When the Ralph Lauren Corporation recently unveiled a turnaround plan, ford's success has become a staple of business school case studies. And much of the current Ralph Lauren strategy seems inspired by the Ford playbook - enhancing a venerable but financially challenged brand by slashing costs, reducing the work force, closing stores and improving quality.
Ralph Lauren's preppy chic clothes have always been designed for people with lean physiques and fat wallets. Now the financially-challenged global apparel and lifestyle brand is trying to follow suit and get leaner itself-while also plumping up its bank account. The company's lower-end Polo and Lauren labels have been losing business to fast fashion retailers H&M and Zara.
That cheap Ralph Lauren, the company, would need a turnaround surely comes as a surprise to many, given its long cultivation of an image of effortless affluence and confident style. Ralph Lauren's still-new chief executive, Stefan Larsson, told me this week that he didn't consciously name his plan after Ford's, "Although I'm a fan of Alan Mulally," Ford's former chief executive, he said. But he seems to have reached a similar place on his own.
TIt will also scale back its presence in department stores to reclaim the high-end territory for the flagship Ralph Lauren outlet brand, which shows at New York Fashion Week but can also be found in Sears. The man behind the turnaround plan is the 41-year-old former Old Navy president who took over from Lauren himself late last year and is using the experience he picked up at not only Gap Inc. but also H&M to shake things up to try.
Ralph Lauren himself, a still-youthful 76, remains the company's chief creative officer and executive chairman. He built the company by evoking an idyllic past from which hard times were banished, taking inspiration from Ivy League college students, prewar British aristocrats and frontier cowboys. Mr. Lauren, in essence, made an upper-class aura accessible to everyone, from Hollywood starlets and hip-hop artists to countless people of humble origins and means. Few, if any designers have had so much impact on American style and taste.
It may also take a hard look at its portfolio of brands and brand architecture, which is confusing: Polo Ralph Lauren, Ralph Lauren Purple Label, UK Ralph Lauren collection outlet, Black Label, Lauren by Ralph Lauren, RRL, RLX, cheap UK Ralph Lauren Childrenswear, Denim & Supply Ralph Lauren, American Living, Chaps and Club Monaco.
Ralph Lauren is starting its turnaround effort from a much stronger position than Ford. But Ralph Lauren's profit was over $1 billion just two years ago. The company has been buffeted by forces beyond its control, including declining department store sales, the rise of fast-fashion chains, the shift to online retailing, and greater price consciousness among consumers. In trying to adapt while still pursuing growth, Ralph Lauren seems to have lost its focus.