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Ralph Lauren: American Company Analysis

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Ralph Lauren is an American company headquartered in New York, which produces and distributes premium lifestyle products. It has been a leader of the apparel industry for more than 50 years since its foundation in 1967 by Ralph Lauren. It generates over six billion U.S. dollars every year and it had a 9% compounded growth rate over the past ten years.

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Ralph Lauren developed four different categories of products which are: apparel, home, accessories and fragrances. If we take a closer look at the company’s revenues, we can see that the major one is apparel. In its financial report Ralph Lauren defines apparel as an “extensive collections of men’s, women’s, and children’s clothing, which are sold under various brand names”.

Target market

Ralph Lauren targets consumers from the upper-middle classes which are mostly family oriented has the brand also distribute children clothing. Moreover, the reference to Polo which is a sport indicated that the company targets sporty people.

Ralph Lauren company’s strategy

In 2018 the company created a five-year performance strategy “for the long-term growth and value creation”. Ralph Lauren’s strategy starts with the purpose, which defines company itself and the impact they want to do in the world. So, the purpose of the company is “to inspire the dream of a better life through authenticity and timeless style”. By “inspiring the dream of a better life” they do not mean the material status, but the life filled with hope, possibility, etc. Talking about the Strategic Framework, it consists of three main parts. First one is 5-years goals, which allows the company to “drive sustainability, long-term growth and value creation.” One of the goals is +$1 billion incremental sales. Second part is guiding principles. They are Consumer at center, Elevate and energize the world, Balance growth and productivity. And the last main part of the Framework consists of five Strategic Priorities, such as Operate with discipline to fuel growth, Drive targeted expansion, Lead with digital, Win over a new generation and Energize core products and accelerate underdeveloped categories.

The market overall

The market for personal luxury goods reached a record high of €260 billion, representing a 6% growth. Worldwide, the personal luxury goods market experienced growth across most regions, driven primarily by more robust local consumption. In contrast, purchases among tourists remained flat on average. Overall, shoes and jewelry were the top luxury growth categories, gaining 7% each. Online luxury shopping continued to accelerate in 2018, growing 22% to nearly €27 billion; it now represents 10% of all luxury sales.

Who’s buying?

Luxury brands can no longer deny the influence of younger consumers. Generations Y and Z accounted for 47% of luxury consumers in 2018 and for 33% of luxury purchases. Men accounted for the largest market share of approximately 56.00% in 2018. As per a survey, it was found that men tend to spend more money on luxury and are far more likely to buy things for others than for themselves.

Where are they buying?

In China, there was the biggest growth and the country represents 33% of global luxury spending. In mainland China, luxury sales grew by 20%. Across the rest of Asia, sales grew by 9%. Europe lagged in 2018; however, in America, the growth has been more noticeable, although not as fast is Asia.

Competitors

Competition within the apparel industry is very strong due to the numerous amount of brands producing products with the same style for the same target market. The company we chose, Ralph Lauren, has 5 main direct competitors which are: Burberry, Calvin Klein, Tommy Hilfiger, Lacoste, and Brooks Brothers. All of these brands have the characteristics to target the same group of consumers who belong to the upper-middle class.

Who is benefiting from the industry?

The clothing industry includes a large variety of professions, such as fashion designers, patternmakers, sewers, merchandisers, retailers, marketers, fashion models, and supporting administrative staff.

How does the industry work?

A fashion designer will design the clothes look and then work with sewers to finish its sample. After it is sent to the merchandising department and approved, related factories will receive orders and ship the finished clothes to retail stores. Salespeople will then handle all issues about marketing and sales.

Industry outlook

With the influence of globalization and technology development, the future of the industry trend is obscure. The apparel industry is anticipated to overall sustained growth. Computer-aided techniques, however, have generally taken the place of traditional labor ,which also causes slow growth in related businesses. 

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