Polo/Ralph Lauren Corporation - Company Profile, Information, Business Description, History, Background Information on Polo/Ralph Lauren Corporation



650 Madison Avenue
New York, New York 10022
U.S.A.

History of Polo/Ralph Lauren Corporation

The Polo/Ralph Lauren Corporation has become one of the most successful fashion design and licensing houses in the world. Founded by American designer Ralph Lauren in the late 1960s, the company boomed in the 1980s as Lauren's designs came to be associated with a sophisticated and distinctly American attitude. The company's first products were wide ties, but it soon designed and manufactured an entire line of menswear before entering the more lucrative women's fashion market as a designer and licenser. By the 1980s, the Polo/Ralph Lauren name helped sell a wide array of products, including fragrances and accessories for men and women, clothing for young boys and infants, and a variety of housewares, shoes, furs, jewelry, leather goods, hats, and eyewear. By the mid 1990s, Polo had a stake in retail sales that topped $3.9 billion, though industry analysts were unable to ascertain the exact value of the company.

The Polo empire began in the late 1960s, when clothing salesman Ralph Lauren got sick of selling other people's neckties and decided to design and sell his own. Lauren had no experience in fashion design, but he had grown up in the New York fashion world, selling men's gloves, suits, and ties. In 1967, he went to his employer, Abe Rivetz, with a proposal to design a line of ties, but Rivetz told him, "The world is not ready for Ralph Lauren." Lauren decided that it was, and he convinced clothier Beau Brummel to manufacture his Polo line of neckwear. "I didn't know how to make a tie," Lauren confessed to Vogue in 1982. "I didn't know fabric, I didn't know measurements. What did I know? That I was a salesman. That I was honest. And that all I wanted was quality." Lauren's ties were wider and more colorful than other ties on the market and they soon found a niche, first in small menswear stores and later in the fashionable Bloomingdale's department store.

Within a year, Lauren decided to form his own company with help from his brother Jerry and $50,000 in backing from Norman Hilton, a Manhattan clothing manufacturer. The company, Polo Fashions, Inc. (which changed its name to Polo/Ralph Lauren Corporation in 1987), expanded the Polo menswear collection to include shirts, suits, and sportswear, as well as the trademark ties. The company designed, manufactured, and distributed the Polo collection, which met with the approval of both the department stores that featured the clothes and the fashion critics who praised their style. Fashion critic Bernadine Morris was quoted in Time as saying, "He's acquired a certain reputation for clothes that are, you know, with it. But not too with it. Not enough to shock the boys at the bank." In 1970, Lauren received the coveted Coty Award for menswear. In a rare move, Lauren then began designing clothes for women as well as for men. His first designs--men's dress shirts cut for women--met with great success in 1971, and soon sales topped $10 million.

The rapid growth of Polo Fashions, Inc. proved hard to manage for the young entrepreneur, who had succeeded in crafting a brand identity but not in managing his business. By 1972, according to Time, "Lauren suddenly discovered that his enterprise was almost bankrupt because of poor financial management and the costs of headlong expansion." "I almost blew my business," Lauren told Forbes. "I wasn't shipping on time and had problems delivering." "It was probably ... one of the darkest moments in my life," he remembered in New York. Scrambling to survive, Lauren invested $100,000 of his savings in the business and convinced Peter Strom to leave his job with Norman Hilton and become his partner. The arrangement gave Lauren 90 percent and Strom 10 percent ownership. Strom described their duties to the New York Times Magazine: "We divide the work this way: I do everything Ralph doesn't want to do; and I don't do anything he likes to do. He designs, he does advertising, public relations; I do the rest." The Lauren brothers and Strom soon made changes in the structure of the company that set the stage for over two decades of unparalleled success.

During its first four years, Polo Fashions, Inc. had controlled each stage in the clothes making process, from design, to manufacture, to distribution. Their first step in reorganization was to concentrate on what they did best--design--and leave the rest to other companies. With this in mind, Polo Fashions, Inc. licensed the manufacture of Ralph Lauren brand womenswear to Stuart Kreisler, an experienced manufacturer who set out to build the reputation of the Lauren brand name. Under licensing agreements, the designer got a cut of wholesale revenues--usually between five and eight percent for Polo, according to Forbes--and shared in advertising costs. Such agreements would be the basis for Polo's future business. Moreover, Strom insisted that those retailers who sold the company's clothes make a commitment to selling the entire line, which meant they had to carry the $350 Polo suit. "That eliminated two-thirds of our accounts," Strom told Vogue. "But those who stayed with us experienced our commitment to them, and it wasn't long before we felt their loyalty in return." With business once again secure, the company was able to turn its attention to crafting a brand image as distinctive as any in America.

