Showing posts with label business strategy. Show all posts
Showing posts with label business strategy. Show all posts

Thursday, April 6, 2017

Ralph Lauren is in Trouble and I'm Nervous for Them

Left: Google suggested search for "Ralph Lauren"

Right: Google suggested search for "Burberry"

RL + outlet, coupons or perfume, versus Burberry + shirt, scarf, belt

I'm not a fashion-guy, but I know enough to know Ralph Lauren built a great business impersonating British brands with heritage that RL didn't have. πŸ‡¬πŸ‡§

In many ways RL is a great example of American approach of "fake it til you make it." It worked. I'm using this as a compliment. In fact, it worked so well an American brand spoofing a British brand that Ralph Lauren signed a 5-year deal in 2006 to be the first tournament clothing outfitter for Wimbledon. πŸ‡ΊπŸ‡Έ

Purple Label. It's high end. It's made in England.

Ralph Lauren Purple Label clothes are amazing in design in quality. RL Home makes some beautiful items, stuff you'll see promoted in magazines.

Yes, there's a point to this

Why am I spending so much time on this? Vindication. Specifically vindication late 1990s style. I grew up in a suburban high school in Massachusetts. It was homogeneous, 95% white (think I'm rounding down). One of "the looks" to have in the halls of my high school was a RL polo and carpenter jeans from The Gap... told you, 1990s.

These were premium priced items. Drive to your local mall and a few bags later you're styling. That polo shirt today, $85. Assuming a high school kid works in 2017, how many hours does it take before he can splurge for a $85 polo? How many can he buy, or expect as a gift for his birthday / holiday season?πŸ‘š

The image of Polo was a fantasy playing a tennis match with Muffy and Buffy at the country club that didn't exist in your town. It was obtainable luxury. With that can come harsh realities. For Polo that reality could come via a suburban young guy dipping a can of Skoal while getting into a Firebird with 12" sub woofers playing WU-Tang's C.R.E.A.M. on blast (great guilty pleasure song btw).

He just might be wearing an authentic polo or he might be wearing a fragrance. If it's the latter, it's probably his first fragrance purchase, and he hasn't learned about applying in moderation.

That's both the problem, and how RL became such a success. All those bright polo shirts allowed for rapid growth. Rapid growth not in the high end cities you see in the bottom line of a print ad, but rapid growth in the suburbs. It also meant the RL brand was less about high end suits and shirts and more about casual-ware.

And that's okay. What can become a challenge is when your audience co opts your brand. Millions of high school and college kids did that with RL. They took the relaxed ook found at American Eagle and went a little bit more fancy with RL, while staying casual.

Several Things Hurt RL, Some Self Inflicted

It would be easy to take pop shots and attack an $85 polo shirt. I won't.
  • C2C E-comm
  • Factory Outlets
  • Young Person Employment Rate
  • Transition from Polos to Suits and Home Decor
  • Upstart Brands
  • Culture of Sales
E-comm channels, both direct and with retailers certainly puts strain on brands such as RL. What also puts strain, were alternatives of purchasing through none of these channels and purchasing through C2C online via websites such as Ebay, Amazon, etc.

Brands such as RL can be sold in mall anchor stores (good), standalone stores (good), and factory outlets (good). All this is helping condition more top line growth and more polo shirts in a person's closet. It's also driving competition against yourself. If you're looking for a new yellow RL polo with it's famous logo, you've got choices to price shop luxury.

Go to a grocery store register at 4:30pm on a Wednesday. Is your cashier or person bagging the groceries look like a high school kid working his first part time job? Probably not, and neither do any of the adjacent registers. For liability reasons you might not want a 16 year old mowing your lawn, or shoveling your driveway like in generations past. I'm at the tail end of the Millennials, I've worked since I was 14. Between some families having the ability to do so, and pressure downward from the Great Recession, young people aren't working like they used to.

To a young person Polo is one of the top luxury brands, and one of the first luxury brands they'll experience. What's the staying power as the customer progresses in various life stages? For RL, this means the potential to extend into home decor, or upscale into the non casual clothing lines. RL has no shortage of customers, or brands for this to occur. Ignore my earlier Gap carpenter jean comment, The Gap manages life stage shifts of it's customers better than almost any other brand. Baseline with Old Navy (amazing kids clothing design and prices), customers 'graduate' or 'overlap' with The Gap, and then move towards Banana Republic. The price, as a dollar amount or percentage, are much tighter than the range of RL's lines. The Gap does an amazing job, whether you're shopping at Old Navy or Banana Republic, you're also able to organically shop at The Gap.

