BOSTON — Ralph Lauren’s newest goal is to capture the burgeoning college market with a new vertical retail concept called Rugby.
“It’s the new Polo,” said Lauren, giving a tour of the first 2,500-square-foot Rugby store, which opened Saturday at 342 Newbury Street here. Geared to the collegiate set, the Rugby store offers a preppy lifestyle collection at more affordable price points than Lauren’s Blue Label (only available at Ralph Lauren stores) and Black Label and Collection (sold at select department and specialty stores as well as Ralph Lauren stores.) Rugby will be around 40 percent less expensive than Blue Label in some product categories.
Rugby doesn’t plan to have any wholesale distribution and will be sold only at freestanding Rugby stores, of which there is only one at this time. The game plan calls for four to six Rugby units to open in 2005 and, according to sources, a rollout of about 40 stores over the next five years. But, over time, Lauren sees substantial potential to expand Rugby’s product categories and even take the concept global.
Rugby stores are slated to open in March in Chapel Hill, N.C., home of the University of North Carolina, and Charlottesville, Va., home of the University of Virginia. A store will also open in East Hampton, N.Y., in June, presumably to attract college kids on the weekends and before they head back to school.
Rugby represents Polo’s first vertical retail concept to be started from scratch. Polo, which began as a wholesale operation in 1967, opened its first freestanding store in 1971, and now has 56 full-price Ralph Lauren stores, 123 Polo outlet stores and 22 Polo Jeans Co. outlet stores. It acquired the existing retail chain Club Monaco in 1999, which has 66 full-price stores and five outlets in the U.S. and Canada.
Discussing the strategy behind the Rugby concept, Lauren pointed out it’s not like young people were not wearing Polo, and in fact the label has taken on a hipness for teens and young women in light of fashion’s current preppy mood. But Lauren believes those customers are often financially limited in their ability to buy the breadth of the Ralph Lauren and Polo collections. “The young market from what we know buys the knit shirts, but [with Rugby], we’re dressing them head-to-toe in shirts, sport coats, eveningwear. It’s affordable and authentic,” the designer said.
The new label will say Ralph Lauren Rugby. “It’s important to know there’s a connection. If they know Ralph Lauren, they know what the product is and the voice,” said Lauren. Logos were also developed for the Rugby product. Men’s shirts will have a small embroidered logo of a rugby kicker, while the women’s logo is an embroidered mini-rugby shirt. The store also offers customers an opportunity to make their own rugby shirts, which retail for $68, with their choice of colorways and patches, retailing from $8 to $15 per patch.
He said he has been thinking about a younger concept for several years and felt like the name, Rugby, was a natural since it has the same sports sensibility as Polo. He trademarked the Rugby name a few years ago.
Still, Lauren was quick to point out that he doesn’t consider Polo “a mature brand,” a complaint he heard 20 years ago. “It’s stronger than ever with all the newness and new product. You do things when you’re strong, not when you’re weak. Polo is in its prime. Black Label, Collection, Blue Label; I believe all of them are growth areas,” said Lauren.
Aside from price and target customer, a key difference between Rugby and Polo is the fit. Rugby’s corduroy pants, for example, have lower waistlines and a sexier cut, while skirts are shorter and sweaters are tighter and more shrunken. “It looks cooler and hipper. It’s more body fitting, and it has an attitude,” Lauren said.
Denim, which accounts for 10 to 15 percent of the business, includes jeans that retail for $78. Cashmere blend cable sweaters are $78 to $88, corduroy pants are $78 to $88, and tweed, flannel and corduroy separates range from $198 to $298. In comparison, women’s Blue Label denim jeans are $125, and Black Label stretch corduroy pants are $398.
While there are clearly big expectations for Rugby, Lauren balked at the idea of referring to it as the start of a new retail “chain.”
“I do everything slowly,” he said. “I will let it push itself.”
