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1 Cover Story 14/12/10 16:45 Page Marketing Week 16 December 2010 marketingweek.co.uk

Cover Story 14/12/10 16:45 Page 17 Gut instinct fires real passion for fashion Ralph Lauren s son David is in charge of the iconic American fashion house s global marketing.

2 Cover Story 14/12/10 16:45 Page 17 Gut instinct fires real passion for fashion Ralph Lauren s son David is in charge of the iconic American fashion house s global marketing. He talks to Lucy Handley about using his intuition and technological innovation to expand the $5bn brand David Lauren says he s hardly slept in the past two weeks. He s been preparing for an ambitious experiential event to promote the launch of Ralph Lauren s transactional website in the UK, which saw a 3D film of catwalk models, ponies and the brand s $17,000 ( 10,100) Ricky handbag projected onto Ralph Lauren s flagship London store in New Bond Street, complete with soundtrack and perfume sprayed into the air and culminating in an image of his father Ralph waving to the crowd from a top-floor window. And the PR exercise brought with it some big spenders. David says that two $50,000 ( 32,000) watches were sold on the night. The same film was projected on to the Madison Avenue store in New York to celebrate ten years of digital innovation so David stayed up until the small hours to make sure everything went smoothly over there. But in spite of the lack of sleep, the jetlag from his trip to London from the States and the pressure of the night before, he s the picture of calm, speaking in a softly accented voice. He sits in the plush surroundings of the New Bond Street store, a corner building opposite jeweller Cartier, from where the film was projected. This is a world of red carpets, chandeliers, a roaring fire and subtle Christmas decorations. He is surrounded by the Purple Label collection for men, the most expensive of Ralph Lauren s 20 sub-brands. An evening suit jacket here might cost 3,500 and a cashmere jumper with a snowflake design sells for just over 1,000 on the UK website. Fashion model fiancee The 39-year-old middle child of superstar designer Ralph has grown up in the highest echelons of American society. Last weekend he got engaged to long-term girlfriend 26-year-old fashion model and designer Lauren Bush, the niece of former president George W Bush. But while his brother and sister have chosen other creative paths outside of fashion Andrew is an actor and producer and Dylan runs her own candy store David has established himself in the family business. He has been working for his father s empire Polo Ralph Lauren, to give the company its full name for ten years and is currently senior vice-president of advertising, marketing and corporate communications, looking after the brand globally. The role is not at board level, but he reports to his father, who is chairman and chief executive, and Roger Farah, the company s president and chief operating officer. David has been credited with driving the business s online growth, having pushed the brand to sell via mobile in 2008 and use QR marketingweek.co.uk 16 December 2010 Marketing Week 17

Cover Story 14/12/10 16:45 Page 18 CV David Lauren November 2010-present Senior vice-president of advertising, marketing and corporate communications for Polo Ralph Lauren.