Beginning in the mid 1970s, Polo Fashions, Inc. entered a period of phenomenal growth that carried it through the late 1980s. From being a designer and licenser of limited lines of men's and women's clothing, the company expanded its products to include fragrances, eyewear, shoes, accessories, housewares, and a range of other products. Yet even as the number of products bearing the brand names "Polo" or "Ralph Lauren" expanded, the image of the company became more secure and more singular. Soon, people were speaking of the "Laurenification of America," crediting Ralph Lauren with creating a unique American aesthetic, and calling the 1980s the "decade of Ralph Lauren." The company's success in this period can be credited to the design skills of Ralph Lauren and to the astute image-making and marketing skills of Lauren and his principal partner, Peter Strom.

Fashion critics and journalists used words like integrity, elegance, tradition, sophistication, WASPy, mannered, pseudo-English, and sporty to describe Lauren's many designs. Yet no single word could encompass the many themes--from the famous English Polo Club designs to the distinctly American western designs--with which Lauren experimented. Some critics complained that Lauren was a relentless borrower, possessed of no unique vision. Lauren himself stated in New York that he was interested in "style but not flamboyance, but sophistication, class, and an aristocratic demeanor that you can see in people like Cary Grant and Fred Astaire." And, as Lauren pointed out, "The things I do are not about novelty. They're things I love and can't get away from. There are some things in life that, no matter what the times are, keep getting better and better. That's really my philosophy."



Polo excelled at getting Lauren's distinctive design image across to consumers. From its very first advertisements in New York City newspapers in 1974, the company attempted to portray its products as part of a complete lifestyle. Polo pioneered the multi-page lifestyle advertisement in major magazines. These ads presented a world lifted out of time, where wealthy, attractive people relaxed in Polo products during a weekend at their country estate or on safari in Africa. Vogue described the ads as a kind of "home movie," with a cast of "faintly sorrowful but wildly attractive people. The women are always between childhood and thirty; the men are sometimes old." Polo lavished huge amounts of money on these ads, as much as $15 and $20 million a year, though its licensees shared some of the cost by returning two to three percent of sales into the advertising budget. An ad director for a major fashion magazine told Time: Polo "has some of the best advertising in the business because it sets a mood, it evokes a life-style."

Lauren's intuitive design sense and the company's ability to create an idealized image for its products provided the base for the company to expand the variety of products it marketed and attain greater control over retailing. From its first product lines--Polo by Ralph Lauren menswear and Ralph Lauren womenswear--the company introduced a variety of products: Polo by Ralph Lauren cologne and boys' clothing in 1978; a girlswear line in 1981; luggage and eyeglasses in 1982; home furnishings in 1983. Later brand extensions included shoes, furs, and underwear. The company expected to introduce its collection of apparel for newborns, infants, and toddlers in 1994. These new product lines were accompanied by continual updating of the older brand names.

Though Polo retained control over the design and advertising of its products, the success or failure of Polo product expansion often depended upon its licensees, as Polo's experience with fragrances and its home collection indicated. Polo's fragrances became a major income producer only when it found a licensee who was willing to help develop and promote the products. Though Polo had marketed its fragrances--Polo by Ralph Lauren for men and Lauren for women--since 1978, they were not major sellers until the mid 1980s, when the company licensed fragrance production to Cosmair, Inc. In 1990, Cosmair introduced Polo Crest for men and Safari for women, made to accompany a new line of clothing also bearing the Safari name. Cosmetic Insiders' Report called Safari the "Fragrance of the Year" after it recorded sales as high as $11,000 a day at Bloomingdale's flagship stores. Cosmair hoped to sell between $25 and $30 million wholesale by the end of the fragrance's first year. Two years later Polo and Cosmair launched Safari for Men, which they promoted in an uncharacteristic television commercial in which Ralph Lauren rode a horse bareback on a beach. According to Women's Wear Daily, Cosmair hoped to sell $28 million in wholesale at the end of six months, and to top $50 million by the end of two years.

