Memo: Olympic Fashion

With a market value north of $8 billion and an annual revenue mark that should surpass 2020’s mark of $6.16 billion, few are comparable to Ralph Lauren. And that may be why its reception at this year’s Tokyo Olympics has been as chilly as its cooling blazers. The New York Times’ chief fashion critic Vanessa Friedman recently reported on multiple advancements:

The navy jackets of the flag bearers Sue Bird and Eddy Alvarez incorporate what the brand has dubbed RLCoolant technology. [1]

The brand also graduated from synthetic fibers to manufacture technical denim, a much-welcomed advancement in an industry that companies like Ministry of Supply and Mizzen + Main pioneered in 2011.

Oh, and the “jeans” (of course, they had to have jeans: Ralph-the-designer even wears his own faded denim to black tie events) are made from a special new material the brand says is “free from synthetic plastics.” [1]

As a veteran of both the preppy wear and technical wear industries, I applaud these improvements. They deserve the spotlight, as does the company’s emphasis on domestic manufacturing. These are welcomed advancements and no one can test the market quite like RL. But the masses don’t see these developments as worthy of its great, international stage. Though Ralph Lauren has done a notable job outfitting the American athletes since 2008, a world of change has happened since. The brand is not suffering from a technical or a supply chain deficiency; it’s suffering from a cultural one. In The New Prep, I explained that Ralph Lauren, Tommy Hilfiger, and Brooks Brothers are at risk of being relegated to cultural irrelevance:

For retailers like Ralph Lauren and Tommy Hilfiger, African-American streetwear culture co-opted their styles. That new base of organic interest drove the two brands to extraordinary heights in the 1990s. Ralph Lauren Corporation (and its $5.5 billion market capitalization) remains a beneficiary of that accidental cultural impact.

Few could have predicted what has happened since 2008. Brands like Aimé Leon Dore, Noah, KITH, Telfar, Todd Snyder (owned by American Eagle), and Rowing Blazers have each contributed to a rewriting of what it means to be preppy. In ways – each their own – the brands acknowledged what Ralph Lauren didn’t during its most pivotal growth stage. There is a new American sportswear, according to GQ’s Rachel Tashjian. It’s authentic and inclusive.

The culture that accidently sparked a revolution for Ralph Lauren in the 1980s and 1990s has all but consumed preppy culture today. In the Hamptons, Rebekah Mercer lives in the same community as Sean Combs. At elite preparatory schools, teenage students arrive at their campus entrances in Jeep Wranglers listening to hip hop and wearing Jordan 1s with their school-issued plaids and khaki. The scenes harken imagery more from New Jack City than Cruel Intentions. Their pop culture idols have brown and black skin. And if they don’t, they were influenced by artists who do. On weekends, high school and college wardrobes of the preppy are influenced by StockX or Golden Goose. The very definition of American Prep has so far diverged from Lisa Birnbaum’s 1980 cult classic The Preppy Handbook that it might as well be a different genre of fashion altogether. Except it isn’t. It is truly prep.

A 1990 article in Utah’s 171-year-old daily paper Deseret News began:

If the 1980s were a movie – and the metaphor is almost unavoidable given actor/president Ronald Reagan’s domination of the decade – the credit lines would have to include costumes by Ralph Lauren. [2]

Fast forward to the Tokyo Olympics and Ralph Lauren’s expression of American preppiness is one of 1980s tradition, not 2020s reality. And when you present a notion of culture that doesn’t accurately reflect America, you see countless responses like the one below:

Mike Sington on Twitter: “Why is Ralph Lauren always selected to design the Team USA Olympic Opening Ceremony uniforms? Our American athletes are a diverse group, they’re not a bunch of preppy white people headed to Newport or the Hamptons. pic.twitter.com/JaTCH6tEu9 / Twitter”

Why is Ralph Lauren always selected to design the Team USA Olympic Opening Ceremony uniforms? Our American athletes are a diverse group, they’re not a bunch of preppy white people headed to Newport or the Hamptons. pic.twitter.com/JaTCH6tEu9

The problem with an overdone caricature of high society is that it bolsters the insinuation that places like Newport, The Hamptons, elite schools, and prestige industries (once notable for 80s yuppie culture) are devoid of others. It’s simply not true. There are Ivy educated bankers of color on Wall Street. There are culturally and ethnically-diverse students in the best schools. Very few dress like they’re mooring their schooner after a weekend on Block Island. Suggesting that Ralph Lauren’s version of American prep is today’s reality is to say that those who currently inhabit the culture do not belong. So where does that leave us?

