Ralph Lauren Is The Latest Brand To Jump On The See-Now, Buy-Now Bandwagon

-4.53%
Downside
183
Market
175
Trefis
RL: Ralph Lauren logo
RL
Ralph Lauren

Ralph Lauren‘s (NYSE:RL) CEO Stefan Larsson, in June, revealed the company’s turnaround plan, called ‘The Way Forward,” which is designed to revitalize the core brand, and to be more in tune with the consumer. The revenue growth for the company has fallen from a healthy 7% in FY 2014, to 2.2% in FY 2015, and further to a negative 2.8% in FY 2016, which ended in March. The main reasons for the company’s poor performance in recent times has been a result of a decline in department store sales, the rise of fast fashion retailers, and the company’s own out of date supply chain model. The company’s focus itself was diluted with numerous brands and a multitude of initiatives. This was recognized by Larsson, who listed the steps being undertaken by the company to overcome such problems, which included closing its underperforming stores, rightsizing the organization, streamlining the supply chain, and focusing on its three core brands.

See Our Complete Analysis For Ralph Lauren Here

The key to the turnaround is fixing the supply chain, and improving the lead time from 15 months to 9, besides the introduction of an eight week test pipeline. This will enable the company to plan the inventory based on demand. Excess inventory problems have driven up discounting and transfers to outlet and off-price stores, which dilutes the brand value. This has also resulted in an inventory growth of 26% in the last three years, while the growth in sales in this period has only been 7%. Focusing on inventory will also help to boost margins in the future.

RL- Supply Chain

The company took its first steps towards this strategy at the New York Fashion Week, which included presenting its first see-now, buy-now collection. The new collection was immediately available at its flagship store on Madison Avenue, and at global Ralph Lauren flagships in Paris, London, Hong Kong, Tokyo, and Beverly Hills, as well as other Lauren shops, in addition to Bergdorf Goodman and Saks Fifth Avenue, according to WWD. Club Monaco, owned by Ralph Lauren, also unveiled its shoppable collection, reflecting the company’s decision to implement the changes outlined in its turnaround strategy. In Ralph Lauren’s interview to be published in Vogue’s October issue, he states “Showing clothes, then delivering them six months later… it’s over.” The rise of the internet and social media has forced luxury retail companies to change their strategy. Moreover, in order to appeal to the millennial shoppers, the show was even streamed live on Facebook, as well as global social media platforms, including Youku, Line, and Kakao, to attract Asian customers.

Ralph Lauren isn’t the first brand to employ the see-now, buy-now strategy; September isn’t even the first season when designers have experimented with this. Brands such as Rebecca Minkoff, Tom Ford, Tommy Hilfiger, Michael Kors, Burberry, and Topshop, have all tried it, to varying degrees of success. The main reason for this model is to give fast fashion brands a run for their money, which, given their quick turnaround, are able to copy the trends and make the products available to customers before the designers’ collections are obtainable. When a collection is available for purchase six months after a show, the brands are unable to convert the buzz generated at the time of the show into sales. This strategy also helps to counter that, and enables them to be in step with the way consumers now want to shop. However, this also involves changing the internal processes to accommodate the new format. For example, Burberry shifted its design, development, and production timeline by several months, from May of this year to January, to cater to its September ready-to-buy show. While the success of this format for Ralph Lauren remains to be seen, it is definitely a step in the right direction.

Have more questions on Ralph Lauren? See the links below:

Relevant Articles
  1. What To Expect From Ralph Lauren’s Fiscal Q2 After Stock Up 9% This Year?
  2. What’s Next For Ralph Lauren Stock?
  3. Will Ralph Lauren Stock Trade Lower Post Fiscal Q3?
  4. Ralph Lauren Q2 Preview: What Are We Watching?
  5. Ralph Lauren Stock To Trade Lower After FY Q4 Results?
  6. Ralph Lauren Stock Slumped 14% In Last Ten Days, What’s Next?

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Ralph Lauren.
 
View Interactive Institutional Research (Powered by Trefis):
Global Large CapU.S. Mid & Small CapEuropean Large & Mid Cap
More Trefis Research