patrice: what is exciting is when you see where this company started, you see what it has become. it has all been driven by a consistent vision. a consistent purpose. francine: it started 56 years ago with a tie. today, ralph lauren is one of the world's most iconic fashion

brands, valued at more than $8 billion, with 500 stores around the globe. at the helm is a chief executive who came into the job seven years ago with no fashion experience, but determination to return the brand to luxury, attracting younger high-value customers. patrice: when i started this job, i often got the question, "is ralph lauren still relevant?" right? which is a painful question to listen to, honestly, but we had to some extent lost touch with the younger generation. francine: in this episode of "leaders with lacqua," i speak to patrice louvet, about the company's founder ralph lauren and his plans to take the company back to its roots. patrice louvet, thank you so much for joining us on bloomberg. patrice: very happy to be here, francine. francine: do you have the best job in the world? patrice: pretty close. francine: because it is fun? what was the most surprising thing about your job since you first started? patrice: there are so many things. probably the thing that actually

attracted me to this opportunity is the opportunity to work with ralph. right? this man is a visionary, incredible entrepreneur, has had amazing success around the world, and the opportunity to work with him and partner with him is really special, and i cherish it every day. francine: you have to get along because he is still such a figure. he has his name on the door. patrice: he does have his name on the door. francine: so how much of it is his vision? patrice: it all starts with his vision. what is exciting is when you see where this company started, a tie. see what it has become. it is all being driven by a consistent vision and consistent purpose. i have talked about, our purpose is to inspire the dream of a better life through authenticity and timeless style, and that has been the driving force of the company. now, we are all around the world. we are well beyond ties. as you know, we are in hospitality, we have restaurants, coffee shops, women's business, homes business, but also still driven by a very consistent business ambition, and this is an

industry that is very much about trends. and ralph regularly says i hate fashion because fashion comes and goes. we talk a lot about style, time as an element of consistency. that has served us quite well the past 50 plus years. francine: what was it like the first time you met him? patrice: there was a moment that was incredibly special. so i got a chance to see him in his ranch in colorado in telluride. francine: before you got the job, or after? patrice: right after i got the job. so that is probably the most iconic moment for me, and i can also give you perspective on the first engagement. but we were in his ranch, we were outside, it was chilly, it is 8:00 in the morning next to the cook house, and we are looking ahead and there is this beautiful mountain view. and we were talking about what business we are in. because it was important to be together and have a consistent ambition. we landed on the fact that we are actually in the dreams business. a lot of people say ralph lauren, you are in the apparel business. you are a fashion company. no, we would disagree with that. francine: is he easy to work

with? patrice: he is wonderful to work with. there is always this vision that the creative leader in a fashion company can be challenging and complicated. there has obviously been stories around that, but ralph is an incredible business partner. he is both an amazing visionary and a great business man. i think that has been a key part of his success. we have been super clear on our respective roles, and although nothing is written on a piece of paper, we are clear on who is responsible for what and where we come together, and i could not be happier with the partnership. francine: there was also a moment where you had to change the company to get away from the department stores. that lowered the ambition for the company. how hard was that? patrice: from a financial standpoint, it is challenging, but if you go back to the roots of this company, this company was founded as a luxury company. and actually the first tie that ralph launched was only 2.5 times the price of a christian dior tie. no one would disagree that christian dior is an incredible luxury company.

so we indeed had to pull back our presence in the u.s. because the brand was overextended. we reduced about two thirds of our wholesale doors. as i look now, we are two or three years into the exercise, we are in a much stronger place. our brand perception is much stronger. our value perception is much stronger. francine: the elevation journey, this ultra luxury at the time was not necessarily a given. now, when you look at the luxury company, it is clear that if you are in the ultraluxury space, you can increase prices, you have a lot more markets around the world instead of moderate luxury. what made you see that back then? patrice: i think it is back to what this company stood for historically. and already at the time, this phenomenon has been going on for a while, that you see this bifurcation of luxury brands that have pricing power, that consumers see the value, and therefore you have the ability to increase leverage at a retail where others are focused on selling products. not engaging the consumer in the same way. much more promotional. we felt like, so we go back to our roots. that is where we wanted to take

the company. francine: how do you create that fortune? how do you create those moments where people associate you with wimbledon or some of the shows that they watch on tv that again elevate luxury? patrice: it is a very holistic exercise. so it is not just one thing. francine: is there one thing you think works better than others? is it the flagship stores that are very -- have coffee shops and have a very distinct lifestyle that you think people are drawn to more than online? patrice: for us, the way we think about it, francine, is 30 key cities around the world. we actually don't really look at markets, we look at key cities. in each key city we want to have a balanced ecosystem. start with a flagship store that really is going to project the image. our approach in china, for example, is very much driven by the city focus, establish a strong flagship, and build the ecosystem around it. but i do not know i can point to just one intervention. i think the transformation of our marketing and storytelling has also been quite effective,

