What could be next for Ralph Lauren, the Polo man? Where is the new challenge for the designer who has already put his touch of funky elegance on almost every item of apparel for men, women and children and stamped his brand on shoes, luggage, perfume and even eyeglass frames?
There would not seem to be much room for growth for an enterprise headed by a man who deliberately limits distribution to elevate his cachet. "I'm not about to put my name on chocolates," he said last week, and he has rejected requests from auto makers to do their interiors.
"You can't just put your name out there, license its use and walk away," he said, in a swipe at other designers who have done so. "You have to have a point of view and a concept. Everything I have done looks like me."
But these self-imposed restrictions, which are the essence of Lauren's marketing technique, don't mean he has no more worlds to conquer. On the contrary, he is about to embark on the biggest, most ambitious and most unorthodox venture he has undertaken since he came out of nowhere with his first Polo ties 15 years ago.
In partnership with J.P. Stevens & Co., the giant textile company, Lauren is developing a complete line of home furnishings, designed by him, made and distributed by Stevens: furniture, carpets, linens, tableware, lamps, all by Ralph Lauren, all bearing the Polo label, all aimed at the affluent buyer.
Stevens has set up a subsidiary, Ralph Lauren Home Furnishings Inc., to produce and market the new line, including a complete array of home products down to kitchen utensils and closet accessories. The company is establishing a separate showroom at its headquarters here to "conceptualize and display the total Lauren home environment as a guide for participating retailers."
It's not unusual for prominent fashion designers to put their names on accessories for the home, such as sheets and towels, but Lauren's project goes far beyond that. His aim is to create and sell a complete environment for the home, just as he created a complete style for the individual.
It will require retailers to commit large amounts of display space to a single line, and to reorganize their stock to display in one place items that have traditionally been in different departments, such as lamps and linens. And the home furnishings line will be coming onto the market in a time of deep recession in the industry.
The venture is, in short, a big gamble, but Lauren said in an interview that "in every business there are buys who play it safe and guys who roll the dice." He clearly views himself as one of the gamblers, but in fact, because of the way he runs his business, it's mostly the manufacturers and retailers who will be doing the betting. The financial risk for Lauren himself appears to be minimal.
Except for men's suits and sport coats, Lauren's firm, Polo Fashions Inc., manufactures virtually nothing. He and his staff provide the designs, supervise the manufacturing and marketing and control the advertising, but the manufacturing and distribution are done by independent companies that pay royalties for a license to use the Ralph Lauren and Polo labels.
As a result, according to Polo president Peter Strom, "the royalty money is almost all cream" because "I don't have to worry about piece goods, equipment, shipping or billing." It is the licensees who have to buy the fabrics, pay the workers, store and ship the products, insure the inventories and handle the bookkeeping.
The home furnishings line, he said, will operate the same way. J. P. Stevens, and sub-licensees, such as Henredon Industries for the furniture and Towle Manufacturing Co. for the silverware and bar accessories, will do the manufacturing and shipping. Lauren and his small staff are creating the designs and will control all the the advertising and the selection of retail outlets. The products will bear the Polo label. And the licensees will pay royalties to Polo Fashions Inc.
Because the company sells no stock to the public, it is not required to reveal any financial information, but Strom said wholesale sales for the entire Ralph Lauren line, from suits to cologne, are about $400 million a year. Royalties returned to Polo Fashions Inc. by licensees are about $14 million.
That appears to be a modest return, but it does not include any profits from the Polo men's wear line, which the company manufactures itself at a plant in Lawrence, Mass. Besides, the company has relatively low overhead costs. Its entire payroll, aside from the factory, is less than 250 persons, Strom said, and its offices are in a suite of converted apartments in a modest midtown building.
Lauren and Strom, his business manager, seem unperturbed at the thought of entering the home-furnishings business at a time when it is in a deep slump. Strom, in fact, appeared surprised by the question. The reason is that the Polo line will be at the high end of the price range, where sales have generally remained strong.
"The home furnishings business is struggling anyway," Lauren said. "They are looking for new things. I say, hey, people already have all the clothes in the world, but they have homes, too. There's a market for specialness. Not everything has to be plastic and polyester."
As for breaking down the traditional lines of retailing that separate linens from furniture or tableware, Lauren said, "when I started out in men's wear, there was a shirt business, a tie business, a suit business, a shoe business -- no one designer was doing it all. Now in home furnishings, I have something to say. If the retail guy is bright, he'll listen to it."
Buffy Birritella, Polo's advertising director, said the home furnishings line will be directed toward "people who use their homes to make a statement about who they are, people who want to control their environment." The inspiration for it, she said, came from Lauren's own experience at his Manhattan apartment, his ranch in Colorado, and his homes in East Hampton and Jamaica -- a long climb from the streets of the Bronx where he grew up in the 1950s.
She said "Ralph considers himself, his wife and his kids as his consumers. We have never made anything just because it will sell."
She said the home furnishings line will be marketed through upperbracket department stores, probably including Bloomingdale's, and through the existing Ralph Lauren Polo clothing boutiques, which will be expanded to handle the new merchandise. There are 30 such stores now, with seven more scheduled to open early next year.
Those stores, which are individually owned, sell only Ralph Lauren merchandise. A storeowner who knows the clothing business might be unfamiliar with home furnishings, but Birritella said the retailers are "bullish on Ralph Lauren because our stuff is selling. They are in the Ralph Lauren business, not the clothing or furniture business."
Department stores, she said, are bidding against each other for the rights to handle the new line when it goes on display next spring. The stores "will have to give us the floor space we need to display it," she said. "If they don't, they won't get the product. We can afford to be audacious."
As advertising director, Birritella can probably claim some credit for the rapid growth of Lauren's business in the past few years. Until 1978, she said, the parent company did not advertise all all, but left it up to individual stores. Then an extensive advertising campaign aided the successful market debut of Lauren's colognes and perfumes, which are manufactured by a unit of Warner Communications Inc., and carefully-managed, high-impact advertising is now central to Lauren's marketing program.
In recent issues of Vogue and the New York Times Magazine, for example, Polo set what must be a record by taking 24 consecutive fullcolor pages, at a cost of about $800,000, to promote fall clothing and accessories. As usual, Lauren himself appeared as a model.
Even competitors acknowledged that the package, in which some pages contained no words at all, only photographs, was innovative and effective. Best of all, from Polo's point of view, is that the parent company did not have to pay for most of it. The licensees, manufacturers of the individual products, turn a portion of their advertising budgets over to Polo, and Lauren uses the money to advertise all of them together.
"The license agreements require that Ralph do the advertising," Birritella said. "You can't have all the licensees doing their own thing." According to Strom, the objective is to "create one world. No one would know we use licensees, you never see their name, only Ralph's name."
The same rules will be applied to home furnishings as to clothing and accessories, they said -- no matter who makes an item, it will bear only the Ralph Lauren Polo name, and will be advertised as part of his package.
Lauren's advertising agency is Kurtz & Tarlow, of New York. Birritella said the agency's chairman, Dick Tarlow, writes the copy for Polo ads, and his wife, Sandy Carlson, is the art director, but Lauren himself "approves every comma."