Luc Perramond: There are many similarities. Like Hermès, Ralph Lauren is a global brand and diversified in terms of product categories. This gives it a very different perspective than a watch specialist. Another similarity is that it is a family business. The company was created in 1967 by Mr. Lauren. Over the past 50 years, he has built it into an empire, but it still very much has the feel of a family business. I find this is similar to Hermès. Another similarity is the vision to be qualitative and timeless – not be a player in the fashion world, because what is in fashion goes out of fashion. We are more a player in the true luxury market.
As a joint venture, Ralph Lauren is a unique business model within the Richemont Group. When it was formed back in 2007, it was conceived as a strategic alliance between a leading international designer and a leading player in luxury watchmaking. I think that combination, bringing those assets together can result in a very a successful business.
Well you know we are a very young company. The initial launch was only in 2009. The focus has been put on watches first – there were some jewelry collections launched later on, but so far most of the effort and the passion and energy have been put behind watches. Part of my mission is to develop the jewelry side now, and I think the potential for jewelry is very important. We have a great following among our female customers, and they are all expecting a fine jewelry collection designed by Mr. Lauren.
The production so far has been evenly balanced between ladies’ and men’s, with the Stirrup on the ladies’ side, which has become iconic, and the Automotive and Safari on the men’s. But my intuition is that we have a lot of potential with the ladies’ market because our customers are predominantly women, especially in the luxury collections. The women’s market is an important niche for us and it tends to be less crowded than the men’s market. The men’s watch market at the high end is saturated today. On the female side, there are fewer players, and I think we are very well positioned and very credible to offer great timepieces for ladies.
We are a house of creation and creativity, and we need to demonstrate this wonderful creativity. So we will be introducing completely new designs. There are many projects in the pipeline, both in watches and jewelry, so we need to show this beautiful creativity. We will see very interesting things next year and the year after. There is a five-year plan, which is quite intensive in terms of new product development and new designs.
The priority is to identify designs that are at the heart of the DNA of the brand, that are so distinctive you can immediately recognize the collection and attribute it to Ralph Lauren, so we need to find a strong signature. Once we feel we have that, we’ll offer the full spectrum – the collection will go from the top, with gold and diamonds, down to more accessible models in steel with quartz. There may also be opportunities to introduce small complications for women.
Mr. Lauren is very involved in the design process. We have meetings in New York every month with him and his team to review product developments. He is very involved and is leading this process. He is a collector, with a very strong interest in watches, so in terms of product and design, and also technique, he is very knowledgeable. Also, he knows what he stands for, and has a very clear vision, so we need to follow that. At the same time, we are there to explain that sometimes beautiful designs might be complex or highly complicated to manufacture, so we have to find the right balance. So there is a very intense and very rich exchange. It’s a very interesting process, which I’m used to because it’s the very same process I had with Hermès. I was working with the artistic director in Paris, and he was giving me his vision and making sure we were working with the philosophy of the brand.
As a partner with Richemont, we have access to the best movements, including Jaeger-LeCoultre, IWC and Piaget. So that is a great benefit of the joint venture with Richemont, and it says a lot about the intention of Mr. Lauren and his highly qualitative approach. He wanted to enter this market from the top and to establish Ralph Lauren as a very serious watch brand. So the goal is not to create our own caliber, but to personalize movements available within the group. For example, the movement in the automotive skeleton Watch, the most important introduction this year, was made by IWC, but was skeletonized specifically for us, so that it is almost a proprietary Ralph Lauren movement.
The strategy is dual distribution. We have a nice global network of Ralph Lauren boutiques, including in Asia, Japan and of course the U.S., so that is a wonderful asset. Watches and jewelry are present in many of those stores and we are trying to give them even more space and visibility, so that’s an important priority. We will also continue to work with specialty multi-brand retailers, and we want to build a network of the best specialty retailers who can best represent us. You need a certain critical size of retail network to grow and have visibility. It shows we are part of the league of prestigious watch brands, and it clarifies this positioning for our clients. Today we are present in 50 retailers, and the five-year plan is to have 300.
Yes, there will be increased production. That is a mission. We need to be more visible in the watch business, and I think we have the potential. But 300 points of sale is actually very selective distribution. You know, if you look at our peers, some prestige brands have a distribution network much larger than that, of 500, 600, 800 worldwide. So we are being very selective with the goal of 300.
We are watching the exchange rates carefully. It’s a volatile environment. At the same time it’s important not to overreact, because currency exchanges can react one way and come back the other way very quickly, We did adjust our pricing slightly in Europe, Japan and Canada, [up by 7% to 8%], but it has been rather cautious and we have not been so aggressive, because we need to see how things develop.