The Ralph Lauren brand performs a delicate balancing act. On the one hand, it represents $3000 dresses. On the other, it is stacks of merchandise piled high on sale at Macy’s. Revenue from Ralph Lauren stores ($2.3 billion) is about equal to revenue from wholesale sales to other retailers ($2.5 billion). Yet the company stores make less than half the operating profit ($254 million) the wholesale business does ($585 million). With this financial reality, why does the company continue to invest in opening company owned stores–particularly one so lavish as the new “mansion” on Madison Avenue in New York?
In a word: brand.
The gorgeously appointed Ralph Lauren stores, filled with exquisite and high-priced merchandise, build the brand; the brand that fuels the profitable sales at department stores. Rare is the brand that gets the balance between high-class image and high volume right. With the new Madison Avenue store, the Ralph Lauren marketing organization walks that line with perfect poise.