Ralph Lauren CEO explains the retailer's direct-to-consumer push

Online retail has exploded since Covid and continues to make grounds as some companies push to transform brick and mortar stores to fulfillment centers to meet demands.

Ralph Lauren CEO Patrice Louvet sits down with Yahoo Finance Executive Editor Brian Sozzi to discuss the state of the consumer and what lies ahead for the state of retail.

"Our direction of travel as a company is direct to consumer. Today, it's about two-thirds of the business. When we meet again in the coming months or years, that number will increase. Why? Because we have the ability to showcase the brand in the way that's most true to our point of view and we have the ability to connect with the consumer directly. The second point, though, is we do believe in quality wholesale. Wholesale is an amazing environment for brand discovery and there's nothing that really replaces it. So quality brick and mortar, quality digital" says, Louvet

For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.

This post was written by Nicholas Jacobino

Video transcript

My day started.

We were talking a little bit off camera.

Patrice talking to Disney CFO Hugh Johnston, who I know you are familiar with.

He told me consumers are watching every penny and that the theme park business for Disney is slowing down.

Are you seeing the consumers act or start to act in in a recessionary way?

I look in the back half of the year I see an election.

I see households still dealing with inflation, anything that gives you concern.

Well, I think, uh, it's pretty clear wherever you look at that, the overall consumer is being pressured by the cumulative effects of of inflationary pressures and and interest rates.

As far as our core consumers concerned Brian, we actually find them to be very resilient.

And that's true in New York.

That's true in Miami.

That's true in Shanghai, and that's true in Paris.

Um, you know, we brought in 1.3 million new consumers this past quarter.

These are younger consumers, higher value consumers.

Uh, our net promoter scores have grown quite significantly.

Our search online is up 25%.

Uh, so the brand has got really good energy, and I think Ultimately, it's about value perception, right?

And I think that's relevant for Disney and all companies in, uh in in this broader space, which is is the consumer seeing unique value in what you have to offer?

And there are a lot of conversations around pricing and so on.

But fundamentally your brand story, the quality of your products, the experience you get when you're shopping, whether it's online or in stores, Does that roll up to something that's worth the price?

And we constantly ask ourselves, Are we providing the right value for the consumer?

What happens?

So you've really been focused on exiting unproductive doors in department stores?

Where are you at in that journey?

And what is the ultimate end game for the department store sector?

Because the way I see it, I mean, I go to these giant, hulking stores.

I'm not going to name names.

There's two floors.

Mostly nobody's in them.

I mean, what happens here.

I mean, you're losing doors, but is it a Is it a good thing what happens to the stores themselves?

I?

I have no idea.

Yeah, so maybe three things, Brian.

First of all, uh, our direction of travel as a company is direct to consumer.

Today, it's about two thirds of the business.

When we meet again in the coming months or years, that number will increase.

Why?

Because we have the ability to showcase the brand in in the way.

That's that's most true to our point of view, and we have the ability to connect with the consumer directly.

The second point, though, is we do believe in quality wholesale.

Wholesale is an amazing environment for brand discovery, and there's nothing that really replaces it.

So quality brick and mortar quality digital.

The third point, though, is we We're gonna show up where we can really reflect the positioning of the brand and obviously, where it's financially attractive.

This has led us, as you know, to do a massive reset 34 years ago, uh, closing thousands of doors, particularly in the US.

Most of the heavy lifting is now complete, but we will continue to assess every single door, and I expect us to continue to prune the doors if they don't meet these two criteria of can we show up in a way that's consistent with the image we wanna build and is it financially attractive.

So we've we've basically guided that this year we will close about 45 doors in total.

I think over the next 23 years, we'll probably close 100 and 50 doors in the the accounts that you've talked about.

But, you know, we're really clear that we're working for the long term.

We're working to make sure that this brand comes through in all the touch points consistent with Ralph's vision.

And we have we apply a pretty rigorous philtre to where we show up and how we show up.

Uh, we have to leave it there for now, but I will say this.

Well, thank you for inviting us into your home.

Uh, and you definitely beat me on the tie game.

I mean, you just you you killed.

I'm not gonna tell you I'm wearing tickets.

You might kick me out of the building and I can give you an address where you can expand your portfolio of I'm sure you could.

All right, We'll leave it there.

Patrice?

Uh, Lu Ralph Lauren.

Thanks for making time for us.

We appreciate it.

Thank you.