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JC Penney And Ralph Lauren Take Chance With "American Living"

Thursday, 21 Feb 2008 | 9:55 AM ET

Last night, JC Penney unveiled its largest brand launch in company hipster--which also happens to be Ralph Lauren's biggest bet. Dubbed "American Living," the clothing and homegoods line is centered around the same-preppy aesthetic that Ralph Lauren has mastered but the price points are far from the high-end ticket prices that usually accompanies any RL project.

Ironically, the ticket price for the clothing itself is high-end for JC Penney customers who aren't used to forking over $60 for a roll-sleeve linen shirt or $100 for a cotton dress. I spoke with CEO Mike Ullman of JC Penney at the launch party Tuesday night, and he said that the price point is aspirational but also accessible for its key customers.

Many of the retail investors with whom I spoke seemed to react well to the clothing line itself. The sensibilities are very J.Crew , Tommy Hilfiger, Ralph Lauren, young and preppy but still fashionable and flattering. The bed linens are something that you'd want to put in your beachouse. Ralph Lauren is undoubtedly the master of the well-bred, well-mannered while effortlessly tailored aesthetic.

But what's interesting about the line is that American Living is manufactured and designed by Ralph Lauren's company which decidedly does NOT put its name on this lower-priced clothing line. The signature RL polo player is replaced by an eagle and American flag icon. Can JC Penney sell the Ralph-image without selling Ralph's brand as well?

Ralph Lauren's marketing and events staff undoubtedly played a big role in last night's launch party. I was impressed with the way that the all-American themed launch party was executed.

The entire event was true to the brand concept and image--from the polo clad waiters serving mini-grilled cheeses and high-end pigs on a blanket (salmon shaped as a pig on pumperknickel bread with wasabi) to the white picket fence bar fronts to the watermelon martinis served inside carved out lemons. The message, as one astute partygoer put it, was "caviar for the masses." American staples done really tastefully.

Ending the evening with a set from country-band Rascal Flatts brought the American-flag laden evening to a near-image-perfect close.

Why is RL so involved with a brand that doesn't bear the designer's name? Brand equity and image is the core of Ralph Lauren's business. He strongly defends the integrity of that brand. This partnership with JCP is a big opportunity to expand the profitability of the RL business--as it adds manufacturer to its designer skill set--but it is also a gamble.

A misstep could dilute the core Ralph Lauren image. That said, the company is not at risk of having its core customers replace its very high-end purple and black label lines with the JCP gear. (JCP is selling country, preppy not tailored boardroom, countryclub.)

The launch wasn't all cocktails and hors d'ouvres. Mike Ullman also debuted the new American Living commercials that were shot by famed fashion photographer Bruce Weber. They could have been mistaken for one of Ralph Lauren's own country-living line.

The khaki wearing kids and long-haired women wearing summer dresses could have been running through fields in Connecticut, the Hamptons or any other classicly-groomed country location. The spots will debut this Sunday during the Oscars and CEO Mike Ullman says that they expect 40 million viewers to view them. (Last year JCP also paid for these key commercial time slots to debut their Ambrielle brand of women's undergarments.)

Is it the right time to launch a higher-ticket item to a mass market audience? That's the big question for JCP. Maybe trend and strong product can override the budget conscious instincts of the JCP customer. Will JCP bring in a customer willing to 'trade down'? Can RL go mass market via this non-brand name line while not diluting its high end image? What do you think?

Questions? Comments? retaildetail@cnbc.com

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