While Ralph Lauren’s fortunes are much better than Brooks Brothers, there is undoubtedly a new guard.

It was presumably tweets like these that warranted a response from one of the most accomplished fashion writers in the industry. In that tweet, I noted:

This is probably the last year that Ralph Lauren outfits the Olympic team. The next design cycle will likely be a consortium of brands that define today. Noah, KITH, Aime Leon Dore, Todd Snyder, Rowing Blazers, Fear of God, Telfar, et al.

This wasn’t wishful thinking by any means. To be clear, it is unlikely that Friedman was referring specifically to my suggestion, but I take issue with the reasoning that she used to justify Ralph Lauren’s continued involvement. Friedman’s contention is simple: RL’s moat is economies of scale.

Vanessa Friedman on Twitter: “All those people calling for a new official Olympic outfitter for Team USA instead of more Ralph Lauren – I get it, but remember: they have to be able to afford making free clothes for 615 competitors plus coaches etc. There are limited designers with that budget. / Twitter”

All those people calling for a new official Olympic outfitter for Team USA instead of more Ralph Lauren – I get it, but remember: they have to be able to afford making free clothes for 615 competitors plus coaches etc. There are limited designers with that budget.

Scale isn’t as much of a moat as one would think. There are a number of individual brands birthed in the digitally-native era who could accomplish this on their own. These aren’t merely independent design houses, they are financed businesses in most cases. Skims, the company founded by Jens Grede and Kim Kardashian has raised $154 million over its two-year lifespan. The company made news by earning the role as the “official underwear provider of the US Olympic team.” Rowing Blazers outfitted a much smaller contingent in El Salvador’s Olympic team, a nod to the recently re-capitalized company’s American ambitions. And Telfar Clemens, the Queens-born, Liberian-American designer successfully outfitted Liberia’s Olympic team – a nod that he, too, would rise to the occasion if the US Olympic Commission chose to consider a redefinition of today’s American culture. The popular designer was recently thrust into the mainstream after Beyoncé was seen with one of his bags. As Beyoncé does, so does America.

The economics of the opportunity are nothing to minimize, to Friedman’s point. And while few brands have the balance sheet to supply 80 garments to 615 Olympic athletes, there are ways in which a task like this can be met. Step outside of fashion for a moment and you may find your solution.

This week, NOBULL has an annual event in its name, the rights to which were for 10 years synonymous with Reebok. The MLS Cup Champion Columbus Crew moved to a new stadium after a change in ownership and a reinvigorated interest in its role in the city’s culture. When the $314 million Lower.com Field was announced to the surprise of many, NOBULL was but three years old. According to Columbus Business First, the deal is valued at $3-4 million annually. The Olympics opening ceremony presents a similar opportunity.

It is not likely that you will ever see a fashion label name a stadium or a sporting event, but Halston (1976), Levi’s (1980 and 1984), and Ralph Lauren (2008 – forward) established a close enough proximate. If given an opportunity to elevate one’s brand on an international stage, it’s likely that a modern retailer would take the chance and raise the requisite amount to afford the project. This includes the 10% USOC royalty, official rights, and the cost of goods required to ship an entire season’s volume of units to an Olympic host country. In return, that brand receives earned media, opened doors, top of funnel interest, and perhaps the great story of Summer 2024.

There will be a brand that rises to fill the big shoes of Ralph Lauren. When their interpretation of classic Americana is televised and streamed across the globe, it won’t feel like a caricature of American preppiness. It will look like America. If Ralph Lauren chooses to hand the baton to the next generation of American brands, there isn’t a label that wouldn’t design, manufacture, and ship that honor. In fact, there are at least a few brands actively awaiting the opportunity. They’re prepared.

By Web Smith | Editor: Hilary Milnes 

Memo: In Good Fashion

The merits of fashion retail have never been logical but for the best operators, there is a way to make sense of the chaos.

