Ralph Lauren Done Right
March 31, 2011,
By Allison Zisko
Ralph Lauren is on a roll.
Product introductions at the New York Tabletop and at the High Point Market shows this month, coupled with new licensing partnerships cemented over the past several months, underscore the evolution of Ralph Lauren Home under the direction of Frank Guzzetta, the retired retail executive who was lured back into the business to create more excitement in the brand at retail.
"It's a phenomenal brand, a phenomenal home brand," Guzzetta during an interview with HFN, in which he discussed the changes he has implemented since taking the helm as president of the home division three years ago. "It kind of lost its way for a while, got a bit off course. It grew in a lot of different ways, in parts and pieces, and didn't have a focus."
Guzzetta, who honed his home furnishings experience for many years at Hecht's and later as president and chief executive officer of Marshall Field's (which then became Macy's North), began a careful assessment of the Ralph Lauren and Lauren Ralph Lauren brands as soon as he joined the company.
Ralph Lauren is "the collection brand," the luxury part of the business. Its cutting-edge design sensibility travels from the runway, through its apparel business, and into home.
Lauren Ralph Lauren is a premium brand that reaches a larger audience, primarily through top-tier department stores. Previously centered around textiles, the Lauren Ralph Lauren brand is now in almost every category of home furnishings.
Guzzetta was frank in his appraisal of the brands. "There was a large business in furniture in Ralph Lauren, but it was missing in Lauren Ralph Lauren," he said. It needed a collection at the price points that cater to a younger consumer with a sophisticated design sensibility. The same held true for lighting and floor covering. Lauren bedding, meanwhile, needed a broader range of products and price points. Tabletop, Guzzetta said, was "not one of our strengths, but we always felt it should be, based on our aesthetic." Core giftware needed to be an essential part of that business, he added.
Distribution was also troubling. Most aspects of the Ralph Lauren collection were only sold in Ralph Lauren stores. Distribution of high-end furniture had "dried up," according to Guzzetta, as manufacturers began to trade down or go out of business. Guzzetta believed the best way to grow the business was to sell to the trade and design community while partnering with appropriate wholesale distributors.
This led to the birth of a two-pronged strategy: intensify its own-store business and establish a wholesale network to represent the brand appropriately. It also developed a tiered pricing strategy in every category to make a distinction between the Ralph Lauren and the Lauren Ralph Lauren brands, the same pricing strategy that is used in apparel.
The company carefully selected its license partners. "The issue is finding partners who understand the brand and know how to present it so the cache isn't lost," Guzzetta said.
Licensing partners now include E.J. Victor (furniture), Folia (fabric, wall covering, trimming), Safavieh (area rugs), Sferra (bedding, bath, table linens), and Visual Comfort (lighting) for the Ralph Lauren brand, and Fitz & Floyd (tabletop, giftware), Folia, Safavieh, Schnadig (furniture) and Visual Comfort for the Lauren Ralph Lauren brand. Beginning this month, Ralph Lauren assumes all bedding and bath operations, a license previously held by WestPoint Home.
Addressing the shift to in-house product development in textiles, Guzzetta said the company has huge sourcing capability worldwide, and considering the scale and size of that business, "it is worth bringing it in-house. We can deliver a lot more value to the customer."
Improvements can already be seen. "Every category is either beating original launch plan expectations, and anniversary businesses are experiencing double-digit increases," Guzzetta said.
In tabletop, Fitz & Floyd has seized on opportunities in serveware and all the components that drive a core giftware business, such as bowls, trays and frames. "That business is growing extremely fast," Guzzetta said. Furniture with Schnadig is new and "off to a positive start." Safavieh launched rugs in January and is beating expectations and getting good placements. Ralph Lauren lighting is an anniversary business; Visual Comfort launches the Lauren Ralph Lauren collection this month.
The overall emphasis for both brands in home is lifestyle. "Ralph doesn't see anything as an item, he sees it as an idea," Guzzetta said. "How you translate those ideas into retail is what it's all about ... Our ability to pull things together and tell a story is what makes it work. That's what I'm trying to bring back to retail."
Guzzetta said he was pleased to see a "turnaround" of the two brands at department stores who have leveraged the brand. Sales performance has been "outstanding" at Macy's, he said. Bon Ton has brought Ralph Lauren back into its stores, and Belk's is intensifying its business, according to Guzzetta.
Its most notable success has been at Lord & Taylor, which granted 45 percent of the floor space in its new Manhattan flagship home department to Ralph Lauren Home. The presentation there is in shop concepts.
"The Lauren Home collection has performed extremely well since our launch with them last October," said Liz Rodbell, executive vice president of merchandising for Lord & Taylor. "Our customers have responded to the product across all categories, from furniture to tabletop, and many are purchasing from multiple classifications to create the look as presented in our shop.
"We are very pleased with the collection across all categories," Rodbell continued. "My office is on the same floor as the home department, so I find myself walking through the Lauren home area on a daily basis. I see the customer reaction first-hand, and they are delighted by the assortment. This is one of the best gauges for me, numbers aside."
Some of the best sellers at Lord & Taylor, Rodbell said, are fashion bedding and casual dinnerware. "We are in the process of expanding casual dinnerware, and are confident it will be a hit among our customers."
The goal at Bloomingdale's, according to CEO Michael Gould, is to upgrade and differentiate its Ralph Lauren business. "I think Ralph himself is always about lifestyle," Gould told HFN. "The challenge of Bloomingdale's is, whether you're talking about lifestyle or collections, how is it better and how is it different from department stores? Ralph has been, from a home point of view, the most important partner we've had. We need to find ways to [differentiate and upgrade the collections]."
In response, Guzzetta said, "Bloomingdale's has Ralph Lauren furniture, other department stores carry Lauren. In addition Bloomingdale's has some exclusive furniture collections, like the Arles collection that is selling very well. They are currently carrying Ralph Lauren lighting and gifts and they will carry Ralph Lauren carpets. The Lauren bedding line has many levels--a good, better, best mode, and Bloomingdale's carries much more of the best mode."
Guzzetta declined to reveal exact sales figures but said the home business scored "consistent double-digit increases in every category over the past year." Third quarter results were "phenomenal," according to Guzzetta, and "home is equally sharing--for the first time in a long time--in that success."
Polo Ralph Lauren Corporation reported more than a 50 percent gain in net income in its third quarter of fiscal 2001, to $168 million. Net revenues for the third quarter were $1.5 billion, 24 percent greater than net revenues for the comparable period last year. The company does not break out individual division performance.
"The level of excitement in the company is gratifying," Guzzetta said. "Ralph feels the same passion about home as he does about apparel. His inspiration is seen in everything we do. It is a very important part of our home strategy. You can see it in the product. Home is part of the architecture of the brand. When it's done right, the product does so well."