3 Cover Story 14/12/10 16:45 Page 18 CV David Lauren November 2010-present Senior vice-president of advertising, marketing and corporate communications for Polo Ralph Lauren. Remit includes global campaigns, strategic marketing partnerships and web development. Also president of the charitable Polo Ralph Lauren foundation Chief creative and marketing officer for Ralph Lauren Media, a joint venture between Polo Ralph Lauren and NBC, which is now wholly owned by Polo Ralph Lauren Editor-in-chief and president of Swing, a magazine for Generation X, since sold to Hachette Filipacchi. codes in its advertising a year later. But he does not come from a traditional marketing background, having run his own magazine for budding entrepreneurs Swing for several years after university. David says that he partly relies on gut instinct and an entrepreneurial spirit to drive marketing strategy for the fashion business. I grew up in the fashion industry. I got my training just by being around my father and I don t think there is a better person to learn from. Ralph himself used his instinct when he started the business in 1967 by launching a range of ties under the name Polo. Ralph has said: I have always had a clear vision. I wanted to develop quality products and create a whole world around that. It means taking risks, going with what you feel, but never losing sight of your vision and conviction. Family trait This instinctive nature is a family trait, says David. Ralph Lauren did not become a designer by going to design school. He used his gut and he has created a culture where people are like him; technical skills are important but are not the rule. David is an embodiment of this, having an instinct for what people will respond to online. But he admits: I don t know how to work the internet very well. I m very bad on a computer, yet I ve thought about what I would like as a customer and what I think our customers would like. If you think like a customer you can work with technical experts to come up with solutions. To this end, he doesn t run focus groups to gain consumer insight. This is a company where your natural instinct and gut are very important. We don t use traditional ad agencies and focus groups to do anything. We have a very strong sense of what our brand is, he says. That brand embodies American elegance but also has a classic British feel, rather like the Rugby brand, which will open in London s Covent Garden in autumn next year. It is similar in its upper-middle-class university look to British label Jack Wills and was launched by Polo Ralph Lauren six years ago. The London shop will be the first in Europe. We started to recognise that maybe our products seem too expensive or too inaccessible, we need to target a younger customer with a brand like Rugby, David says. As part of this initiative, the Rugby brand has been used to test mobile technology. Customers can download an app that allows them to customise their own polo shirts by choosing a colour, logo and adding their name or initials. David has often expressed his desire to use technology to make things happen. Having been inspired by the futuristic film Minority Report where Tom Cruise s character walks through a shopping mall and is presented with a variety of screens offering products they sense he will like, David introduced interactive shop windows in 2006, where customers could tap a credit card onto the glass, buy products and have them delivered, even if the store was shut. He also opened a virtual store at the US Open tennis championships, where there was no product on show, just shopping kiosks with computers in them, and references film when he talks about the 4D projection (the fourth dimension being fragrance) onto the London and New York flagship stores. This is a company where your natural instinct and gut are very important... We have a very strong sense of what our brand is Every year brings some new excitement, some new energy. Six months ago I could never have told you that we would make the first ever 4D experience. I would imagine that would come from Steven Spielberg or Walt Disney. I would never assume that would come from Ralph Lauren. But more than just an experimental nature has been required to grow the business. The latest annual figures were released in June, for the year to the end of March, with turnover at $4,979m ( 3,199m) and profits of $689m ( 436m). This is up on the previous year particularly profit, which rose 17% and there are ambitious growth plans, especially in emerging markets, David says. Our effort is to grow our business very significantly. We have to look at other brands that have been in the market, and be impressed by what they have done. 18 Marketing Week 16 December 2010 marketingweek.co.uk

Cover Story 14/12/10 16:45 Page 19 Q&A Marketing Week (MW): Do you want to run the business, taking over from your father? David Lauren (DL): Right now I m just in the learning phase.

MW: You founded the magazine Swing in your 20s, for ambitious people to read about people they might aspire to be. Who do you look up to?

People who can build cultures like that are very inspiring. Walt Disney has done that, Barack Obama has created a culture that s a movement and it s very rare to see that kind of energy.