particularly at recruiting a younger consumer. that was one of our priorities when i started. francine: which is the hardest, right? patrice: which is the hardest, because they are fickle. francine: and they change. patrice: exactly. and there are a lot of opportunities. i remember when i started this job, i often got the question, is ralph lauren still relevant, which is a painful question to listen to honestly. but we had, to some extent, lost touch with that younger generation. this company is 56 years old, and we expect to be here another 56 years from now, so critical to rejuvenate our customer base, and we pivoted our marketing to be where that younger consumer is. gaming, the types of sports activation that resonates with them, right, styling the product differently. what's very interesting is our white polo shirt, which is one of our icons, you have 80-year-old man wearing it, 40-year-old women wearing it. 16-year-old kids wearing it, same product. but we style it differently. francine: is there a secret sauce that you are the right lifestyle brand for the right

moment? because it's not -- people don't go to couture events anymore unless they have a more relaxed approach even when they come to the office. patrice: yeah, hopefully more than just this moment, because we want to be here for another 50 years, but i do think what ralph and the teams have been able to create over the time is the lifestyle proposition. we are not handbag experts or auto wear experts or sneaker experts. we offer a lifestyle and we offer this range of product. and indeed, as we have seen people still working from home partly going back to the office and going back to social events, we have this ability to serve you with this more athleisure driven type of proposition. francine: are we going to hoodies now? has work from home changed forever? patrice: maybe it depends which industry you are in. i think at ralph lauren, i have not seen many people in hoodies, but ralph does come in once in a while in a polo hoodie but he makes it look beautiful as you can imagine.

francine: up next, patrice louvet on raising prices, ambitions in asia, and why sustainability is key. patrice: you can't expect to be timeless if we run out of resources. so, for me, sustainability is not a side activity. it is not a reaction to external pressure. it is core to who we are, what we stand for, and to a strong extent, it is about future-proofing our business. ♪

francine: ralph lauren has raised the average price of its products by around 80% since 2018, as it aims to elevate its brand and become a lifestyle luxury company, something the chief executive is passionate about. i continue the conversation with patrice louvet. when you look at pricing, you have also been able to really elevate the brand by increasing prices. is there a limit to how much you

can increase prices by before it hurts demand? patrice: our average unit retail indeed is up to about close to 80% now since we started on this journey. the short answer is i do not think there is a limit as long as we do a good job on elevating the product, elevating the story telling, elevating the environment, making sure the consumer sees the value, and they have so far. our value perceptions actually are the highest they have been since we've been tracking it, but the onus is on us to make sure we are able to provide this consistent elevation. as the consumer sees it, and that will support the continued growth of average unit retail. francine: talk to me about china. china has huge potential, but it is actually still quite a small market for you. patrice: it is still small for us. huge short, mid, and long-term potential for us. so it is about 6% of the company today. that is double what it was three or four years ago, but still in absolute quite small when you look at the penetration of the

chinese business for some of the best luxury players in the industry that are 20%, 30%, or 40%. so i am excited about the opportunities on the runway. what is really energizing for us in china is how the brand is connecting with that younger consumer. and that more elevated consumer. we sell oddly enough, it is the result of the elevation work our teams have done, our most elevated products we sell best in china. we have the best gender balance. as i believe you know, most of our business historically has been more men. in china, it is a good balance of men and women, and it is a relatively young consumer. late 20's, early 30's, so it is actually a good example for us for the rest of the world. we are being very deliberate in our approach in china. so not -- we can grow faster, we want to do it in a quality way, so we are building the brand so that serves us well five years from now. 10 years from now. i am very excited about more generally asia. francine: are you worried that you dilute the brand if you become too big in china too quickly? patrice: yes.

i think the notion of desirability is important, and there is an element of exclusivity, and that is why we pulled back in the u.s. where we felt like we had over distributed. and to some extent, ubiquity can be a challenge in the luxury space. not to some extent, it is a challenge of the luxury space, and you want to stay unique and special. that is why we are building markets in china even as we look ahead to markets like india. which are promising for the future. being very deliberate on planting the right foundation so we can build from there with the right image presentation. francine: the world is changing. we talk about ai all the time. we talk about sustainability, and the need for fashion companies to do more. how much time do you spend thinking about sustainability? patrice: a lot, and i will tell you why. if i go back to our conversation on purpose earlier. right? it is part of the dream of a better life, timelessness, and authentic style. timelessness and sustainability go together. right? you cannot expect to be timeless if we run out of resources, so for me, sustainability is not a side activity.

