Ralph Lauren's Strategy

Because I own stocks in Ralph Lauren, I subscribe to RL alerts. Today, I found a post made by Suzanne, a partner at Venture Law Associates LLP. She wondered:

If a business outsources its core functions, is it still a business? This is what I pondered after spending time today on Ralph Lauren's site. You can now either buy clothes that Ralph actually designed or click through to "Create your Own Gift Collection", where you can design your own versions. Simply: (a) select the clothing item (shirt! tie! hoodie!), (b) choose your colours (Chatham Blue! Vermont Brown! Newport Navy!), (c) choose your pony or monogram, and (d) "make it your own"(add a vintage year!) Why pay a premium for the design vision of Ralph Lauren when you can pay the same premium for the design vision of, well, you?

Outsourcing design seems like an odd choice for a designer to make. I can't get my husband to select socks that match his suits; why on earth would I let him choose what horse galloped across his pectoral muscles? And why is displaying the year on a piece of clothing significant for men's fashion? Do we have to cellar some shirts for a few years before wearing them? Will they be collected like baseball cards at some point? I'm very confused....

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My understanding is that Ralph Lauren has not outsourced its core competencies at all. It is not letting computer nerds in India or laborers in China design its clothes. Or even consumers for that matter. This is not outsourcing at all.

It is called "branding" and brand participation. It's allowing customers to associate with and interact with the brand, which leads to brand identity and to loyal customers. By letting consumers interact with the brand on such deep level such as customization, RL forms relationship with the customer. By letting consumers choose, you're giving them almost exactly what they want, something good companies do. There is a great book I read on marketing a brand. Customers that feel they have a hand in creation create the best word of mouth and will advocate the brand.

In addition, RL has realized that its consumers are individuals and we live in a individualist, customizable society in which Converse allows you to build your Chucks, Google lets you customize your own start page, Toyota lets you "build" your own car, and iPod allows you to engrave your iPod. It's all about giving consumers what they want and letting them be individuals. Next to sending tailors to people's home to make them perfectly coats tailored to body and taste, this is the way to give people that individual attention that is so valued. Fashion lives because nobody wants to wear what everyone else wears. It would be wrong if a highly esteemed firm like Ralph Lauren which is on top of the latest trends to miss this wave. In fact, RL has always been good at embracing change. See: Interactive window, Ralph TV.

There is almost no danger of hurting the brand equity because consumers are limited in what they can customize. All the selections have been designed by the in house designers. It's not as if consumers can make a polo from scratch. This is no different than having a huge selection and letting customers choose the perfect one. The problem is if your husband has no fashion sense, the shirt he picks will still be ugly.

RL's core functions are designing clothes, managing, and marketing the brand. It has not abandoned design. It's still there. They've only extended the design part of some products by embracing our open source culture.

Furthermore, anything consumers do on their site can be used as cheap and effective market research. What do consumers want? RL gets that information faster than the feedback it gets from retailers and assessing what designs are successful. What colors are people choosing? What are the trends? Whatever it is, consumers are telling RL directly and almost instantaneously. This rapid and transparent information also leads to reduced costs because they can better adjust production.

Finally, it increases the market because it is able to offer a wider selection. How many times have you wanted something in red but they only had it in black and grey?

My last observation is "design" in this case is possibly nothing more than just a highly efficient way of letting consumers browse through a huge variety of clothes online.