Branding is a relatively new concept in China and the rapidly evolving market place gives many brands the opportunity and desire to reset their brand image and position. With almost no exception, all fashion and luxury brands in China try to upgrade their brand position, even if this is out of line with their home or other markets. Of all the luxury brands in China, Polo Ralph Lauren (RL) has one of the biggest challenges ahead in re-positioning itself and becoming known as a brand with heritage, superior quality and a convincing story to tell. In order to reposition to a top luxury brand Ralph Lauren needs to clearly define their store image and merchandise selection as soon as possible.
For many years Ralph Lauren was sold in China via Hong Kong based distributor Dickson Group. Stores were mostly found in department stores selling polo and dress shirts, knit wear and other items generally found in the Ralph Lauren blue label (and below) range. The polo shirts and ready to wear business shirts enjoyed strong popularity among Chinese male consumers giving Ralph Lauren a steady revenue stream while also becoming one of the most pirated apparel brands in China. In 2010 Ralph Lauren took direct control of the business in Greater China, buying the distribution license back from Dickson. Since then Ralph Lauren has began to deploy their re-positioning strategy, the essence of which is to elevate the brand to one of true luxury and prestige able to compete with Prada, Giorgio Armani and alike.
Getting the store image and merchandise right presents the biggest hurdle to Ralph Lauren’s future success in China. Presently RL has a scattered retail footprint across China with stores in Hong Kong, Shanghai, Beijing and various other second tier cities. The main (not quite what you would call flagship) stores in Greater China include the Landmark Building and Peninsula Hotel in Hong Kong and the Peninsula Hotel in Shanghai. Ralph Lauren is currently perceived in China as a mid range menswear brand famous for polo shirts, but with these ‘flagship’ stores RL is trying to upgrade their merchandise to the purple and black label men’s and women’s lines and also their recently launched luxury watch lines. Despite efforts by RL to create these purple and black label type flagships, across China stores are completely misaligned in terms of image and merchandise, thus sending a very confusing message to consumers.
Ralph Lauren must start to compete on image with the European luxury brands in China, but they haven’t got it right yet. Canton Road in Hong Kong’s Tsim Sha Tsui district is the glitziest shopping street in Greater China. Louis Vuitton, Dior, Chanel, Hermes, Gucci and Prada plus others all have amazing flagship stores there while Ralph Lauren has a tiny store with an uninviting façade and window displays and a few clothes rack stocked with random items from across their various lines. Regardless of the fact that this store is operated by Duty Free Shopping (DFS) Ralph Lauren should be managing their image better. It is vital for Ralph Lauren to be in the presence of the other luxury players, yet with such an unimpressive store alongside some of Hong Kong’s best, its possible that this store is doing the RL image more harm than good.
Even inside their main stores Ralph Lauren is sending mixed messages to customers. In recent visit to the RL store in Hong Kong’s Landmark Building, The Maosuit noticed a Louis Vuitton trunk as part of the décor. When asked about why an LV case would be put in an RL store, the store staff replied: “ it is to display a lifestyle”. While visually merchandising a lifestyle may be understandable in a mature market where consumers can differentiate between brands and understand the lifestyle element, for a Chinese consumer the message just becomes confusing. Many luxury consumers in Hong Kong are actually Chinese visiting from the Mainland and they have little or no concept of the difference between luxury brands and lifestyle. Many only care about price and famous logos. Ralph Lauren should prioritize brand building through their own products and avoid confusing customers by having competitors’ products in their stores.
Another issue for Ralph Lauren is their made in China products. The Ralph Lauren store (inside Seibu department store) in Pacific Place, one of Hong Kong’s main luxury malls, stocks only made in China products, with clearly displayed labels attesting to this fact. Severe misconception amongst consumers arises when on one hand Ralph Lauren is trying to push their top purple label in some locations, while having a store where all merchandise is made in China in others. Chinese consumers looking to buy luxury want to buy European or foreign made products and will quickly shy away from Made in China.
Despite obvious difficulties, RL has already proven its re-positioning ability other Asian markets. In 2007 Ralph Lauren bought back their Japanese license and set about an image makeover in Japan. RL invested heavily and purchased a prime spot of land on Tokyo’s Omotesando Ave. and built an elegant flagship store that truly represents the Ralph Lauren brand as it is known in New York and other sophisticated markets. Now after five years RL has successfully re-positioned itself in Japan and by late 2010 the first Rugby store (a sub brand of RL) was introduced to Tokyo with great success. The Tokyo flagship store played an integral part in the Japan re-positioning exercise. This would indicate that RL needs to establish a flagship store presence in Hong Kong, Shanghai and/or Beijing that truly represents the top tier luxury elements of the brand.
Finding locations for flagship stores will be extremely difficult for RL as each Chinese city has its unique challenges with retail real estate. In Shanghai and Hong Kong Ralph Lauren has a chance (albeit small) of finding a heritage building, which they could convert into a store similar to their Rhinelander Mansion flagship store in New York. In Hong Kong these types of heritage building exist yet are in high demand and very difficult to get a hold of. Shanghai has more of these buildings, yet none lie along the luxury retail belts of Nanjing Rd. and Huaihai Rd. There are no heritage buildings in retail areas in Beijing and purchasing land and building a flagship store is so far unheard of in the city. This leaves RL will very few options for stand alone flagships and so to date they have only been able to open stores in shopping malls and The Peninsula Hotels.
With all brands competing for the top retail locations across China right now, convincing Chinese mall developers’ that RL is a top luxury brand that can generate sales and draw crowds also poses challenges. Making it more difficult is the fact that the European brands don’t consider RL as a luxury brand at their same level and will pressure developers’ not to let Ralph Lauren into the malls. Thus RL finds themselves in a catch 22 situation of needing the top locations to bolster their image, but can’t get the right locations because of their current image.
Even with the right location, merchandising then becomes another problem. In second tier cities, consumers aren’t yet ready for the trendy designer and all American looks that RL is synonymous with. Although many Chinese men do purchase bespoke suits, they tend to go for more demure designs which Zegna and Dunhill offer, not RL double-breasted suits with bright pinks and pocket watches. Moreover, the purple label women’s line is also heavily lifestyle based and perfect for a weekend in the Hamptons but misses the mark for wealthy Chinese women living in second tier cities. RL knows this and so where they have been able to secure good locations in second tier cities they are in the balancing act of creating elegant and sophisticated feeling stores while stocking them with less trendy and more subtle products whilst maintaining high prices and a luxury aesthetic (See top Photo of Chengdu Store).
Overall RL has a lot of work to do in order to improve their standing in the luxury brand community in China. The biggest challenges for RL will be finding the right store locations and creating a consistent image across all stores while tailoring merchandise to each city. If the Japan experience is anything to go buy it will take RL another five years to get their China presence right. In this case Ralph Lauren will be getting it right just around the time when China becomes the biggest market for luxury goods in the world in 2015.