Not all licensing arrangements worked so well. In 1983, Polo began to promote the introduction of its "Home Collection," a line of products that Lauren had designed for the home. House & Garden called the collection, which numbered over 2,500 items and included everything from sheets to furniture to flatware, "the most complete of its kind conceived by a fashion designer." But the collection soon ran into serious trouble as the licensee, the J. P. Stevens Company, experienced difficulties getting the products to retail outlets on time. J. P. Stevens also had trouble maintaining quality control, having themselves licensed elements of the line to other companies. In addition, Stevens demanded that stores that wanted to show the collection construct $250,000 free-standing, wood-paneled boutiques to display the items--and stores balked at the price tag. Polo/Ralph Lauren vice-chairman Peter Strom told Time that the introduction was "A disaster! Disaster!" It took several years for Polo to get the collection back on track.

Over the years, Polo used a number of techniques to exert control over the way its merchandise was distributed and sold. Early on, the company insisted that retailers offer the entire product line instead of simply selecting items it wanted to carry, arguing that the lines had to stand as a coherent whole. Beginning in 1971, the company began to offer franchises as well, and it has franchised over 100 Polo/Ralph Lauren stores worldwide since that time. Instead of charging a franchise fee, the company made money as the wholesaler for the clothing. These franchises allowed an entire store to concentrate on the Polo image. In 1982, Polo opened the first of its 50 outlet stores in Lawrence, Kansas. The outlet stores allowed the company to control the distribution of irregulars and items that had not sold by the end of each season, thereby preventing the company's products from appearing in discount stores. These outlet stores were placed at a significant distance from the full-price retailers to ensure that they did not steal business. Such expansion occurred not only in America but around the world, as Polo opened shops in London, Paris, and Tokyo.

The flagship of the Polo/Ralph Lauren retail enterprise was the refurbished Rhinelander mansion on Madison Avenue in New York City. Opened in 1986, the 20,000-square-foot mansion featured mahogany woodwork, hand-carved balustrades lining marble staircases, and sumptuous carpeting. "While men who look like lawyers search for your size shirt and ladies who belong at deb parties suggest complementary bags and shoes, you experience the ultimate in lifestyle advertising," wrote Lenore Skenazy in Advertising Age. Naomi Leff, who designed the interior of the Polo palace, called it "a marker in retailing history. It tells manufacturers that if they're willing to put out, they'll be able to make their own statement, which is not being made in the department stores."

Establishing brand-focused retail outlets made perfect sense for Polo/Ralph Lauren, for it allowed the company to increase profits by eliminating the middleman as well as to control the environment in which the products appeared. In fact, other designers have since followed Polo/Ralph Lauren's lead, including Calvin Klein, Liz Claiborne, Adrienne Vittadini, and Anne Klein. But the move caused tension between the designer and his traditional retailers, the large department stores. A Forbes feature on Lauren's strategy claimed that "a lot of people in business think it is in bad taste to compete with your own customers. Lauren clearly does not agree. And such is his pull at the cash register that he may get away with this piece of business heresy."

The Polo/Ralph Lauren Corporation rode its expertly crafted brand image and astute retailing strategies to remarkable heights in the 1980s, as sustained economic growth and America's fascination with Lauren's image fueled an unparalleled expansion in products bearing the Ralph Lauren name. But retail expansion slowed dramatically with the economic downturn in the early 1990s, and some stores that once thrived on the sales of Ralph Lauren's high-priced products complained that the company was unable to adjust to changes in the market. Robert Parola, writing in the Daily News Record in 1990, noted that many clothing manufacturers had lifted their designs from Ralph Lauren and begun selling them for less.

Polo/Ralph Lauren was hardly a company to be counted out in the 1990s, however. Successful fragrance introductions and the development of the popular Polo Sport active-sportswear and Double RL jeanswear lines promised to keep money rolling into the company coffers. The 1994 sale of 28 percent of the company to a Goldman Sachs & Co. investment fund for $135 million prompted speculation about the future of the company. Wall Street Journal reporter Teri Agins remarked that "the company is at a crossroads as it embarks on a strategy to improve its retail operations and lure a younger generation" to its products. In the short term, industry observers expected the company to use the cash influx to expand its retail stores. But observers also wondered whether this sale, the first in the company's history, indicated that the company would eventually go public or that Ralph Lauren was beginning to look toward life after designing. If either of the latter speculations were to prove correct, the nature of Polo/Ralph Lauren would certainly change, for it is hard to imagine a design house controlled by a board of directors. What remained to be seen in the mid 1990s was whether Polo/Ralph Lauren's continued entrance into retailing would complement or supplant the company's role as designer of choice for the upwardly mobile of the world.