Within this decade social media has helped fuel upstart brands. That $85 polo now has 3 companies that didn't exist 5-10 years ago with an amazing Instagram feed and email marketing program. They might promote on a slightly different fit, some unique materials, and likely a very different buying experience. Some of the cool factor is the newness, and the leap of faith that you're ordering the right size online. These upstarts are focused on content marketing, user experience, and have a level of brand recognition with exclusivity. The fact they aren't in every department store, standalone store, or factor outlet is making them desirable. At the $50 - $85 polo shirt level, what is a disadvantage in higher manufacturing cost is somewhat recouped in a leaner sales distribution channel. They've kept to this scaled back approach (thus far) and surprisingly haven't made the mass market expansion into retail anchor stores.

The last factor I'll focus on is the culture of sales, specifically items being on sale. Part of this is the rise of Ecomm, C2C sites like Ebay and Amazon, commoditized offerings in standalone stores, anchor stores and factory outlets. Sticking to the yellow RL polo example, if you're in the market for one you'd almost have to try to pay full retail. All these channels are make it hard to "wow" a person. Unless you need it for tonight, or it's not your credit card being used, you may feel guilty to pay the $85 retail when you can walk 500 feet to price check a few stores down, while searching the price online as you walk. The latter is hurting anchor stores, and standalones if they are not constantly discounting and the fear of becoming "Amazon's showroom" is very real.

I'm guilty of doing this. I've have several barcode scanner apps on my phone.

My $80 RL Raincoat

During the 2016 holiday season I was blown away at some of the sales that Macy's was having. My high school observations, combined with Black Friday 2016 shopping was my inspiration for this post. One of the items I bought was a new Ralph Lauren raincoat. It's 3/4 length, and while I don't remember the retail price ($395 ?), with the sale + using my Macy's card brought the price $80 range.

I love this coat. Living in Atlanta it's rare to need a heavy winter coat, so this is a good substitute on colder days. It's cut well, and on the inner pocket there's that "Lauren" tag... Note, it's not a "Polo" tag, it's a "Lauren" tag. However, this would mean something more if the tag was purple in color. My tag was green. It was made overseas, not in England, but instead in Asia. This is RL Green Label. Upside, it looks great and fits great. Drawback includes needing to provide occasional maintenance with scissors to trim a random khaki treading. Why? RL Green Label is going to involve more machine manufacturing process, where Purple Label is more handmade. Annoying, maybe even a little disappointing for a person that didn't know all the RL clothing line tiers.

The reason why I love coat is it is balanced. I had an RL peacoat in college. It still fits, it's sleek, and I wear it about a two dozen times (though it needed it's lining replaced several years ago). Also purchased at Macy's circa 2001, believe it was just under $200. How long will this new raincoat last? No clue. I'd be happy with 2-3 years, I can see 5+. It serves a purpose, it's nice, but not so nice that I'm afraid to wear it. I'm careful, but if the bottom gets caught along my car door, I'm not going to panic.

For years I've always wanted a Burberry raincoat. I like the look, and I know it will last. I also fear, I'd be obnoxiously anxious to be around wearing it, and would protect it from wear and tear. I know this because I have two Burberry polos and an iconic print tie that are so old if they were children they range in age of being able to do basic math multiplication problems, ranging all the way to studying to get a learners permit.

I don't have that fear with my Green Label raincoat. While cutting back a thread here or there is annoying, few things can touch it for the money.

From Polos to Raincoats and Beyond

Back to the problem, how does RL take the MILLONS of young people with one or more polos, or whom are regular fragrance users, and then convert them into raincoat, bath towel, and bedding customers? How can RL fight off the upstart polo manufacturers, and avoid a pricing race to the bottom through sales channel conflict?

These are big questions to work out. Very few buying an $85 polo will ever buy a $2,500 sports coat. If you're in a large retail space, organizing the journey from polos to $2,500 sports coats is not an easy task. It's compounded further when a buyer needs to see that $85 polo on sale under $50 to stay competitive with other sales channels. Those discount percentages, and the culture it creates also makes it tough to stay firm at $2,500 for that sports coat.

I don't think Ralph Lauren is going anywhere. The stories about the significance of closing it's Fifth Avenue Store are sensational, especially with so many retailers in trouble. For many RL represents obtainable luxury, and often one of their first luxury brands. RL in 2017 has an advantage in this field. The cache and pedigree it prematurely projected decades ago when launching, it's obtained, and it's authentic. The question becomes, do you want to sell more polo shirts at a lower average price, or sell less and protect the price?

