Digital learnings from China inform Ralph Lauren's US COVID-19 response

Stuart Lauchlan Profile picture for user slauchlan May 29, 2020
Ralph Lauren is taking lessons from how China coped with COVID-19 as digital acceleration becomes a priority.

(Ralph Lauren )

I was joking with the team last week that actually, at this point, given the stores are not fully opened yet, we are, to some extent, a digital pure player because that's our biggest business today.

Given that retailer Ralph Lauren just posted some wider-than-expected quarterly losses, it’s perhaps good to know that CEO Patrice Louvet retains a sense of humor in these difficult times.

That aside, it is the digital playbook in the firm’s Chinese operations that is set to shape the fashion outlet’s strategic direction for the rest of 2020 and beyond with a focus on accelerating the online arm of the business.

This digital focus has been heavily inspired by how the course of the pandemic response rolled out in mainland China. Over the past few months, after the COVID-19 pandemic shuttered physical stores in early February, the company has expanded its curbside pick-up and Buy Online Pick-up In Stores (BOPIS) programs as well as tech-enabled initiatives, such as digital booking of appointments and virtual store tours. Louvet explains:

We accelerated our digital and omni-channel capabilities in China to better serve our consumers during the store closures and beyond. We were excited to launch digital clienteling, with virtual appointments and customized filing recommendations based on shopper's previous purchases. This program helped to mitigate traffic declines and leverage store inventories while consumers stayed home.

We expanded our Buy Online-Ship From Store program to provide greater convenience and limit face-to-face interactions as stores reopen. These initiatives, combined with our digital marketing, drove a 76% increase in China digital sales, significantly outperforming the broader apparel industry in February and March.

As the crisis progressed, the physical stores began to play a role again, he adds:

While our digital business led the recovery in Mainland China with a return to pre-COVID growth rates in March, we were encouraged by the recovery in our brick-and-mortar stores resulting from these omnichannel and in-store programs. We saw steady improvement in mainland sales from high double-digit declines in February at the peak of our closures, ramping back to positive growth in early May.

The rest of the world to follow

Expect to see a similar roadmap put into effect in other parts of the world, says Louvet:

These programs are being tested and rolled out in North America and Europe. And over the coming weeks, we're exploring other contactless options, like curbside pickup and self-checkout, in many locations…Although we expect the shape and timing of recovery curves to look different in each market, our experience and lessons from China are informing our actions across the rest of Asia, Europe and North America.

Prior to the current crisis. Ralph Lauren had been embarked on its 'Next Great Chapter' strategic overhaul, targeting Millennial and Gen Z consumers (inevitably) using digital, mobile and social platforms (also inevitably). The turmoil of decent months has done nothing to diminish Louvet’s enthusiasm for this thinking and has in fact led to him doubling down on it:

The strategic pillars of our plan completely hold true today in the current environment, but there's a clear opportunity to accelerate some of the priorities. Let me give you three examples. There are many more, but the three I would highlight are: first, continuing to accelerate digital. We transformed our digital selling platforms over the last three years, new e-commerce platform, new OMS [Order Management System], mobile personalization and connected retail streams. So we have a strong infrastructure in place when it comes to digital commerce and connected retail. We're fast tracking and scaling new digital capabilities like digital clienteling and other forms of virtual selling.

Some of the digital focus has involved some relatively basic stuff, such as re-prioritizing the presence and profile of key items on the company website in response to changing consumer purchase trends during the COVID-19 crisis. Louvet says it’s reflective of agility of response which he sees as critical:

We are tracking very closely kind of consumer interest across different categories. We've seen an acceleration in loungewear, an acceleration in ‘athleisure’, we've also seen an acceleration in the home business….We have actually started to pivot. If you go on our website, you will see that we've pivoted to a more emphasis on loungewear and ‘athleisure

Other digital elements are more sophisticated, such as April’s launch of Instagram Checkout capabilities, and back-end innovations around 3D tech. Louvet explains:

We’re making meaningful strides in digitizing how we work, which is an important part of our journey to drive faster lead times, minimize physical waste and reduce costs. We launched our digital library and 3D design studio. This represents a major milestone for our company as it will eventually enable us to digitize our entire end-to-end process from product development all the way to how we communicate with our consumers.

We started this process by digitizing all of our Polo core styles, raw materials and trims onto a digital library. Starting in fiscal 2021, we will create 3D prototypes for all of our core Polo products, replacing traditional physical samples. We've already created thousands of 3D prototypes in fiscal 2020, and it's only the beginning, especially as our teams learn to work in new ways from home.

I think overall, with all the new capabilities that we've put in place, whether that's digital clienteling, whether that's all the connected retail capabilities, we are encouraged by the progress we're making on dot-com.

But there’s still faith in the role of physical store, he adds:

We're encouraged by the early connected retail interventions like curbside pickup, for example, but we're going to continue to review our store portfolio in the context of our omni-channel strategy. And especially within North America wholesale, this means continuing to concentrate on our most productive brick-and-mortar doors, which are generally the top doors of our wholesale partners anyhow, as we also grow select wholesale opportunities.

My take

The good news on that wholesale front is that the recent bankruptcy moves at department stores JC Penney and Neiman Marcus haven’t had a knock-on effect on Ralph Lauren -  concessions business at the former is “non-existent” and “relatively small” at the latter, according to Louvet.  Whether the CEO’s confidence in the firm’s ongoing Next Great Chapter push is justified remains to be seen. The online uptick in Asia over recent months hasn’t been matched elsewhere - US digital sales were down 7% and 2% in Europe. Company founder Ralph Lauren talks poetically about ‘the idea of timelessness” defining the retailer. The next few months will put that belief very much to the test.  Louvet might well need to hang on to that sense of humor.

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