, Lauren is moving a notch closer to what many (jokingly) assume is his ultimate goal: world domination, at least in floor space. The new division gives his company an opportunity to gain significantly more real estate at retail, and it's not limited to luxury stores. Since Lauren will offer the brands under a different guise, the concept could, in theory, be expanded to retailers at any tier, from class to mass. It allows the designer to dodge the dangers of downgrading or diluting the Polo moniker.
"There is a world out there that I don't want to put Ralph Lauren in because Ralph Lauren is exclusive," Lauren said. "It is a luxury brand, and all our brands have their designations. But there is more business, more growth. And there's a lot of potential in the stores that really need help, and they want what Ralph Lauren is about and see what we can do."He certainly has the track record to back up his confidence. Today, Polo is one of the healthiest and fastest-growing fashion and luxury businesses, with revenues of $3.75 billion in its most recent fiscal year. In the run-up to its 40th anniversary year, Lauren and president and chief operating officer Roger Farah have created a business model based on a multitude of Ralph Lauren-related labels; a strategy of buying back licenses to gain better control, and a focus on freestanding retail, from bringing Ralph Lauren stores to Tokyo and, this spring, Moscow, to new store concepts like Rugby and Double RL. Polo has been stepping up brand recognition efforts by becoming the official sponsor of high-profile sports events like the U.S. Open and Wimbledon tennis tournaments.
"If you look at our company, you see Ralph Lauren, Polo, Purple Label, Black Label, Lauren and children's," the designer said. "These are all concepts that grew out of a tie. It's all done under these offices. And there's Rugby retail and Ralph Lauren retail. There will be Lauren retail. They are all different concepts with a soul that has to do with Ralph Lauren.
"This is a place that is designed on every level, and we develop our advertising," he added. "It is like a school here. We do our own branding, our own planning as to how we're going to advertise. That kind of flexibility, that sort of dimension, says, 'What can we do that would be interesting?'"
Farah said in a statement, "This fits into our overall strategy of continuing to invest in the breadth of our unique offering. We are setting up a structure which can basically be a one-stop shop for companies in need of niche opportunities to meet customer's demands."
In its premise, Global Brand Concepts resembles a private label development business, though Lauren hopes to create brands that will offer more than the own-label assortment usually found in department stores.
The group's strategy is flexible, and each arrangement will be customized, the details depending on the nature of the relationship. Retailers can approach Lauren about developing an exclusive line for their stores, or, if he sees an opportunity in a retail chain and envisions a particular brand concept, he can suggest it. The designer will be involved in each brand and will work closely with his design teams.Hypothetically, a chain like Penney's could contact Lauren about developing a new lifestyle collection. Global Brand Concepts would then enter a contract agreement with Penney's, and Lauren and his team would develop the brand from scratch, a process that would include concept, design, sourcing the fabrics and contracting out production. Then the group would work on brand-building through advertising and marketing, all of which the retailer would finance.
The organization's structure would loosely resemble a wholesale operation. A retail client would be required to carry the entire product line, which it would then own and would be responsible for inventory issues such as markdowns. Polo will oversee its presentation at retail. If the lines proved successful enough to merit stand-alone stores, it would be up to the retailer to finance such an extension. Legally, however, Lauren would own the brand's trademark since Polo Corp. would manufacture and ship the product as part of the arrangement, but the company does not plan to deal with markdowns or excess inventory.
"I love breaking the rules and the ability to have other niches," said Lauren. "There's no limit. I think this is very important for retail. Can they do it by themselves? Maybe and maybe not. Many retailers have tried to, but they are in the retail business. It's very hard to develop a brand internally. You can develop a name and say, 'OK, we will make this a private label,' but is it a leader? How do you promote it, advertise it, build that brand and market it? Our sense is to develop a new concept with a partner. We would say, 'This could be interesting for your store.'"
The designer said it was too early to disclose the kind of lines he envisioned at retail but noted they could be at any tier as long as they were "within the world of what I am seeing and what I think is missing," Lauren said. "It doesn't matter if that's hip-hop. Maybe I am thinking I want to do a new jeans brand or a new career look, a young look or home. It can have that diverse sensibility, but it has to be something I really want to do within this company."Skeptics may wonder if Lauren runs the risk of creating lines that will directly compete with Ralph brands on the selling floor, but he downplayed the notion.
"The goal is to make them all individual. The goal is not to make them copies," he said, adding that while they could compete on some levels, there would be plenty of nuances and details to differentiate them.
He added that Global Brand Concepts would be positioned to develop brands for retailers around the world. As chairman and chief executive officer of Polo, Lauren will oversee the operation and assemble a separate team of executives that will work at Global Brand Concepts to develop the new exclusive brands.
Lauren wouldn't disclose projections for Global Brand Concepts but indicated the division would fit in with the company's momentum.
"This is a public company and a company that has to perform, so we sharpen up. We try and look at the future and see what we haven't done, what no one else has done and where we can be original," Lauren noted. "That's the premise. The fun for me is the newness."
Despite this push to build non-Ralph brands, the market for Polo extensions has not been saturated. Far from it, said Lauren, "but I am not going to build a brand unless I have a reason."
"I want to take this company to greater heights than I have," he added. "This is my baby. It started with a tie, out of a drawer in the Empire State Building. I was the only one in the company and had to pick up the phone. One year, for Thanksgiving, my wife, my father-in-law and my mother-in-law were sewing on labels in a warehouse downtown. I can't even believe that ever happened. The most important thing for me is building this company and this brand."
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