Can RL shift consumers from associating it's brand with outlets, coupons and perfume? Do they want to?
Can RL shift consumers from associating it's brand with outlets, coupons and perfume? Do they want to? Who knows. Before we sound the alarm on this luxury brand, let's look to another luxury brand, Ferrari. If you're in the market for a $2,500 sports coat, you might also be arriving in a Ferrari, or similar car. Just like there's only so many RL customers for those premium sports coats, there's a cap on super car buyers. RL solved this with $85 polos, and Ferrari makes a fortune doing the same with sneakers, t-shirts, and other accessories.

Obtainable luxury. It's a powerful lure for luxury brands to cash in by harnessing the mass market. Done right, it'll enhance the brand and can be a large portion of the brand's revenue. Even if they are wearing the equivalent of Polo, or Green Label, these customers feel included and part of Purple Label experience that the high net worth luxury buyer enjoys.

So c'mon RL, let's get people searching for shirts, sports coats, and home decor, and less on outlets and coupons.

Wednesday, November 2, 2016

Search Engine Land + A Decade of SEO

There is no doubt that Search, specifically SEO, was my first love and entry to digital marketing. When I started my MBA thesis in 2006 the 1998 Tim Berners-Lee concept of the semantic web caused me to view it as a disrupter to replace to the Yellow Pages. I saw this as being accomplished by semantic programming language on websites aided by emerging mobile phone technology fascinated me.

What seemed like sci-fi marketing tech futurism at the time, is possible now. Through advancing in content tagging (rich snippets) and artificial intelligence, we're seeing a preview of of a different type of marketing. A smarter type of marketing.

Keith Hanks MBA Thesis (2007) Cover Providence College. Thesis titled, "Non-Traditional Marketing Impacting Multi Collaborative Networks"

Recently Search Engine Land featured an article, 8 ways SEO has changed in the past 10 years. It was a trip down memory lane and caused me to dust off the old thesis remembering an example, about how local search for pizza restaurants, would look in the future.

  1. The rise of content
  2. The death of link schemes
  3. The reshaping of local
  4. SERP overhauls
  5. The rise of the Knowledge Graph
  6. Mobile prioritization
  7. The soft death of keywords
  8. Update pacing and impact

#3, "Local Search" as a vocab term was not listed in the thesis, and would not become common terminology with marketers for several more years. This was just as much triggered by advances in algorithm sophistication, new taxonomy portals to document local listings online, and arguably by a decline in traditional Yellow Page industry revenue.

Source: Keith Hanks 2007 MBA Thesis (pg 58)

What's the next decade hold? In my opinion the innovation will have challenges duplicating the last decade. Instead of pure technology advances I predict we'll see growth focused around HOW the tech advances of today, or rather, the last few years, will be applied and democratized from big budget brands down to the SMB markets.

While that sounds exciting, there's a catch... sophistication. For upwards of two decades we've enjoyed the prospects of a high school student, and at times, a middle school student, being able to help a mom and pop business with digital technologies such as websites, and other marketing disciplines. While technical emersion will happen at a much younger age the idea of being able to 'read a few books and blogs, then create something' is going to have a much stiffer barrier.

Search is a much more mature industry today, and it appears to be shifting into two directions. The first is an integration with more traditional copyrighting and content disciplines. The second, is much more technical and programmatic. The later is white collar today, but very easily can become more vocational, the carpenters, plumbers, and electricians of our generation.

Tuesday, September 6, 2016

What WWI Shipbuilders Taught the U.S. About Building at Scale

If it's not in your vocab already, the shipyard at Hog Island needs to be. I learned about this facility during my 2016 train trip cross country when I visited the Smithsonian National Museum of American History.

via the National Museum of American History - Smithsonian (Washington, D.C.)

  • EFC (Emergency Fleet Corporation) created days after the U.S. enters WWI (1917)
  • Purpose to to construct a fleet of merchant ships
  • American International Shipbuilding Corporation is hired to build and operate the largest shipyard in the world.
  • "Hog Island" is that shipyard. Located near Philadelphia it stretches 1.25 miles along the Delaware River. 
  • 50 shipways, 250 buildings, 846 acres
  • 30,000 workers (most with no factory experience that received emergency job training)

Now for a few stats that jump out:

  1. New merchant ship built every 5.5 days during peak production
  2. Powered by prefabricated parts into the supply chain, the development of building complex large ships, quickly, at scale results.
  3. Most of the 30k factory works had no factory experience and received emergency job training
  4. Allows the U.S. to expedite ship building during WWII

Right after students learn about Henry Ford and the success of the assemble line, they need to learn about Hog Island.