4 Cover Story 14/12/10 16:45 Page 19 Q&A Marketing Week (MW): Do you want to run the business, taking over from your father? David Lauren (DL): Right now I m just in the learning phase. I m trying to learn every part of the business and to learn my area, so that I can be a valuable part of it. MW: You founded the magazine Swing in your 20s, for ambitious people to read about people they might aspire to be. Who do you look up to? DL: My father is a great role model as he is the leader of our industry. He has built a company where people are enthusiastic about the concepts. He s created a family experience. People who can build cultures like that are very inspiring. Walt Disney has done that, Barack Obama has created a culture that s a movement and it s very rare to see that kind of energy. MW: Your father has said that he worried about disappointing his father when he started his business in What is it like working with your father? DL: I worry about what I do and every day I try to do something that is smart and interesting. There is always pressure knowing that your boss is your father, so it is double the stress. But I think I have been successful in inspiring a team of people and bringing in a new sensibility for the company, and helping maintain a brand identity that is so well established. MW: Your father has also said there is a sense that in America the fashion houses are marketers, and in Europe they are artists. What do you think? DL: He was making a point that there is a misperception. Our goal is to make sure people look at America as a design centre. In the past even Americans have looked to Europe. But that is changing because we are so much larger than many of our European counterparts. MW: How do you work out what your customers want? DL: We know our customers so well, there is such brand loyalty and interest in this brand. The products are interesting, and tell stories. Our job as marketers is to tell stories. While other people are looking at spreadsheets and worrying about focus groups, we have built a company. This is an industry where you have to make your own trends and not follow them. The innovation that comes [from us] comes from a keen understanding of what a brand is and what our customers respond to. MW: Polo Ralph Lauren has a five-year contract until 2015 to provide the uniforms for the Wimbledon tennis tournament. Why do that? DL: We started by outfitting the US Open and were able to reinvent the way fashion was integrated into sports. Wimbledon wanted to express its sensibility in a way that was very much old world 1940s English. It never had uniforms that were suits before that. We made Wimbledon the way you thought it used to exist. Paul McCartney walked by our shop there and said he was looking at the clothes and thought they looked so English that they must be Ralph Lauren, and it was very flattering. MW: The American TV series Friends featured central character Rachel (Jennifer Aniston) working for Ralph Lauren. What s your view on product placement? DL: We really don t do it. They wrote that into the script and asked us if we were OK with it and we were. Most of the products that are put into films are chosen by the directors. It s wonderful to get a call from Tom Cruise s office saying that he wants to wear RRL jeans or from Penelope Cruz to say she wants to wear a dress she saw in the window in a movie. Those are wonderful moments but they happen organically. marketer2marketer Mike Soutar Chief executive at Shortlist Media asks: How do you forecast the balance of Ralph Lauren s marketing spend will change both off- and online in the next few years? David Lauren (DL): I look at what I think is right for our brand, what magazines I think are interesting and how often I want to see our ads in those magazines. I do the same with newspapers and television, and I surround myself with people who have a good instinct for helping us select the right media. If we love an ad we might run it in more places. We have to be nimble to keep up with the times and not lock ourselves into anything, so if we had planned to run more print ads one year, but then we think of an idea like an online children s story book, for example, we d change things around. I think that we were very cost conscious this year and if spend came down in one area then it might have gone up online. Paul Dickinson Sales and marketing director at Virgin Atlantic asks: With so many luxury brands in the fashion world, how do you engender loyalty? DL: We create loyalty by creating great products. No level of marketing and buzz can fool a good customer. A good customer understands a good product and a good environment and service. That said, we try to create excitement by initiatives that allow them to get closer to the brand. James Tarbuck Global brand director at Toni & Guy asks: How do you ensure brand continuity and management when using licensees? DL: The idea of licensing is to license your product when it is appropriate, when you have a partner that is able to do something you re not able to in house. [In Asia-Pacific] we felt that we could do a better job ourselves and that has paid off amazingly. But it is sometimes best to work with a partner who knows the market for that product better than we do. The aim is to sell evenly in the US, Europe and Asia. But 70% of turnover currently comes from the States, with 21% in Europe and 9% in Asia, and David admits there is a while to go on this objective. LVMH, which owns the Louis Vuitton, Marc Jacobs and Thomas Pink brands among others, has nearly 500 shops in Asia-Pacific; Ralph Lauren has just 23 (see chart, page 20). Part of this growth drive has included paying $37m ( 24m) last year to bring Polo Ralph Lauren franchised stores in Asia-Pacific back under its control. Burberry did a similar thing this year, paying 70m for 50 stores in the region. Polo Ralph Lauren currently has more than 600 of its own shops, factory outlets and concessions, while its products are sold by an additional 9,000 outlets throughout the world. Selling more product direct to consumer is a long-term goal and the company made its UK TIME LINE Polo Ralph Lauren 1939 Ralph Lifshitz born in the Bronx, New York. Since changed his surname to Lauren Ralph Lauren starts a tie line under the Polo label Polo menswear launches Tailored women s shirts launches, including Polo player logo Fragrance launches. Westernwear launches, starring Ralph in its ad campaign New Bond Street store opens the first outside the US. First multipage magazine advertising Polo Sport and RRL casual menswear launch Polo Ralph Lauren becomes publicly traded company on the NYSE Ralph Lauren launches the Pink Pony campaign, becoming the symbol of the company s cancer initiative Ralph Lauren launches first store in Italy The Rugby brand launches Ralph Lauren becomes official outfitter of Wimbledon tennis championships The brand becomes the official outfitter of US Olympic team. Mobile commerce launches and QR codes appear on ads UK website becomes transactional. Share price $ ( 70.62) at time of going to press. The Lauren family continues to control the business and has 84% of voting power of common stock. marketingweek.co.uk 16 December 2010 Marketing Week 19

Cover Story 14/12/10 16:46 Page 20 website transactional last month, selling via a distribution centre in Glasgow. David insists this is not to the detriment of its wholesalers.