it is not a reaction to external pressure. it is core to who we are and what we stand for, and to a very strong extent, it is about future-proofing our business. right? you need to focus on sustainability in order to recruit. more and more, that younger consumer we're talking about, they want to work for companies that care about this planet, that do more than just generate revenue and profit. you need sustainability to attract consumers. more and more, that younger consumer, they care deeply about what are you doing differently? are you making a difference? investors, particularly in europe, more and more place value on what you are doing in sustainability. many of our partners have expectations on sustainability. francine: what does that look like for a luxury lifestyle company? patrice: ah, so for us, it is multidimensional. right now, we are putting a lot of emphasis on circularity. i actually think if we are able to shift the business model and fashion from linear to circular, that is probably one of the biggest changes we can make that has the greatest impact.

now, obviously, that is a total ecosystem you have to impact. to give you examples, it is innovating how we design. so we have just launched the first cradle to cradle certified cashmere sweater. it is innovating in materials. it is innovating with the processors. there is a company called reverser in italy that helps us with recycling cashmere. and then it is leveraging industry scale, because i think in sustainability we cannot go it alone. francine: do you sell differently to the chinese than you do to the american consumers in terms of lifestyle? or is it a similar lifestyle? patrice: i think the fundamentals of our lifestyles and the different movies that we showcase, different stories that we tell, are pretty consistent. if anything, just in the way the consumers kind of dress and engage with fashion brands on average, this is a generalization, but on average the chinese consumer like the japanese or korean consumer tends to be more elevated and sophisticated in the types of styles that they put together. so that informs part of our body and our product.

but fundamentally -- francine: more innovative? it is not necessarily more edgy, it is more luxurious. patrice: it is more luxurious. it is actually more elevated and luxurious. francine: what is amazing is there seems to be a trend, and you may be one of the first ones to get chief executives from parts of the industry that were not luxury in fashion, that were actually in consumer products. is there a parallel? do consumer products chief executives do better than luxury? patrice: oh, that is a big statement. i am not going to answer that question directly. you know this trend started in , beauty actually. if you rewind the tapes, beauty is where you started to see the consumer professionals come in first, and now we are seeing that in the fashion world. i think, at the end of the day, success in this industry is getting the balance right between magic and logic. and so obviously, the fashion industry creative leaders have the magic.

there is an opportunity to bring a higher level of logic without diluting the magic, and i think that people from the consumer goods industry bring our greater focus on the consumer, understanding the consumer. where you get success is designer vision, customer needs come together, and that is where things get explosive. so great understanding of the consumer, more data, more experienced, leveraging data and decision-making. again, there is an element of intuition that needs to be protected, but that can be supplemented by data. francine: what is the ideal algorithm for the story? patrice: it is confidential, i cannot tell you. [laughter] francine: you would have to kill me. patrice: i would not do that. but we do look at a number of metrics, whether that is obviously consumer profile, whether that is competitive environment, or the types of products being sold in the area. the last thing i would point to is operational. these are complex businesses where we develop a lot of sku's every year. complex supply chains, and what you learn in the consumer goods

industry is how to run pretty rigorous and disciplined supply chains and just general operations. and a lot of these luxury companies now are $5, $10, $15, $20 billion. the level of complexity requires great expertise. francine: how do you choose celebrities and influencers? again, when you look at -- we said we used to rely on magazines. everything has changed now. are consumers more influenced by influencers and celebrities? patrice: i think influencers have always been part of the business, whether it is the fashion industry or other spaces. francine: but it was more controlled. is that the difference? compared to 10 years ago. patrice: you are right. it was less spokespeople, and now you have a much broader palette. for us, what is critical is authenticity. so there is the concept of i'm going to write you a big check, francine, today and you will

talk about us, and tomorrow you will show up on a competitive brand because you got another big check. we are not interested in that. we want people who have an authentic relationship. francine: up next, patrice louvet on risk-taking, gambling with the metaverse, and the next 50 years. patrice: the only failure is a failure of learning. so even if we have tried it and it bombed, as long as we capture the learnings and apply them elsewhere, it was a success. ♪

