My boyfriend — a menswear afficionado — is obsessed with Ralph Lauren. Now, as the brand has polished its image, so is everyone else.
That has enabled Ralph Lauren Corp., as well as Coach owner Tapestry Inc., to outperform some European rivals. This is a dramatic reversal of fortune compared with a decade ago, but it’s one that has a solid chance of enduring, even as the luxury giants decide they want their middle-class customers back.
The two US companies have benefited from rampant price increases at the industry’s behemoths, which have alienated many customers. With Gucci and Prada out of reach, shoppers have turned to Ralph Lauren, which stretches from the top-end Purple Label to more premium Polo, as well as Coach, which is perceived as value for money, especially now that it has gotten more trendy. Add in the fact that their biggest market, North America, is leading the luxury revival, and this has created a rare window of opportunity for these semi-luxury names.
But this window may be closing. With the likes of LVMH Moet Hennessy Louis Vuitton SE attempting to recapture those they’ve priced out and US consumers looking more fragile in general, Ralph Lauren and Tapestry will have to prove their renaissance is more than being in the right place at the right time.
The odds are good, as their current success has not come about by chance.
Both companies have been repositioning for many years. Ralph Lauren, under Patrice Louvet, chief executive officer since 2017, and of course the creative direction of its founder, has been moving closer to its European rivals. It has focussed on products it’s best known for, including cable-knit sweaters, blazers and chinos, improving style and quality. It has invested in its own shops and website, and cut back on selling apparel elsewhere. Where its brands are still on display in third-party stores, it has upgraded the selection and experience, for example through a recent Polo Country capsule for Net-a-Porter.
Even outlet stores, which play an important but undisclosed role in the business, have become more attractive places to shop. And effective marketing, such as dressing the US Olympic and Paralympic teams as well as a successful hospitality business, have created a buzz around the brand.
It’s a similar picture at Tapestry. CEO Joanne Crevoiserat, who took the helm in October 2020, put connecting with consumers, particularly Gen-Z, at the heart of her strategy. This has paid off, with compelling products such as the Tabby bag and most recently the Brooklyn, which has gained the top spot in fashion platform Lyst’s most recent index of the hottest items. Its cherry bag charm underlines another Gen-Z trend that Coach has been quick to jump on.
Consequently, both Ralph Lauren and Coach have been able to expand sales while cutting back on discounting, raising the average price at which products are sold, and bolstering profits.
European competitors are now realizing they pushed prices too far. The most striking example is Louis Vuitton’s reissue of its collaboration with Japanese artist Takashi Murakami. While many items still retail for thousands of dollars, the line also includes cheaper small leather goods. Advertising featuring actor Zendaya taps into Gen Z’s 2000s nostalgia, while a recent pop-up in London took a leaf from Ralph Lauren’s book with an Instagram-friendly café.
Amid concern that the US consumer is starting to crack and the turmoil of tariffs, it’s little wonder that shares in both Ralph Lauren and Tapestry have slumped over the past few weeks. But US luxury can hold its own.
At Ralph Lauren, women’s apparel is a significant opportunity alongside handbags, with the popularity of the $500 Polo ID bag boding well. While North America accounted for about 47 percent of revenue in the last quarter, there is scope to expand in Europe and Asia. Longer term, Ralph Lauren could push further into hospitality, for example adding hotels to its restaurants and more than 30 Ralph’s Coffee outposts.
Coach, meanwhile, released the New York range — including the Brooklyn and the Empire — last fall. Another blockbuster would provide a fresh avenue for growth. It’s notable that Empire models costing around $700 and $900 have proved popular, potentially giving it scope to stretch its prices, although it must not make the same errors as its loftier peers. Sister brand Kate Spade’s sales are still falling. If Crevoiserat can follow the Coach playbook, she could finally fix the label. It also recently agreed to sell shoe brand Stuart Weitzman. Tapestry walked away from acquiring Capri Holdings Ltd. after a US judge blocked the deal, so we’ll never know if it could have worked its magic on Michael Kors, which continues to struggle.
Right now, there are more pressing matters, such as meeting demand for some of its hottest bags, as my boyfriend pointed out. The viral Empire Carryall in a deep burgundy that he’s been eyeing for months is still sold out. When a Coach bag is as much of a must-have as an Hermes Birkin or The Row’s Margaux, it suggests US luxury can survive the coming bling battle.
By Andrea Felsted
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