Not so subtle plug for The Great War Channel (YouTube). Easily one of my favorite pieces of content being regularly published currently. I've long said history can be stranger than fiction, and subscribe that history repeats itself.  Seriously take a look.

The Great War Channel

  • Covers WWI 1914 - 1918, exactly 100 years ago, "week by week"
  • Format is approx 10 min video
  • Discusses side angles, and topics not covered in history text books and/or TV documentaries
  • War starts using 1870s tactics, but concludes with the technology and strategy that would be seen at the beginning of WWII 

Monday, August 8, 2016

Rio TV Ratings Behind Barcelona Cause Merica (no really 'merica)

Olympics TV Ratings for the opening weekend in Rio are not looking good for NBC. For the 1st weekend TV viewership was lower than the 1992 Barcelona games.

It would be easy to point fingers at NBC on this. Don't.

London, Atlanta, Beijing and Barcelona all bested Rio in first weekend viewership. Rio outperformed Seoul, Athens and Sydney.  
Like with other recent games, Rio has been had faced a mountain of bad PR about the city, facilities, and logistics.
Hope's were high for Rio. As many know Brazil is a BRIC country, an emerging powerhouse in the global economy. Like the games greatly elevated my hometown of Atlanta, many saw Rio as a great breakout opportunity to get the world excited for what Brazil was capable of and to showcase it's future.

For months the headlines have been brutal. If the crime in Rio wouldn't get you, the pollution would, or the Zika, or the... you get the picture.

First Weekend Rio TV Viewership - By The Numbers:
Blame it on Rio? Not so fast. 
What's missing? 'Merica (also pronounced 'Murica)
This guy is ready to cheer. Get him to a TV (or computer, or tablet, or smartphone...)

My Take:

  • The Olympics are about global unity
  • They are also about competition and promoting national success
  • Overt patriotism is not fashionable.
  • The topic of nationalism is a topic being debated, including what role of the USA should play globally versus focusing on itself at home
  • Stories leading up to the games focused around real physical danger to athletes. That storyline is depressing and overshadows the games itself. 
  • Storylines before the games are important. Too much of that was dominated by the lack of readiness of the venue itself.

In the coming weeks we'll likely hear that TV viewership was down, but online was up. While this shift will likely be good for my industry as a digital marketer, the greater storyline should be how do we get overall viewership up? There's a lot more potential viewers today than during 1992 Barcelona games. Some of this is likely education about unfamiliar events that are only seen once every 4 years (what are the rules, who are the athletes, who is likely to win). Alternatively, the format and user experience itself might be a big issue. 

As marketers we know the importance of a video clip being short, the shorter the better. We also know the drop off after 30-45 seconds if the content isn't compelling. Watching a video clip is easy, getting a viewer to participate in the pre-event analysis, commercials, and continue afterwards to watch other events is the hard part. We can help by integrating the omni-channel, but with this integration also comes a distraction, an additional screen, during the events. 

  1. We need to find a way to be united by the games. If we had a fraction a country another country had during World Cup it would be an amazing cultural event
  2. Consumers have changed how they interact with video and media. The TV may be a secondary screen. Social media sharing short clips consumed on a tablet or smart phone are view much likely to be in use while watching the games
  3. Without a rally to #1, many advertisers locked into expensive sponsorship commitments look like they are going through the motions of connecting their brand to supporting and cheering on #TeamUSA.
  4. Sponsors can leverage the omni channel to create better user experiences, in this case "stickiness" towards the games, and better remembrance of the role their sponsorship played. 

Monday, June 20, 2016

Marc Benioff Quits FB, calls it Overwhelming

Salesforce CEO Marc Benioff recently said, "I deleted my Facebook account completely. I found it was just overwhelming me." via

My Take:

  • I'd hypothesis that Facebook needs to take a lesson from Google
  • Gmail Tabs allow users to better segment user experience
  • Facebook keeps tinkering with an algorithm, while great for maximizing sponsored posts is causing headaches for users. 
  • Improving how posts, and FB friends can be filtered, both via desktop and the mobile app would allow users to quickly dive into topics of interest the same way one would bounce from website to website
  • If Facebook wants to be stickier and a destination for various online experiences, and longer content experiences, it must make tailoring posts and viewing segmented groups easier.
  • Items like "top posts" are still relevant, but within each category, like Instagram, and like Gmail, content should be organized, or the option to easily filter in chronological order.