Likeability, brand equity, and appeal can shift in an instant. But there are predictors of success and failure. Historical benchmarks have long been available to serve as guideposts for the savviest retailers looking to navigate tumultuous times of the present. Manufacturers have thrived during war, recession, protest, and pandemic, and only the poorer performers cited external factors as cause for concern.

A common misconception in the digitally native vertical brand industry is that the previous year of the pandemic is thwarting the growth of fashion retailers, harming sales projections, stifling growth, or shuttering doors. The hard data contends there’s more to the story. Of the current top 100 fastest-growing direct-to-consumer brands tracked by 2PM, 40 are fashion retailers, while four are in the top 10. This has been a breakout year for fashion.

Updated for the week of 2/8/2021

A number of modern brands deepened community and developed foundations for explosive growth over the last 12 months: Parade, Rowing Blazers, Madhappy, Aime Leon Dore, Tracksmith, Buck Mason, Gymshark, and Monica & Andy are but a few. For the retailers who struggled through the last year, this memo can serve as a helpful reset.

The average American buys a piece of clothing every five days. A study of historical crises will show that our behaviors do not slow to halt during moments of distress. Instead, they change; we allocate our spend differently. We limit our purchases to “affordable pleasures” or we shift to differing styles that represent the feel of the moment in question. We are wired to buy things to wear and we do so frequently, even the most frugal of us. What changes is how we express our individuality in evolving times.

Consider Ralph Lauren’s rise in the late 1970s and early 1980s despite a catastrophic American recession. A 1990 article in Utah’s 171-year-old daily paper Deseret News began:

If the 1980s were a movie – and the metaphor is almost unavoidable given actor/president Ronald Reagan’s domination of the decade – the credit lines would have to include costumes by Ralph Lauren. [1]

The designer identified and marched forward on a new approach to an established idea, the article explains: The New Traditionalism or “the baby boom’s kitschification of the middle age.” Lauren wasn’t the first; an even greater example of this strategy is 1947’s launch of then-obscure designer Christian Dior’s first line.

In 1947, my first collection was successful beyond my wildest dreams. 

After departing the army in 1942, the 37-year-old Dior joined the Lucien Lelong fashion house alongside a gentleman named Pierre Balmain, the house’s other primary designer. Drio, along with Lelong and Balmain, labored to maintain France’s fashion industry throughout World War II. Five years later, Dior launched his design house’s debut fragrance. The bottled Miss Dior perfume was a tribute to his sister Catherine who was liberated from a concentration camp just two years prior. Inspired by the country’s Belle Époque period of the late 1800s, Dior preceded Ralph Lauren in a period-driven return to tradition. It was his admiration of that period, 50 years on, that influenced a femininity in his design that would eventually take the contemporary fashion world by storm.

Fashion has never been logical. Sometimes, timing is as much a factor as anything else. For Dior, timing couldn’t have been better. Fast Company’s Liz Segran recently covered COVID-19’s effect on fashion trends. She cited Dior’s prescient strategy and brilliant timing:

During World War II, for instance, women wore jeans and overalls as they took over men’s jobs. Then, in 1947, Christian Dior unveiled his debut collection, which featured figure-hugging jackets, fitted waists, and A-line skirts. It was a radically feminine look that repudiated the utilitarian, masculinized garments of the previous years—and that was the point. Around the world, women swooned over this style, dubbed the “New Look,” which became a dominant fashion trend of the late 1940s and early 1950s. [2]

This next part is prescient. In that Fast Company report, Segran went on to explain the dynamic of women wearing men’s workwear, including overalls and denim, during the war. She cited author Kimberly Chrisman-Campbell explaining how, even after the war concluded and the pendulum swung to a radically feminine look, the fashion trends of the war persisted:

After a crisis, there is a backlash, but there is also a lasting effect. Both of these can be true at the same time.

The war years normalized a new era for womenswear, including pants and garments that were never before considered customary. This sheds light on the potential post-pandemic behaviors of today.

The retail industry has suffered from foundational issues. The reliance on debt leverage to fund growth and inventory has contributed to legacy companies filing for bankruptcy. Of these, J.Crew, Brooks Brothers, JCPenney, and Neiman Marcus are three of many.