Principal Licensees: Ralph Lauren Womenswear, Bidermann Industries; Ralph Lauren Fragrances, Cosmair, Inc.; Ralph Lauren Home Collection.

Additional Details

Further Reference

Agins, Terry, "Clothing Makers Don Retailers' Garb, Manufacturers Open Stores, Irk Main Outlets," Wall Street Journal, July 13, 1989.------, "Izod Lacoste Gets Restyled and Repriced," Wall Street Journal, July 22, 1991, p. B1.------, "Ralph Lauren Sells 28 Percent Stake in Polo Concern," Wall Street Journal, August 24, 1994, pp. A3, A10.------, "Retailing Executive Farah Is Said to be Discussing a Post with Ralph Lauren," Wall Street Journal, October 7, 1994, p. B10.Aronson, Steven M. L., "High Style in Jamaica," House & Garden, October 1984, pp. 127-137, 230.Barns, Lawrence, "J. P. Stevens Takes the Designer Route," Business Week, September 19, 1983, pp. 118-119."A Big Time Safari for Ralph Lauren," Women's Wear Daily, October 27, 1989, pp. 1, 14.Born, Pete, "Polo Crest Takes Fashion Approach to Fragrance," Daily News Record, July 26, 1991, p. 3.------, "Lauren Hits TV Trail for Men's Safari," Women's Wear Daily, August 21, 1992, p. 5.Donaton, Scott, and Pat Sloan, "Hearst, Lauren at Work on Lifestyle Magazine," Advertising Age, April 27, 1992, pp. 1, 54.------, "Ralph Lauren Sets Magazine Test," Advertising Age, November 2, 1992, p. 3.Ettorre, Barbara, "'Give Ralph Lauren All the Jets He Wants,"' Forbes, February 28, 1983, pp. 102-103.Ferretti, Fred, "The Business of Being Ralph Lauren," New York Times Magazine, September 18, 1983, pp. 112-113, 124-133.Gross, Michael, "The American Dream," New York, December 21-28, 1992, pp. 71-72.Koepp, Stephen, "Selling a Dream of Elegance and the Good Life," Time, September 1, 1986, pp. 54-61.Kornbluth, Jesse, "Ralph Lauren: Success American Style," Vogue, August, 1982, pp. 263-265, 306-307.Lafayette, Jon, "Ralph Lauren Drops WRG," Advertising Age, September 18, 1989, pp. 1, 84."Lauren," New York, October 21, 1985, pp. 40-47."Lauren Price Cuts Don't Spark a Trend," Women's Wear Daily, June 14, 1991, p. 17.Ling, Flora, "Ralph Lauren's Polo Game," Forbes, June 26, 1978, p. 88.Lockwood, Lisa, "Ralph Lauren's Sales Go Up as Prices Fall," Women's Wear Daily, June 11, 1991, p. 1.Mander, Lois, "Safari for Men by Ralph Lauren Off to a Powerful Start," PR Newswire, September 18, 1992.McHugh, David, and Joanne Miller, "Sales Team Had Designs on $1.4 Million," Detroit Free Press, September 12, 1991.Parola, Robert, "Polo/Ralph Lauren," Daily News Record, October 17, 1990, p. 3.------, "Polo/Ralph Lauren: At the Crossroads," Daily News Record, October 29, 1990, p. 10."Polo/Ralph Lauren Adding Store in California," Women's Wear Daily, October 29, 1990, p. 11."Ralph Lauren: The Dream Maker," U.S. News & World Report, February 8, 1988, p. 78."Ralph Lauren, the Seventh Avenue Designer Known for His Sportswear, Is Taking a Major Swing at the Golf Market," Golf Pro Merchandiser, 1989, p. 37.Rosen, Pat, "Phony Pony?: Polo Player Rides to Court in Logo Lawsuit," Houston Business Journal, May 6, 1991, p. 1.Skenazy, Lenore, "Lauren Gets Honorable Mansion," Advertising Age, October 20, 1986, p. 56.Sohng, Laurie, "Polo Partners Ralph Lauren Footwear Always Plays to Win," Footwear News, October 14, 1991, p. S4.Spevack, Rachel, "Polo and Izod: Adding New Luster to Knit Logos," Daily News Record, March 12, 1991, p. 5.Talley, Andre Leon, "Everybody's All-American," Vogue, February 1992, pp. 203-210, 284.Trachtenberg, Jeffrey A., "You Are What You Wear," Forbes, April 21, 1986, pp. 94-98.

User Contributions:

Comment about this article, ask questions, or add new information about this topic: