15431 Fri, 10/17/2008 - 2:04pm
By Warren Shoulberg
“I have always aspired to create home collections that offer a breadth of possibilities.” Ralph Lauren
For a quarter of a century, the breadth of possibilities has produced the longest-running, no doubt most influential and arguably single-most iconic brand in the home furnishings industry: The Ralph Lauren Home Collection.
And this month, as the brand celebrates its 25 anniversary, it is poised to enter a new era, with a new division president, several new key licenses imminent and a vastly changed retail landscape that has caused it to expand its distribution beyond its traditional upstairs niche.
“I jumped at the chance to come here,” said Frank Guzzetta, who just came on board as president of Home this past summer, “because I saw an opportunity for tremendous growth.
“There’s nobody that has more great product than Polo Ralph Lauren. The wonderful thing is the bandwidth of this style.”
That bandwidth has expanded dramatically over the past two years as Lauren’s main channel of distribution, department stores, have lost market share to other retailers. Two years ago, the company introduced the Chaps Home line at Kohl’s, followed in 2008 by American Living at J.C. Penney.
The company does not release retail sales numbers, but estimates from the trade are that well over a billion dollars of Ralph Lauren-created home products were sold last year. In fiscal 2007, the last year for which figures are available, home revenue for Polo Ralph Lauren was $390 million, largely through licensing royalties, representing 7 percent of corporate revenues.
Through the 25 years, the collection has remained remarkably consistent, although Lauren, in an exclusive interview with HFN, says additions have come as things have progressed.
“Over time, I have added all the elements that make a house a home—from fabric and wallcoverings to floor coverings to lighting, and even a range of paint colors and techniques to complement them,” Lauren said in response to HFN questions.
One big change, he said, has been the Internet. “Obviously [it] has precipitated a huge change in the way we communicate to our customers.”
And the bulk of those customers will come from department stores, said Guzzetta, who brings with him an impressive retail resume, including most recently as head of Marshall Fields, which became the Macy’s North division after it was bought.
“You don’t spend 30 years in the department store world and think that department stores are going away,” he said in his corner office at the Home Collection’s base on Madison Avenue in New York City. “I really believe in it as a channel of distribution and I think there’s a lot more business to be done by the Lauren brand in department stores.”
Much of the company’s business comes from this channel: According to its 10-K report, 24 percent of corporate sales are through Macy’s with another 12 percent through Dillard’s. Home-only numbers are not available.
Guzzetta, who spent eight years in the Peace Corps in India, can trace his roots with the Ralph Lauren brand almost as far back. He was the home textiles divisional merchandise manager at what was then Woodward & Lothrop in Washington, when the line was introduced. Twenty-five years later, he sees things much the same.
“The customer wants department stores to be the curator for brands. Listen, we have the brand, why not do it better than anybody else?”
The company’s flagship home brand remains Ralph Lauren, but it is the Lauren label that does the most business. That will not change, but the potential remains for additional brands, much the way the company operates in apparel.
“I am always exploring opportunities for expansion,” Lauren said. “Creating the RRL and Rugby lines in the apparel arena allows me to speak to new customers in their own languages.
“Both brands have such distinctive voices,” he said. “I would consider expanding them into home or creating something similar when the time is right.”
Guzzetta thinks the Ralph Lauren brand can go into wider distribution. “It’s a brand that can’t be promoted, so that’s probably not going to happen in most department stores.
“But places like Bloomingdale’s and ABC Home could do it.”
He also is high on the brand’s place in the company’s own stores. “One of my top priorities is to get a model for a home store that can be rolled out around the world. Ralph has always wanted a Polo home store and the customer is crying out for it.”
As Polo has continued to bring businesses back into the corporate fold, eliminating licenses, some have wondered if the same thing will be done in home. “Right now we’re operating as a licensing model, but anything can happen,” Guzzetta said.
“But home is more complex than fashion and if you have good licensing partners, the model can produce better returns than if you did it yourself.”
Two key licenses are in transition. Furniture, which had been produced by Henredon for a number of years, is headed for a new licensee, but as the contract has not been finalized, Guzzetta was not able to disclose a name. The same for the tabletop license, which had been held by Mikasa but with the sale of that company to Lifetime Brands earlier this year, will be going to a new home, too.
Both new licensees are expected to show product at this week’s furniture and tabletop markets.
Tabletop has admittedly been a tough category for Lauren, but things will be different this time, Guzzetta promises. “We have a real opportunity to have a narrow assortment with a real difference. Maybe it’s a higher price point, but you can’t be a total home resource without tabletop.”
Any new product classifications the company is looking at? “We are the most complete home furnishings resource out there, so nothing new is expected.”
Guzzetta obviously still has many plans to put in place, but he’s excited about where he is. “It’s a great place.” Being on the supply side, he says, feel different. “You instantly feel the difference. But I understand the other side.”
To that other side, the retailer, he says: “We have the toys you want and you have the batteries. Why don’t we work together?”