A news item that can't be ignored: the American prêt-à-porter group Ralph Lauren is to close 50 stores in the United States, including its Polo store on Fifth Avenue in New York. The closure of one of the Big Apple's most famous stores is part of a series of cost-optimisation measures. However, the announcement failed to convince Wall Street, where Ralph Lauren's stocks dropped by more than five percentage points.
The product ranges currently for sale at the Polo store, located in the heart of Manhattan on one of the world's most famous shopping thoroughfares - rumoured to cost around $25 million a year for approximately 3,800 square feet of space - will be incorporated into the Ralph Lauren men's and women's flagship stores on Madison Avenue. In general, Ralph Lauren will maintain a heavy commercial presence in downtown New York, with seven stores remaining open.
The company explained that the decision was motivated by the need to rethink the concept of its new stores in light of general spending trends in the fashion industry, which also tend to favour e-commerce. Thanks to these measures and others, Ralph Lauren will save an estimated $140 million in the tax year to 3rd
March 2018. This sum will be added to the $180-220 million already announced during the Investor Day on 7th
June. A great resource for future investments in unusual retail
concepts, such as the Ralph's Coffee store which recently opened on Regent Street in London.
For Jane Nielsen, the company's chief financial officer, "the Polo brand remains strong, and we expect it to further strengthen as we continue to evolve the Polo product and marketing. We continue to review our store footprint in each market to ensure we have the right distribution and customer experience in place. This will optimise our store portfolio in the New York area on the one hand, while also allowing us to focus on new opportunities."
For some time now, we have been writing a great deal about the consequences of changing consumer habits on traditional sales models and on the brands which have thus far symbolised these changes. By simply looking at store rental rates, we can easily make a few observations: the number of empty stores is close to reaching a historic high. This is because an exclusive location is not enough to compensate for formats that have failed to incorporate the necessary innovations in due time and in the right way.
But it is easy to jump to the wrong conclusions: stores are far from dead, and no study in the world denies that a large majority of shoppers prefer to visit their favourite brands' physical outlets. Last autumn, when commenting on the contentious e-commerce strategy of the famous American clothing brand Land's End, we wrote about the resounding success of Dick's Sporting Goods, the number one sporting goods chain in the United States (a historic brand operating in the industry since 1948, with 650 stores as of today). The company announced its plan to open 36 new outlets and potentially take over certain outlets belonging to its competitor Sports Authority. One of the key factors behind DSG's boom was the creation of new formats, with smaller and more specialised stores. As long as they are modernised and have a clear focus, and provided the retailer’s offline and online channels are well-integrated, stores would appear to have a long life ahead of them.