5 Cover Story 14/12/10 16:46 Page 20 website transactional last month, selling via a distribution centre in Glasgow. David insists this is not to the detriment of its wholesalers. When we opened our online site [in the US] many of the people in our own retail stores thought that if people shopped online they wouldn t get commission in the stores. But our best customer is our cross-channel customer. The internet has helped us significantly grow our business, online and offline, he says. Merchantainment David has had a central role in the development of the websites, which he says are about merchantainment, selling a lifestyle via editorial pieces and video next to clothes. Features have included a live tennis clinic with Boris Becker and Venus Williams and online children s books telling stories from which garments can be bought. It previously ran the editorial elements including Ralph Lauren TV with US network NBC, but in 2008 it bought it out completely, allowing for more control. Tracking behaviour online and combining this with knowing the areas in which people live has helped the business cross-sell its brands, adds David. We can see that if a person buys Blue Label, they might have a propensity for Black Label. We constantly monitor the database and use it to help not just our business but also our customers. He says that as the business has a variety of brands at various price points, a wide spectrum of people are attracted to the website. The price of our products do range, but they do tend to be more luxury products. Because of that, we are finding that other companies are interested in finding out who our customer is and how they can reach them, David says. Those other companies include Mercedes-Benz, which advertises on the website. Having a total of 20 brands, including sportswear label RLX and the preppy Blue Label for women, means the business can encourage people to shop for different needs. But David brushes off the suggestion that there are too many brands. The brand is clear, the mission is focused, the advertising is second to none. We find the best media positions and create images that are romantic, stylish and timeless. Every brand has different identities and we reinvent ourselves all the time in new ways. It all falls under the Ralph Lauren sensibility and umbrella, but it is limitless, he claims. David, like the aspirational lifestyle his brand projects, is also a dreamer. The company has grown quickly and into markets we could barely imagine ten years ago. Every year we take on these new projects and countries and challenges and that s bigger than we can imagine. While other brands are looking at spreadsheets and worrying about focus groups, we have built a company THE FIGURES Luxury brands and groups Turnover (m) Burberry 1, Pre-tax profit (m) Christian Dior (owns 42% of LVMH s shares) 17,745 ( 15,027) 1,902 ( 1,595) Estée Lauder (brands include Clinique, Bobbi Brown and Aveda) $7,796 ( 4,937) $688 ( 436) Giorgio Armani 2,228 ( 1,878) 145 ( 122) Hermès 1,914 ( 1,614) 450 ( 379) L Oréal luxury division (brands include Lancôme, Shu Uemura and Cacharel) 4,080 ( 3,440) 617 ( 517)* LVMH (brands include Louis Vuitton, Moët Hennessy, Marc Jacobs, Thomas Pink) 17,053 ( 14,377) 1,973 ( 1,655) Richemont (brands include Cartier, Montblanc and Net-A-Porter) 5,179 ( 4,366) 697 ( 588) Phillips-Van Heusen (brands include Tommy Hilfiger and Calvin Klein) $2,399 ( 1,520) 212 ( 178) Polo Ralph Lauren $4,979 ( 3,154) $689 ( 436) Prada 1,561 ( 1,316) Not reported PPR (brands include Gucci, YSL and Alexander McQueen) 16,525 ( 13,932) 455 ( 384) Valentino 2,075 ( 1,749) Not reported * Operating profit. Pre-tax profit not available. Sources: Annual reports and Mintel luxury goods retailing report detailing the most recent reported annual results 20 Marketing Week 16 December 2010 marketingweek.co.uk

LUXURY MILLENNIAL SHOPPERS. Trends & Insights to Reach Luxury Millennial Consumers

LUXURY MILLENNIAL SHOPPERS. Trends & Insights to Reach Luxury Millennial Consumers LUXURY MILLENNIAL SHOPPERS Trends & Insights to Reach Luxury Millennial Consumers As consumer behaviors shift towards a more digital, social and experiential economy, so does the luxury industry. Both