Ralph Lauren's Fading Fantasy

Bloomberg View , May 16, 2014

It’s been an anxious week for followers of Ralph Lauren Corp.

Last Friday the company told analysts that it expects operating margins to narrow this fiscal year. (The stock closed yesterday at $147.47, down from $148.81 a week earlier.) It also announced that retailing star Roger Farah, who’s been serving as executive vice chairman since stepping down as president last year, will retire at the end of the month and leave the company’s board in August.

Given Farah’s relative youth -- he was born in 1952 -- the move prompted speculation about his career plans. It also called attention to the advancing age of Ralph Lauren’s eponymous chief executive, who will be 75 in October.

“Unlike other iconic majority holders in a dual-class structure company---like Phil Knight at Nike (NKE), who exited gradually and gracefully -- Ralph remains critical to product design and the strategic direction of the brand,” observed retail strategist Brian McGough. Shareholders, he suggested, “need to gain some confidence that the company will not miss a beat in the event that we wake up one day and Ralph Lauren is no longer a part of the company he built.”

In fact, the problem is bigger than developing a clear succession plan. Even if Lauren lives to be a healthy 150, his age poses an ever-greater challenge for the company.

Ralph Lauren isn’t known for a signature design, such as the Chanel suit or Diane von Furstenberg’s wrap dress. Nor is the company a notable fashion innovator, pushing the aesthetic frontier. Many brands offer similar classic styles.

But Ralph Lauren doesn’t just sell its founder’s aesthetic. It sells meanings -- settings and images that evoke dreams, promising to transport the customer from ordinary life into “the world of Ralph Lauren.” It’s a company built on glamour.

Glamour isn’t about a specific style. It’s about channeling the audience’s longings into compelling images of escape and transformation. Both those longings and the images that embody them change with the times.

“The world of Ralph Lauren” isn’t universally alluring. It’s created from the images and ideals that enchanted a poor Bronx boy born in 1939: the country life of the WASP leisure class, cowboys in the American west, exotic African safaris, aviators wearing bomber jackets.

Lauren often compares his work to filmmaking. “What I do is make movies with my clothes,” he recently told the Telegraph. But he isn’t talking about today’s films. He’s talking about yesterday’s.

Explaining his “timeless” approach to fashion, he cited a movie from his teens: “Watch Cary Grant in ‘To Catch a Thief’ tomorrow, next year, whenever -- you would still want to be him at the end of it. And a woman will want to be Grace Kelly. That’s timeless.”

In fact, that’s 1955, with stars born in 1904 and 1929. Grant and Kelly are still compelling, their clothes still look good, and the film is much loved by classic-movie fans. But “To Catch a Thief” is a historical artifact. Its vision of leisured, international wealth spoke to the striving, upwardly mobile, little-traveled American audiences of the mid-20th century, including the young Ralph Lifshitz. The children and grandchildren of those moviegoers live different lives and dream different dreams.

Few women today aspire to the white-gloved perfection of Grace Kelly. Post-feminist audiences prefer their icons with power: the elegance of Kerry Washington’s red-carpet persona infused with the gladiator qualities of Olivia Pope, say, or the action-star prowess and philanthropic activism of Angelina Jolie.

“People are not as old as they were when my parents were old,” Lauren told the Telegraph. “My parents’ tastes did not affect me strongly, but with me and my children there is a total connection of life. Age today is not the same thing.” That’s true. But sharing aesthetic tastes and sharing emotional meanings are not the same. Glamour is more than style. It arises from desire and discontent. Having grown up with money and status, Lauren’s children would not see in the images he loves the same ideals that inspired him.

“The world of Ralph Lauren” is luxurious but purposeless and static. It’s alluring to people who have little and dream of having more, or who finally have much and want recognition that they’ve arrived. It doesn’t answer the yearnings of today’s children of affluence (even those whose parents aren’t billionaires). Barring a shift in identity, the company’s continued success thus depends on finding new customers longing to inhabit the old symbols of security and status.

It has managed that in the past, if largely without trying. The company’s Polo brand became a touchstone of hip-hop style in the late 1980s and early ’90s and, in the eyes of some fans, remains so to this day. “The éclat of the man on the horse in Hip-Hop culture is unmatched,” journalist Isaiah Shelton, who was only born in 1990, wrote two years ago. Lauren’s youthful aspirations and entrepreneurial success resonated with this audience, which saw his audacious, outsider appropriation of WASP styles as creating an inclusive version of Americana. But hip-hop has by now generated plenty of its own fashion brands, making Ralph Lauren for many fans more an object of nostalgia and respect than a source of current products. No wonder the company is investing heavily to build its image in China -- the promised land of striving, upwardly mobile customers eager to prove they’ve made it.

The alternative to finding new audiences for old imagery is to add new versions of glamour that tap into new longings. The most compelling example of this strategy isn’t Ralph Lauren but a company that aspires to imitate its success: Kate Spade.

“Ralph Lauren is our business analog,” chief executive Craig Leavitt told Bloomberg in March. But rather than solemnly pose its goods with arcadian symbols of the idle rich, Kate Spade sends them on jolly, colorful adventures. “It’s about encouraging the customer to lead a more interesting life,” said Leavitt. “Everyone strives to spend more time in museums and have adventures like seeing a new part of the world or going to a flea market and finding something unique for your home. The brand is optimistic, happy.”

Ralph Lauren isn’t a company in trouble. It has great strengths. But its brand image depends on an ideal of the good life that, to those unaccustomed to hardship, looks out-of-touch and even a little dull.