Still, he admitted he wouldn’t be devoting his staff and himself to the project if he didn’t think it was going to be successful. “This is done by us. This is where we are building a brand, as we built Polo. It’s part of our retail business.” Although he acknowledged that Polo was built primarily in department stores, he said things were different in those days. Rugby is part of Polo’s aggressive retail strategy to control its own destiny with its own freestanding stores.
Lauren toured the Boston store with Roger Farah, president and chief operating officer of Polo, Jackwyn Nemerov, executive vice president, and Jerry Lauren, executive vice president of men’s design. He said he chose Boston for the first store “because I think the customer is here.” (He already has two other Ralph Lauren stores in the neighborhood.)
“They’ll tell me what they think. We’re bringing it to where the kids are,” said Lauren, adding that Newbury Street “has a community feeling.”
Home to such retailers as Guess, Niketown, Gap, French Connection, Emporio Armani, Betsey Johnson, Lucky Brand Jeans, Puma and North Face, Newbury Street is a magnet for the college crowd.
“We thought they would understand what we’re doing. It’s a very preppy area. We’re trying to do it in every college town,” said Lauren, who couldn’t resist picking out a few Rugby items for himself, such as gray sweatpants, a couple of rugby shirts and some long, vertical-striped scarves.
Polo had planned to open the store on Monday, but after Lauren and his team viewed it on Friday, they decided to open it right away on Saturday, taking advantage of both Parent’s Weekend on several college campuses and the Boston Red Sox-St. Louis Cardinals World Series game.
“The launch was a hit, and sales more than tripled expectations,” said a Polo spokeswoman. Bestsellers were the $68 rugby shirts; $78 cable cashmere-blend sweaters ($88 for men), and novelty pants and skirts with skulls and crossbones from $68 to $78. In the first two days, women’s apparel sales outperformed men’s wear.
Although he agreed the Rugby line has preppy roots, he said he wasn’t taking advantage of the strong preppy trend in the market right now. “This is not about fashion. I wish preppy was totally out. This is not about the moment. It’s about taste and style, and being connected to the consumer,” he said.
The company, whose products generate $10 billion at retail worldwide, seems to be bucking the financial woes of many competitors. In the first quarter ended July 3, Polo reported a 165.1 percent leap in income to $13.4 million, compared with $5.1 million a year ago, while revenues increased 24.1 percent to $592.8 million from $477.7 million.
The firm hopes to parlay the enormous brand equity it has built with the Polo/Ralph Lauren brand into the younger Rugby concept. Lauren said the targeted Rugby customers, who grew up on traditional Polo, will move into Rugby while in their late teens to mid-20s and then, when they’re older, return to the Polo brand and eventually, Purple Label.
Unquestionably, Lauren is entering the college market at a time when retailers such as Abercrombie & Fitch, PacSun, Urban Outfitters and American Eagle are battling it out for market share. American Eagle, which has shown the strongest momentum in sales this year among its competitors, appears to be the chain to beat. It posted a 23.3 percent surge in September same-store sales, while PacSun showed a 9.8 percent gain, Abercrombie & Fitch had a 2 percent increase, Aeropostale, had a 1.9 percent rise, and Hot Topic was up 1.1 percent. J. Crew, which is trying to turn around its business, is also aimed at the college-age market and in the second quarter had a 12 percent jump in same-store sales. Urban Outfitters had a 26 percent gain in same-store sales in its latest quarter.
Lauren declined to divulge who he believes Rugby is going up against, but said, “We’re competing with everybody.” But, he quickly added, “I don’t think this looks like any of the competition’s lines. It looks like Ralph Lauren. My goal is this is a Polo/Ralph Lauren product. It’s not about a formula or being locked in. It has a point of view, and it’s constantly changing. There’s a heritage and a sensibility.”
Marshal Cohen, chief industry analyst of The NPD Group, said, “The teenage market is ailing big time. The college-age market is not going through the same growth as a year ago, but it’s doing a lot better than the teenage market. Is there room for another player, no, but is there room for someone who does it well? Yes.”
Polo president Farah believes Rugby’s advantage, apart from the design, is its price and quality. “It’s appropriately priced for this customer. The quality and workmanship is much better than what this customer has been wearing to date,” he said.
