This year the Calvin Klein brand will generate over $7 billion in retail sales in over 100 countries. Through its over $300 million in advertising spending and over $400 million worth of equivalent editorial, it is one of the most dominant designer brands in the world.
This story first appeared in the November 16, 2011 issue of WWD. Subscribe Today.
“Certainly at Calvin Klein we aspire to the idea of ‘Brand Everywhere,’” said Tom Murry, president of Calvin Klein Inc., which is owned by PVH Corp., directly addressing the theme of this year’s summit. However, even within its biggest accounts, such as Macy’s, Calvin Klein is far from ubiquitous and is just one of many powerful brands vying for consumer attention.
“That’s actually a good thing,” said Murry. “From my perspective, and I imagine from yours as well, there certainly are better measures of success than ubiquity. Innovation, quality, consistency and discipline: these are just as important, if not more important, to a brand’s long-term success.”
While potent branding has been crucial to Calvin Klein’s robust recent growth — that $7 billion figure is up from $2.8 billion in 2003 — product is always the primary driver of sales, emphasized Murry. “Never get arrogant about the strength of your brand,” he explained. “Even with the profound strength of our brand, if we don’t get the product and the execution right, it seldom works.”
Since its acquisition by PVH in 2003, Calvin Klein’s full-priced freestanding store count around the world has grown from 93 to 660 in 2010, with a total of 700 planned by yearend. This year, the brand will add over 470,000 square feet of direct-to-consumer retail selling space, nearly double the 250,000 square feet it added two years ago.
Emerging markets have been key to Calvin Klein’s global expansion. In 2008, South Korea became the brand’s biggest market in Asia, surpassing traditional leader Japan. South Korea, in turn, was displaced by China this year as the biggest market on that continent.
Overall, Brazil has been the fastest ballooning market for Calvin Klein, growing at a compound annual growth rate of 141 percent since 2003, followed by India with a CAGR of 74 percent, China at 61 percent and Mexico at 26 percent.
Within the branding space, Calvin Klein maintains a firm grip on all aspects of advertising and marketing for its broad portfolio of licensed products, in order to ensure consistency around the world. CKI operates a full-scale, in-house public relations agency as well as a dedicated in-house advertising agency, which jointly oversee the Calvin Klein brand image from a unified vantage point.
“At any Calvin Klein event, in any city or country in the world, we nonetheless remain a centralized operation controlled from our headquarters,” pointed out Murry. “The graphics are done by our internal team. The models are reviewed and selected by our fashion office, which will also designate what looks they will wear. Our visual team will assess the venue. Our special events team will oversee the production. If we have celebrity guests, our celebrity services team will be involved. We’ll even dictate what the bartenders and service waiters will wear and the type of trays they carry and glassware they use.”
While some might consider such measures obsessive, this attention to detail has burnished the Calvin Klein image globally and helped create a powerful foundation to grow the licensed businesses, said Murry.
While advertising and marketing are centralized in New York, the company tailors advertising to local markets and varying standards of taste — even within the U.S. “Every time we shoot a campaign, we shoot multiple versions of it in order to handle censorship issues,” said Murry. “We could run one campaign in New York City and another campaign in North Carolina.”
Despite the economic malaise in the U.S. and elsewhere following the 2008 recession, Klein has continued to invest heavily in advertising and marketing, allowing the brand to take market share from more cautious competitors. Murry pointed to a McGraw–Hill Research study of 600 businesses during the recession of 1981-1982 that found sales of advertisers that maintained or increased spending had risen 256 percent within three years over those that cut back on advertising.
While Calvin Klein is known for its iconic, painstakingly art-directed billboards, magazine ads and television commercials, the brand has jumped into the less controlled world of social media. “Social media is a new and unpredictable frontier, but it can still be employed in disciplined and strategic ways consistent with one’s brand image,” said Murry. Calvin Klein live-streams its runway shows and now has 1.7 million Facebook fans.
The brand’s $400 million-plus worth of editorial coverage comes in large part from an aggressive campaign to dress Hollywood A-listers for red-carpet events. “But we don’t need or want everyone to be wearing Calvin Klein,” said Murry, clicking through a slideshow of the brand’s favored ambassadors, including Gwyneth Paltrow, Emma Stone, Naomi Watts, Claire Danes, Diane Kruger and Jennifer Lawrence.
All of these concerted advertising and marketing efforts helped make Calvin Klein the world’s favorite designer brand, at least according to one Nielsen survey in 2008 of over 25,000 Internet users in 48 markets.
“We continue to strive to achieve ‘Brand Everywhere.’ But at the same time, as I mentioned at the outset, this isn’t our goal, per se,” summed up Murry. “‘Brand Everywhere” is a byproduct of our strategy of consistency and quality and the very best in innovation, design and execution. What I’ve described today is not a brand–centric model of success. It’s a consumer–centric model of success.”