However, like womenswear post-World War II, the reset is not as clear as once thought. America’s current comfort in casual wear is likely to persist in the home and places of work for years to come. Consumers did buy clothes to wear during the pandemic despite the remote work trend, stay-at-home orders, and distance learning. The clothes or the messages by the retailers were just unique to the time.

Good Fashion, Bad Everything

This year, traditional retailers like VF Corporation’s The North Face grew in prominence through careful merchandising, streetwear adoption, and savvy collaborations (See: Gucci). Lululemon’s stock is trading near all-time highs. And Gucci has become the “preferred” luxury brand of Generation Z.

While many brands are suffering, and some have had to take drastic measures like permanently closing stores, other brands like Dior or Louis Vuitton have been performing well, indicating that the pandemic is hitting brands with pre-existing conditions harder. [3]

Direct brands like Parade climbed from relative obscurity to $10 million in annual revenue. Rowing Blazers, a traditional menswear retailer, showed up on everything from NBA stars to Princess Diana in Netflix’s The Crown. Madhappy used savvy merchandising, a persisting message, and their partnership with LVMH to earn Lebron James’ attention in the NBA bubble. The brand is now one of the most coveted streetwear brands born in the last five years. Gymshark accepted its first funding, landing at a valuation north of $1 billion. And Tracksmith, the amateur running brand, finally caught the attention of the mainstream after years of quiet growth. It is now featured across the airwaves thanks to the success of their succinct and aspirational advertising strategy.

Like Ralph Lauren’s rise to prominence during an economic recession and political and cultural reset, and Christian Dior’s establishing of a new post-war tone for American women that flew in the face of other trends, the brands that succeeded during our most recent global crisis did so because they were properly equipped. In each case, they all share (1) smart marketing, (2) savvy merchandising, (3) a messaging strategy that cuts through the worried noise, and most importantly, (4) appreciation for the history of the industry.

For the brands that struggle to regain their footing, at least one of the above four are missing. The pandemic has served as a mirror for modern and traditional retailers alike. Walk into a J.Crew and you may feel soulless. Walk into a Rimowa store and you will feel the sense of New Traditionalism that catapulted Dior and Ralph Lauren to generational success. An over-reliance on physical distribution, pay-per-click advertising, traditional merchandising cycles, academic marketing strategies, and stale interpretations of customer profiles are the preexisting conditions that culminated with the current state of retail distress.

It doesn’t have to be this way. Study the best practices of the past. There will always be momentum shifts, forth and back, over time. The brands that survive are studied in sociology, customer understanding, brand history, communication, and the experiences that elevate a product into a moment. These brands capture more than eyeballs; they capture imagination. It’s the one constant of an enduring brand over decades of ebbs and flows.

By Web Smith | Editor: Hilary Milnes

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Memo: H.E.N.R.Y. Revisited

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Every week, there is a new retailer in distress. It’s time to consider how much of America’s retail economy was built on a class of consumers that was never as static as once believed: the middle class.

Many legacy retail brands, marketplaces, and department stores are at an impasse. For decades, they successfully marketed to a group of Americans that would neither rise nor fall from their economic standing. When that consumer cohort faced job losses or other financial uncertainties, retailers responded by offering promotions to attract them to their stores. In the previous decade, those promotional efforts haven’t let up. Few retail executives seemed to consider the longer-term sociological trends that impact class and consumer confidence.

Consider Ralph Lauren Corporation’s (RL) current struggles. According to a Credit Suisse report, the retailer grew digital sales just 3% in Q2 of 2020. This was against the backdrop of historic online retail growth for retailers. The stock is currently trading near five-year lows; much can be attributed to their poor promotional strategy and a lack of investment into direct-to-consumer business. According to Retail Dive:

The brand also noted in its meetings with Credit Suisse that it plans to take the pandemic as a time to aggressively pivot from low-value online customers and pursue higher-margin customers, a demographic which the company believes to be more accommodating of its recent price increases, reduced promotions and higher-end selection of products. [3]

A product of the 1980s, Ralph Lauren and its peers assumed that some things would never change. That didn’t hold true.

From the Far South to the North Shore

Like many children of the ’80s, I devoured films like The Breakfast Club, Sixteen Candles, Ferris Bueller’s Day Off, and Uncle Buck. The films were idyllic. From the images of economic prosperity to the confidence of the characters, I was drawn to it all. It wasn’t until I was an adult that I realized the cultural implications that served as the backdrop of John Hughes’ work – the fractured city, itself.

