Ralph Lauren looks to elevate its brand cachet

The strategy: Ralph Lauren isn’t going to pull back on price hikes anytime soon as it looks to elevate its brand cachet, per Bloomberg.

• The average price of Ralph Lauren products is up 80% since 2018.

Ralph Lauren’s growth plans are focused on expanding its women’s business, including apparel and handbags, as well as broadening its reach in China and India.

The context: Personal luxury sales soared in 2021 and 2022 as younger and middle-income consumers splurged on high-end goods. However, many of those consumers either shifted their spending to travel and other services or pulled back due to inflation.

• Although luxury sales remain well above prepandemic levels, they are decelerating as they slowly return to more typical growth patterns.
• After US personal luxury sales grew a healthy 13.3% last year, our luxury goods forecast expects growth to decelerate to 6.6% this year.

The challenge: Despite Ralph Lauren’s price hikes, the company’s gross margins (61.7%) remain lower than competitors such as Capri Holdings (64.9%) and Coach parent Tapestry (72.8%).

• That suggests that its brand perception isn’t as elevated as those brands.

The big takeaway: In many ways, Ralph Lauren’s strategy echoes the strategy RH is pursuing.

• RH evolved from a furniture retailer to a lifestyle brand, in part by revitalizing landmark buildings such as a 17th-century estate in the Cotswolds, England, and using those spaces to house restaurants and showcase its wares.
• While it makes sense for Ralph Lauren to lean into luxury, transforming its brand perception will take time.