American Brand Looking To Lift Prospects Amid Sluggish European Demand
Much-discussed but long-delayed, Ralph Lauren’s China expansion push may finally take place this year, with the American brand announcing this week plans to open 60 stores in the Greater China region within the next three years. Starting first in Beijing, Shanghai and Hong Kong, Ralph Lauren has 15 locations slated to open regionally between mid-fall of this year and the end of March, 2013.
As for the remaining locations, Women’s Wear Daily notes today that the company is “still identifying premier locations for the balance of the 45 new sites, and it already has a few firm commitments in place for locations in shopping malls scheduled to open in 2014.”
In addition to a broader expansion effort within China, Ralph Lauren plans to make more aggressive attempts to tap the spending of Chinese tourists in Europe, where they’re among the fastest-growing and most free-spending tourist segments. As Ralph Lauren continues to struggle in Europe amid a sluggish luxury spending environment, the brand hopes to increase the proportion of sales in Europe to Chinese tourists in line with what other premium brands have seen in recent years. As Ralph Lauren president and CEO Roger Farah said this week, while Chinese tourists account for up to 20 percent of Europe revenue for some brands, they only make up two percent of Ralph Lauren’s European sales.
Though Ralph Lauren is smart to target Chinese shoppers both at home and abroad, as Jing Daily wrote last year the brand faces a long road ahead. Though, in the United States and Europe, Ralph Lauren has been ranked among the top premium brands for over 40 years, beating out luxury giants like Louis Vuitton and Burberry for the top 2010 Luxury Marketer nod, in Asia the New York-based lifestyle brand is typically seen as a mid-range brand. This is particularly true in China, even though the brand is, in many ways, just now looking to tap that market. According to local Chinese media, due to less-than-successful brand management over the past few years, Ralph Lauren has missed an opportunity to position itself firmly as a luxury brand among Chinese consumers, and for close to two decades, Ralph Lauren’s Polo imprint in particular has been heavily damaged in China due to rampant counterfeiting.
As the Chinese-language news site JRJ Finance noted in 2011, Ralph Lauren’s China efforts have, over the past several years, been complicated by issues often beyond the brand’s control, among them ham-handed marketing and packaging by local brand agents and low brand awareness among consumers:
Ralph Lauren’s three major product lines in China are his Purple Label, Black Label and Blue Label, and each of them occupies a different market segment, such as luxury, the relatively expensive high-end business segment, and more youth-oriented fashion. However, each of these product lines has simply been mixed together by Ralph Lauren’s local brand agents, with pricing being chaotic and irrational. As more low-end items were sold with other higher-end lines, Chinese consumers became confused, a development that has further damaged Ralph Lauren’s brand image.
Despite numerous missed opportunities and missteps in China amid the country’s post-2001 luxury boom, Ralph Lauren still has a strong chance of making a comeback. Just as the British brand Paul Smith recently announced plans to give its China expansion efforts another go with the December launch of a 5,000 square foot (465 square meter) “megastore” in Shanghai, and Burberry transformed its image in China via savvy leveraging of digital marketing, local social media platforms like Sina Weibo and Jiepang, and large-scale events, Ralph Lauren could still find success both in China and among outbound Chinese tourist-shoppers.
Let’s just hope the brand makes its newest overture to the China market with efforts a little more subtle than its China-influenced Fall/Winter 2011 collection, which debuted 15 months ago in a fashion show at which a number of Chinese supermodels walked the runway to a cover version of David Bowie’s “China Girl.”