Mr. Hughes, whose father was a roofing salesman, used these communities to explore issues of class, status and consumerism as well as the tension and attraction between suburb and city in ’80s America. [1]

The basis of 2PM’s Regarding HENRY report was the 1980s Lisa Birnbach book, The Official Preppy Handbook. That book, along with Hughes’ work, projected an image of ascendant wealth, ease, and certainty to an entire generation of consumers.

The book was written for what was then called Yuppies: a young person with a well-paid job and a fashionable lifestyle. Originally published in October of 1980, the book was co-authored and edited by Lisa Birnbach and illustrated by Oliver Williams. The manuscript played second fiddle to the now-iconic illustrations, ones that served as a guide for consumers and brands for nearly two decades. It was more than a north star for where to go to school, or party on weekends, or which members-only clubs to apply to. [2PM, 2]

Like Hughes’ work, Chicago’s North Shore is omnipresent throughout Birnbach’s satirical take on wealth and class in America. My youthful fascination with Hughes’ Chicago was replaced by a newer, more inquisitive one as I began to visit the city in my 20s and 30s.

America is bifurcating socially, politically, and economically. In these scenarios, the masses move towards one of two proverbial poles. In many cities, there cannot be one without the other. In Chicago, the poles are also literal. Over decades – with a diminished focus on achieving a steady middle class – some resources shifted away from the working class and towards growing the upper class. Most of the resources were misspent elsewhere, furthering the disadvantage of the working class. In just a 45 minute drive through Greater Chicago, you can observe two distinct worlds of diametrically opposed attributes: war versus peace, struggle versus ease, shortfall versus abundance.

This part of the Midwest region along Lake Michigan is a living example of Heraclitus’ Doctrine of Flux and the Unity of Opposites [5]. A Greek philosopher who lived around 500 B.C., Heraclitus claimed that each opposite is inseparable. The opposites depend on one another; this dependence forms the identity of each opposite. If one of the pair disappears so will the other, according to the philosopher.

Imagine two contrasting worlds separated by 25 miles and you’ll begin to understand Chicago’s disparities. The design of the city has bolstered this divide. There are physical barriers, bridges that can be lifted, and a quiet tension between the haves and the have nots. As of recently, the tension has grown beyond quiet and beyond the artificial borders. A citizen who lives in the city’s far South Side has a median wage of $26,400, according to a 2018 article in The Atlantic. However, an astonishing one-fourth of the city’s citizens earn north of $100,000. According to Redfin, the average home price in the North Shore area of Winnetka is $1.28 million. The respective unemployment rates of the North and South Sides are 4.7% and 16%, according to the same report. One cannot exist without the other; both sides squeeze the middle.

When I last visited Chicago, I saw it for myself. In August, I drove from O’Hare Airport towards the 100-block of East 132nd Street to visit an old friend’s grandmother. I stayed at her home for 45 minutes or so, but the impression was lasting. Everyone that I encountered wanted the literal and figurative mobility that many who read this will take for granted. In the week that followed, six local residents would die within one-fourth of a mile from the porch where I sat. The Eden Garden neighborhood of Chicago has an intensity that you won’t quite understand until you’re there for yourself.

I made my way from East 132nd street and along Route 41. One lakeside road ushered me from the city’s South Side to Evanston, one of the most noteworthy areas along the city’s North Shore and the home of Northwestern University. This is John Hughes’ and Lisa Birnbach’s Chicago. The experience was diametrically opposed to my 45 minutes elsewhere: peace, ease, and abundance. I was comfortable enough in both worlds to be able to assess their impact on the other.

In every city, you will find these lines of demarcation, though few are as clear as Chicago’s. The pandemic has accelerated the reshaping of the groups defined by these lines.

On one side, remote work is practical and desirable. Access to capital allows for short-term gains in the stock market. Savings accounts and low unemployment rates ensure a continuation of life within the new normal. It’s as if this period of economic distress hasn’t existed at all.