Some might argue that Lauren already has a college-driven line with its Polo Jeans label, but the designer believes that line was a vehicle to develop a denim-based collection for department stores, and furthermore, it’s a licensed business (to Jones Apparel). The license expires in 2010. Rugby, he believes, will reflect his own sensibility, from start to finish.
“Everything I’ve done under one roof has been successful,” said Lauren. “This [Rugby] is not a license. It’s totally vertical. It’s an outgrowth of everything that I’ve done with a point of view.”
Most of the line — which includes corduroy pants, rugby shirts, crew neck sweaters, tweed jackets, mini-skirts, toggle coats, puffy vests and dresses — is manufactured in the Far East. The Rugby store also carries accessories such as striped ribbon belts, watches, cowboy boots and underwear. Lauren said he is sourcing some of the products through Polo’s licensing partners, but there are no licensing agreements for Rugby.
Awash in bright colors and jam-packed with merchandise, the Rugby store is located toward the end of Newbury Street, across the street from Diesel and Puma and near Urban Outfitters. Sandwiched between a florist shop and bookstore, the shop, which has 4,000 gross square feet and 2,500 square feet of selling space, has lively window displays featuring colorful shirts, blazers, sweaters, lacrosse sticks and football memorabilia. Unlike Polo stores, which have a more sedate, sophisticated feel, Rugby’s ambience is fun and frenetic, with hip music pulsating in the background. Men’s wear is featured in the front rooms, while women’s apparel is further back. A billiard table is smack in the center of the store, covered with piles of rugby shirts, sweaters and accessories. Rugby shirts hang from rafters, and the walls and shelves are rigged with rugby balls, boxing gloves, oars, and footballs. Coffee-table books on Bob Dylan, rock ’n’ roll, and movies from the Seventies are displayed on tables. A large football scoreboard hangs over the cash register area.
The merchandise offerings are evenly split between women’s and men’s.
Rugby’s small space actually appeals to Lauren, though he believes future stores will be bigger, with more emphasis on women’s wear. “I like shopping in a crowded store,” said Lauren. “It’s a friendly, fun atmosphere. It’s fun to find things.”
Taking over a former Skechers store, the Rugby shop’s exterior has a quaint, historical downtown Boston feel, with a solid copper storefront. The shop retained its Southern yellow pine soft wood floors, and covered part of them with Oriental rugs. There are also brown oak stained shelving and a tin ceiling that dates back to the Twenties.
According to industry sources, the Boston store is expected to generate between $500 and $550 per square foot a year, which based on gross square footage, would translate to between $2 million and $2.2 million in annual sales.
Farah, as well, sees a bright future for the Rugby concept, which he said is part of the company’s retail expansion plan. “It’s the outcome of a lot of hard work for a lot of people. It’s Ralph’s dream in 3-D. I think there is real opportunity. It’s part of the metamorphosis of the company. It’s a vertical retail concept.”
He anticipates that word-of-mouth will draw in customers, as well as several marketing initiatives on college campuses. Teams have been organized to blitz college campuses and create buzz about the store opening. Additional grassroots efforts include advertising in campus newspapers, free novelty postcards distributed in local restaurants and clubs, and regional targeted e-mail through polo.com. In July, polo.com will start retailing Rugby on its site.
In addition, a Harvard University Internship/Apprentice program will be offered this fall. Three students, preferably college juniors, will be selected to participate in the program. They will receive a brand orientation and introduction to Polo in New York and will work at the Rugby store during the spring semester in marketing and store operations and at Polo’s New York headquarters during the summer.
Lauren envisions launching a children’s Rugby line down the road and also believes Rugby stores would be a natural in Europe.
Reflecting on Rugby’s worldwide potential and his own ability to build another blockbuster brand, Lauren said he feels like Thomas Crown in the movie “The Thomas Crown Affair,” who said he had one more big bank robbery left in him.
“I’m going to do it again,” Lauren vowed.