American designer Ralph Lauren (pictured right) recently appointed former global president of Old Navy Stefan Larsson (pictured left) to succeed his role as chief executive officer of the former’s titular fashion empire.
In September, Grita Loebsack, a former vice president at Unilever, joined Kering as CEO of emerging brands, which include names such as Stella McCartney and Gucci. Meanwhile, luxury powerhouse Moët Hennessy Louis Vuitton (LVMH) snagged a top Apple executive to join as its chief digital officer.
Do these appointments signal a trend? What is making luxury brands go after mass-market brands’ top brass? Is it technology or the ‘consumerisation’ of luxury that calls for a different skill-set at the top? Consumerisation of luxury has long been a concern for the industry. With the rise of the new-age affluent class, luxury brands are eager to cast a wider net. Is a mass-market-like strategy then inevitable for luxury brands?
Lawrence Chong, CEO of Consulus, sees the appointment as part of an emerging hiring trend.
Luxury brands cannot continue to remain out of reach.
According to the Ralph Lauren team, the recent hire follows a number of changes the company has made to strengthen its industry leadership, reach new consumers and drive the continued growth of Ralph Lauren Corporation.
As luxury brands adapt their strategy to attract a broadening audience, it comes as no surprise that a fashion maestro such as Ralph Lauren picked a replacement that has succeeded in expanding and growing mass-market brands.
Dominic Twyford, country director, Landor cited the example of LVMH’s recent hire of Apple’s Ian Rogers as a signal for luxury’s need to evolve its marketing.
“Traditionally reliant on in-store experiences, the luxury end of the market is slowly realising that online retail is a crucial factor in future growth. In the case of Rogers, LVMH have poached specific knowledge and experience.”
Luxury brands are looking for broader retail skills to match today’s omnichannel retail world, Twyford said.
“In the case of Larsson, they have hired someone who while at H&M and Old Navy spent his time chasing fashion trends, but this doesn’t mean that Ralph Lauren are about to go down market.”
Under Larsson’s leadership, Old Navy enjoyed three consecutive years of profitable growth, adding US$1 billion in sales. Prior to that, Larsson was at Swedish retailer Hennes & Mauritz (H&M) for 15 years where he was part of the team that grew sales from US$3 billion to US $17 billion and expanded the company’s operations from 12 to 44 countries.
Larsson’s hire highlights his ability to develop agile brands and create new opportunity through constant transformation. Ultimately, he understands how to create demand and growth whilst maintaining brand relevance. Twyford explained that luxury brands pale in comparison to the likes of Uniqlo, H&M and Zara when it comes to their speed to market. As mass-market brands soar in their ability to maintain low-costs while still appealing to millennials, logo-reliant brands like Ralph Lauren feel static, Twyford said.
“Ralph Lauren need to change mindset from top down, they believe Larsson has his finger on the pulse of the market, consumer and retail industry.”
Larsson’s appointment will become effective in November, at which time he will also join the Ralph Lauren Corporation board. Larsson will report to Ralph Lauren, who will continue to actively drive the company’s vision and strategy as executive chairman and chief creative officer.
This hire isn’t about understanding the world of luxury, it is bigger than that.
Meanwhile, Chong thinks the talent love between mass-market and luxury cuts both ways: “When Angela Ahrendts left Burberry to join Apple as retail head, it was a major nod to the trend that making luxury accessible is the way forward. This means reaching out early to the rising group of High Earners.”
But this is a tough balance to strike. How does a luxury brand prevent losing its premium feel and image while becoming widely accessible?
“It is more like introducing premium economy class on an airline and getting people to watch through the business class experience so as to induce one to upgrade. It is a tried and tested model and it works,” Chong explained.
Through such mass-market poaching, luxury brands can hope to achieve a more sustainable revenue pipeline in an increasingly complex market. It is all about hiring the right people with experience in serving the wealthy middle class who are moving towards the high net worth category and how to appeal to this group, Chong said.