Iconic retailers face generational change
Helen Gardner, shopping on New York’s Fifth Avenue with her boyfriend on Tuesday, left the Polo store without buying anything.
“It’s quite old-fashioned,” said the 28-year-old visitor from London. “It’s not for the young crowd.” Then she lowered the boom. She’s bought Ralph Lauren clothing before, she said, “but just from outlets.”
Ralph Lauren, the retail avatar, has spent a half-century selling his Gatsbyesque fantasy of the American dream.
But now, at 77, Lauren is confronting life after the dream fades: sometimes flagship stores get a little dull, the kids use their phones to search for discounts on your US$245 jeans and iconic blue blazers move off the racks but just from outlets.
Beset by a decline in sales, Ralph Lauren Corp. announced Tuesday it would close the flagship store on Fifth Avenue in New York as part of a US$370 million shakeup. The beleaguered company will refocus its e-commerce operation and cut an unspecified number of jobs.
It’s the latest humbling moment for Lauren, who spent decades creating his personal mythology of American aristocracy. Only two months ago, the company announced the departure of its chief executive, Stefan Larsson, leaving the founder to navigate an increasingly perilous retail landscape.
Indeed, Ralph Lauren, the company, encapsulates the growing travails of U.S. retailers at large, especially apparel companies, such as J. Crew Group Inc., Gymboree Corp. and True Religion Apparel Inc. The rise of e-commerce has left many fighting for survival. Consumers have got used to discounts. And an address on Manhattan’s luxury showcase isn’t what it used to be. Tourism is down, rents are too damn high and it doesn’t help that security surrounding the Northern White House, down the block, has diverted foot traffic. Fifth Avenue vacancy rates are hovering near an all-time high, according to Cushman & Wakefield Inc.
“This is more evidence that retailers, specifically apparel, are under tremendous pressure,” said Chen Grazutis, a Bloomberg Intelligence analyst. “People aren’t buying as much apparel as they used to.”
Ralph Lauren shares have fallen 9.9 per cent this year through Monday’s close. They were down 4.46 per cent to US$77.74 on Tuesday in New York.
The store was opened in 2014 in a neoclassical limestone building on the same block as Armani and Dolce & Gabbana. Its preppy clothing and accessories are laid out over three oak-floor levels. The first floor has a rugged masculine ambience with dark mahogany panelling.
“The general look is quite old school,” said Robert Wood, 30, an accountant from London and Helen Gardner’s companion.
“I prefer the store to be lighter and a bit more open.”
Compare that with Coach Inc., whose nearby store entrance has two mechanized conveyor belts with a rotation of its colourful handbags and jackets. The centre atrium holds a 12-foot sculpture of a dinosaur made with the company’s leather bags.
Chief financial officer Jane Nielsen, a former Coach executive, is taking the reins as acting CEO while Ralph Lauren searches for a new leader.
As part of the changes, Ralph Lauren said it will invest resources on e-commerce infrastructure, shift its digital operations to a platform run by Salesforce.com Inc.’s Commerce Cloud and improve customers’ online experience. It’s also streamlining its organization and closing other stores.
The restructuring plan will bring cash expenses of US$185 million and a similar amount of noncash charges, the company said. The changes are expected to save US$140 million a year by their completion, which is slated for the end of the next fiscal year in March. Ralph Lauren declined to say how many jobs were affected.
The Polo store, which is closing April 15, has been one of Ralph Lauren’s highest-profile locations in its hometown of New York. The company still has seven other stores in the city, along with its Polo Bar restaurant. It will also develop new store formats and explore concepts including Ralph’s Coffee, which is part of the Fifth Avenue Polo store.
The company has pledged to react faster to fashion trends and cut the time it takes to get clothes on the market, while increasing its marketing efforts by hiring a new chief marketing officer in February.
This all might pay off in time for Helen Gardner’s next visit to New York. But for now, she’s leaving empty-handed.
“I just think it’s a bit of a ripoff for what it is,” she said. “I don’t think the style ever changes. It’s been the same for years and years.”
This is more evidence that retailers, specifically apparel, are under tremendous pressure. People aren’t buying as much apparel as they used to.