Younger Shoppers Reward Ralph Lauren’s Digital Push With Rising Profits
Mixing computers and couture, Ralph Lauren (NYSE: RL) set out three years ago to start appealing to Millennial shoppers while building sales through its digital division. Now both those efforts seem to be paying off. Though the company's international sales dropped because of Asian troubles, CEO Patrice Louvet recently reported positive results from its continued focus on its digital initiatives. But while the explosive popularity of online shopping clearly makes this a key way to remain chic, and profitable, into the future, the fashion house still needs to prove its implementation is sound.
Digital accessibility has clearly become as crucial as physical boutiques in an era when, according to research, over 76% of Americans buy products online, with 16% doing so at least weekly. According to Forrester research, mobile shopping on smartphones will skyrocket to $209 billion in 2022, up from $117 billion in 2018. While older Americans' shopping habits aren't as fossilized as stereotypes would have us believe, with 66% of "Boomers" shopping regularly online, "Millenials" and "Generation Z" still outpace them in using social media and the Internet to research products they want to buy. Around 90% of Millennials use online reviews to research purchase decisions. Ralph Lauren's strategists are right on the money when they say the company needs to strengthen digital integration if it wants to achieve popularity among the rising generations, too.
Ralph Lauren's refocus away from the brick-and-mortar and toward a vigorous e-commerce presence began nearly three and a half years ago, in mid-2016. Income growth had been negative since 2014, with the company losing approximately 4% of its income annually. Taking bold action during his brief tenure as CEO, Stefan Larsson launched the Way Forward Plan, designed to chop out the deadwood by closing some retail outlets, streamlining and rationalizing management and supply, and other efficiency-boosting measures.
Source Fool.com