On the South Side, wage work and income require a physical presence and a tolerance for health risk. These are the dignified hourly workers that make our economy move, though they receive no credit for doing so. There is little to no access to capital on their side; there is no taking advantage of record market gains during record highs in unemployment. There isn’t even capable WiFi access for many. For these citizens, nothing is the same as it was before the lockdown. Matters found a way to further devolve. And for a subset of them, impossibly hard circumstances have worsened. Remote learning is mandated for families whom cannot work from home or support the infrastructure required to learn remotely.

This is the backdrop. American retailers suffered because they didn’t foresee the bifurcation of wealth, access, and humanity that was staring back at them. When you review a list of bankruptcies and closures, you will notice that they will skew towards companies that have built strategies around a perpetual middle class. But in my trip along Route 41, there was no middle class to observe. For our consumer economy (one that employs nearly 30 million Americans) to return to form, enterprise retailers will have to understand the core message of “HENRY.” The middle was never really static at all.

HENRY Revisited

The HENRY designation is short for “high earners not rich yet.” The acronym system of identification has become popular with analysts, however, this consumer classification has gone largely ignored by enterprise retailers.

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Whether by acronym or not, the pandemic has been witness to this phenomenon. Access to suburban escapes, remote work or educational benefits, and day-trading volume were but a few of the tell-tale signs. In New York and Brooklyn, residents fled to New England and the Hamptons. In the Midwest, the upper peninsula of Michigan was a hot spot for this psychographic. On the West Coast, rents in the Bay Area’s suburbs grew as rents in the city fell as much as 15%.

When Ralph Lauren Corporation cites a strategy to modernize its business by creating “smart customer profiles,” it is the HENRY designation that the brand is speaking of.

The HENRYs are advancers, not necessarily those who have cleared the wealth bar to America’s elite class. In fact, many are working to leave the middle class as if it’s a blemish on their personal ambitions. In this way, the term is more inclusive than the yuppie moniker of yesteryear. It’s also a symptom of our current economy, one where the cost of living can begin to erode long-term investments like real estate, money market funds, or other equities. [2PM, 2]

As Heraclitus wrote, “life is flux.” The focus on early identification of the upwardly mobile is one that will become commonplace in marketing and branding. As target metrics like customer acquisition cost (CAC) and lifetime value (LTV) dominate eCommerce-first retail, I’d argue that there is another that will arise: duration of loyalty (DOL). Brands will identify certain customers early and follow them throughout their education and careers, a strategy commonly practiced in the automobile industry.

As enterprise retailers like Ralph Lauren begin to smart-target the middle class, the days of shallow promotional efforts will give way to the notion of flux. By targeting these customers appropriately, the hope is that many will remain loyal as they ascend to greater discretionary income and higher consumption.

In Sanitized Urbanization, 2PM explored the larger trend of urbanites moving to suburban areas. Across America, the upwardly mobile pursued exurban peace, ease, and abundance. Some sought permanent moves. In theory, these areas brought a calmer pace, cleaner air, and functioning local retailers. These were things that were once considered essential, today they are luxuries. In these areas, amenities like parks and beaches provided a sense of normalcy.

Sanitized urbanization removes the perceived risks of living in urban areas while adding the value of – what’s often – upgraded infrastructure, improved schools, and lower tax bases. It is likely to become a politicized issue once urban municipalities begin to suffer the full force of the migration away from city centers. [2PM, 4]

Like many phenomena, the pandemic accelerated existing trends: sanitized urbanization, remote work, online retail, in-home fitness, and a decreasing dependence on personal vehicles. For the professionals who were comfortable with this shifting economy, a great many of them achieved financial breakthroughs despite the economy’s vulnerability. The vulnerability has never been equally distributed. One of the last bastions of economic mobility is America’s 29+ million retail jobs. To protect what’s left of them, retailers must begin to see the market this way. The industry’s stodgy retail executives seem to lack the ability and foresight to do so.

This cohort of professionals is a cross-section of race, ethnicity, and gender though many share similar traits in quality of education, career, and social standing. This psychographic is due to become the key study in the next five to 10 years of retail marketing and communications development. HENRY is beginning to live up to its name. There is a new guard of creative leaders, solo capitalists, and ascendant executives to show for it.

By Web Smith | Editor: Hilary Milnes | Art: Alex Remy | About 2PM

Original Report: Regarding H.E.N.R.Y.