Ralph Lauren Focuses on Factory Outlets to Drive the Growth in Sales

Luxury brands and companies have to depend on innovative strategies to manage the changing environment. The traditional methods of marketing aren’t as effective with the increased competition and changing demographics of the customers. Polo Ralph Lauren is a fine example of a leading American luxury lifestyle company that is focusing on nontraditional channels to drive its growth in sales. The luxury brand offers Ralph Lauren collection for women, Ralph Lauren Men’s wear and luxurious accessories along with fragrance and home decor. They face direct competition in the market with other premium apparel and accessories players like Coach, Liz Claiborne and Ann Taylor.

Their strategy to grow their business is unusual. Instead of focusing on the traditional Ralph Lauren outlet they have focused on their factory outlets. The results have been dramatic as the factory stores have become their biggest channel of sales contributing 34% of the total value of the sales. It has grown to become the single largest business division of the firm. Though the factory stores serve predominantly to the value conscious customers, they have not been neglected and carry men’s wear, women’s wear, children’s apparel, accessories, home furnishings and fragrances. This is true all over the world. The stores also help clear the excess and out of season products.

The focus on the factory stores has resulted not only in the growth of sales but increase in profitability as well. The revenue per square foot at Ralph Lauren factory stores has increased by about 6.5% annually over the last five years. About sixty new factory stores have been added in the last five years with the total number topping 190. The number will keep growing till it reaches 250. The cost of operations being lower in a factory store the margins are higher. After dropping a bit during the dull phase it has bounced back to about 16% now.

Via: blogs.forbes

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