Meet Your New Barista: Ralph Lauren

One of the more puzzling things in the recent Ralph Lauren Corporation announcement of the closing of its flagship Polo store in Manhattan on Fifth Avenue and 55th Street was its plans to expand its Ralph’s Coffee franchise. Clearly, it’s an effort to insert new customer experiences into the company’s stores, as it has had some success in branded restaurant/dining operations.

But is a coffee bar what Ralph Lauren needs to create relevance to the next generation of shoppers?  Shouldn’t Ralph Lauren be serving up better reasons to buy $350 authentic Ralph Lauren polo shirts, instead of $3 cups of coffee?  Of course, there’s nothing wrong with adding a coffee bar into its stores, but it’s hardly revolutionary or the kind of bold initiative that once made the Ralph Lauren brand great.

The question hearkens back to a recent discussion I had with Ken Nisch, chairman of JGA, an architectural firm that designs retail spaces.  “It seems like everyone is following the same kit of parts in the name of experiences; things like every store has a coffee bar or a workshop on the sales floor,” Ken says.  “The tools that retailers are leveling experiences against are falling into the same bland ubiquity that has resulted in the sad state of retail today.  We have become too focused on information, data, CRM and one-off ideas, like the coffee bar, as a substitute for the personal and imaginative.”

More imagination, not warmed-up copy-cat ideas, is what the Ralph Lauren company needs today.  “It’s time for the Imagination Economy,” Ken proposes and I agree.  Imagination retail transports the shopper, taking them to new places and delivering new experiences that excite the imagination and engage the emotions. A Ralph’s Coffee bar isn’t one of them.

It is the kind of imagination retail that Ralph Lauren was master of, back in the day, and aimed at his original customers, the Baby Boomers. “Ralph’s genius is creating beautiful products that tell a story,” said Jeffrey Morgan, then head of marketing in 2005, when I profiled the company in my book, Let Them Eat Cake. The story, or more appropriately stories, Jeffrey was talking about were the “Worlds of Ralph Lauren that depict romantic and luxurious worlds that consumers can dream of and aspire to.”

Back then, the company had a clear fix on the dreams and aspirations of its customers.  It understood the various Worlds of Ralph Lauren that its customers wanted to live in.   But since then, those worlds have gotten bigger, broader, more diverse, and populated with a new generation of people that clearly aren’t dreaming the same dreams as Ralph Lauren.  Rather than evolve, the Ralph Lauren brands have devolved into a cut-rate world, short on luxury aspirations and long on discounts and filled with way too much product and too many poorly-differentiated brands.

The company’s much publicized “Way Forward Plan” obliquely references these issues, but doesn’t tackle the problem head on.  Specifically, they need to explain why a customer should trade up to a $350 polo shirt in its Purple line, when a Polo Ralph Lauren shirt is available for $85 at its namesake boutiques and on its website, and widely discounted by upwards of 50% elsewhere.

Then the company needs to talk about its 272 Factory Stores.  Though the company doesn’t break out sales in its Factory Store segment, my suspicion is they are an able cash generator.  This despite the fact that company executives are quoted by the Chicago Tribune saying “30% of items in its high-end line account for 70% of sales.”  But until things change, those Factory Stores are essential to clear out the 70% of inventory that isn’t getting any love.

Ken Nisch likens this imbalance of its sales-to-product ratio to an iceberg, where the bulk of its weight is the invisible 70% under water that threatens to pull the visible 30% under the water too.  “That is what we see happening with most of the luxury department stores and luxury brands — Way too many outlet stores,” he says.

In an effort to learn more, I reached out to some of my connections inside the corporate world of Ralph Lauren.  What they told me is that over the years Ralph has become increasingly isolated from his customers, the original source of his creative genius.  That is attested to by the bloated nine level management structure that has grown over the years, though it reputedly will be axed to six under the “Way Forward Plan.”

But even then, Ralph’s six degrees of separation from the front lines may be too much.  Word has it that Ralph has surrounded himself with yes-men and women, people who tell him only what he wants to hear, not what he needs to know, including news like this from then-president and CEO Stefan Larsson on the company’s dependence on discounting and creating too much overlapping inventory: “Continuing with this vicious cycle is going to hurt the brand.”  Larsson may have told Ralph too many such inconvenient truths, resulting in the “creative differences” that caused his abrupt departure.

Nonetheless, the company continues to make high-level executive appointments to implement the “Way Forward Plan,”and says it will hire a new CEO to fill the spot vacated by Larsson.  Let’s just hope that this new team can effectively deliver the naked truth about the company that Ralph needs to hear.  Otherwise, Ralph Lauren will remain the emperor who has no clothes, while the rest of us have way too many.

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