francine: more than half of ralph lauren's customers are women, yet they represent less than a third of sales. it is an area of the business the chief executive sees as an opportunity as he bets on growth in women's merchandise. i continue the conversation with patrice louvet. what is next for ralph lauren? are you going to focus on sleepwear? are there other parts that you think you can grow a lot more? patrice: what is amazing with this brand and what ralph has created is we can actually enter a lot of spaces with automatic credibility. we are one of the hottest restaurants in new york. we are looking for an opportunity for us to open one in london. that is a part of our ecosystem, it is not a core priority for us. the next phase for us is winning with women. as i mentioned earlier, our business has historically been driven by men. today, 56% of our customers are actually women on our website and in our stores. they represent less than 30% of our business, so that is a

massive opportunity for us. and i think as we get to understand her better, develop the right products for her, present the products in a way that resonates with her, which may not be the same way as for men, that is a big opportunity for us. handbags is an area. as part of kind of completing the style for women. and we are looking into home. i actually think if you reflect on ralph's approach to this space, he creates these environments, creates this world. you could really picture how that translates into home, so that is an area for growth for us. it is longer-term but i am actually pretty excited about the perspectives there. francine: the metaverse. are you excited about the metaverse? i mean, i was but then we talked about ai and i think we forgot about the metaverse. patrice: we are investing in the metaverse. it follows the principle i talked about earlier, which is

we want to be where our consumer is. that is where the younger population is. that is where they and we have actually done some really cool boots we developed that you can dress your player with. we have done a physical version of them as well. francine: was that quite a gamble? patrice: yeah. francine: it is brave, so it paid off. it could have backfired. patrice: true, but here is where i go back to the roots of this company. ralph started with a tie. we could be here 56 years later being the market leader globally of ties. part of the dna of this company is trying things, innovating, expanding, experimenting. so we are just staying true to that. and, you know, i always talk about the fact that the only failure is a failure of learning. so even if we have tried that

and it bombed, as long as we capture the learnings and apply them elsewhere, it was a success. francine: what are you like as a leader? a risk taker? patrice: i think people, if you ask them throughout my career how they would describe me, they would say servant leader. i really believe in the fact that my job is to set the team up for success and create the conditions for people to leverage their full potential. if i do that well, i will be fine. um, i think people would say "listener." there is a great quote from a greek philosopher. "we have two ears and one mouth," and there is a reason for that. people have said i am "a learner," and constantly learning, and ralph is an incredible inspiration, because based on where he is at this stage of life is constantly learning, and i use that as an inspiration. i am a measured risk taker i would say. i am not a swing for the fence risk taker, but i believe in innovating, experimenting, and trying new things. and i think that you feel that energy inside the company today. i love that spirit of trying

things and again learning. francine: what is a good day in the louvet world? so how do you measure success? patrice: a good day for me -- where i get the greatest energy and excitement is time in our stores with our team. francine: do you change things around? [laughter] patrice: no, i try to hold myself back from doing that. it is very tempting but i try to avoid doing that. [laughter] no, i listen to the stories that our teams tell me, both in terms of how they are engaging with customers, what we can do better in terms of the brand and product, and also how they are building culture within their stores. francine: and you are committed to the u.k.? patrice: very committed to the u.k., second-biggest market for the company. historical market for us and great source of inspiration for ralph, so this market is very important to us. francine: worst day at the office? have you had a bad day? patrice: i haven't had a lot. obviously, when the numbers are not coming through the way that you would like them to, that never feels very good, but welcome to life in the business world. when we are not able to get the balance right between the magic and the logic, and the groups

are not communicating well, it can obviously be frustrating. the fashion industry, one of the lovely things about it, is it is very emotional. one of the challenging things about it is it is very emotional. so, it is managing people's emotions. francine: were you surprised that even in this cost-of-living crisis, actually luxury does so well? patrice: i think people need to dream. right? when the environment is more challenging, people still need to dream. they need someone who will give them hope and bring optimism, and i think that is what the best luxury companies do well. francine: where will you be in five years? patrice: we are on an exciting journey right now as a firm, both in terms of expansion geographically. we will be stronger in asia. we will have established a good presence in india. we will be better distributed across europe. we will be more present in the west of the u.s., because that is actually a big white space for us. i think you will see our women's business to be more successful and larger than what it is

today, and what i hope is that i am still at the helm working closely with ralph to bring dreams to life for all of consumers around the world. francine: patrice, thank you for joining us. patrice: thank you very much, francine. ♪

sonali: i'm sonali basak, and this is the "next big risk." it's the job of a financial executive to calculate the unknowns. geopolitical tensions are rising across the globe, as conflict engulfs countries in the middle east and europe, and concern builds around taiwan