How Patrice Louvet blends ‘magic and logic’ at Ralph Lauren

After Patrice Louvet left a 29-year career with Procter & Gamble to become CEO of Ralph Lauren in 2017, he found himself flying blind.

The consumer products giant where he had steered brands like Gillette and Pantene was renowned for its data-driven understanding of its customers. But when Louvet started working in the fashion industry, he discovered it had little of that discipline.

“I felt like I was put into a cockpit of an Airbus or a Boeing, and someone had put cardboard on all the cockpit windows, so that I couldn’t see a thing,” he recalls in an interview for The CEO Signal show. The Frenchman asked his team, “How am I going to run this company with no real data on how we’re performing, [or] where the opportunities are?”

Louvet has invested millions of dollars since then to sharpen his company’s ability to understand consumers’ desires and shopping habits. But he has also learned “to get more comfortable with the balance of magic and logic,” he says — and “lean more into the magic.”

The heart of a company like Ralph Lauren is its designers, he explains. Now, he anchors his strategy in a question that might be alien to many P&G-trained executives: “What’s the emotion we want to trigger here?”

There is no measurable answer to that question, he says, but “I had to start with, ‘OK, what’s the dream? What’s the story now?’ I don’t think you get rid of the data, but I think the data then follows. And we talk a lot about magic and logic and getting the balance right. But it has to be driven by the magic.”

If he were to go back to P&G now, he adds, “I would bring back some of that magic, emotion, [and] dreaming.”

Defining your playground when you’re selling a dream

Talk of emotion and magic can obscure the hard business realities Louvet inherited. The company, a byword for preppy American style, had seen its same-store sales fall for nine consecutive quarters and was under pressure from online and fast-fashion rivals by the time he arrived. Stefan Larsson, Louvet’s predecessor, had lasted less than two years as CEO, leaving after “creative differences” with the company’s eponymous founder.

Louvet was “very aware of the risk” that his own tenure would be similarly short, and spent hours getting to understand Lauren’s personal vision, values, and ambitions before he took the job. Days after he began, he flew to Lauren’s ranch in Telluride and asked his executive chairman and chief creative officer, “What business are we in?”

It’s a question that people in business don’t ask often enough, Louvet says, which can leave them defining their market too narrowly or too broadly. In Ralph Lauren’s case, he concluded, “we’re in the dreams business. We make people dream. We tell stories, we invite people into worlds.”

Louvet likens Lauren to Martin Scorsese or Steven Spielberg, calling him a movie director who can create dramas in which consumers can play the role of a Colorado cowboy or a Wall Street businesswoman.

“If you’re in the dreams business, then it defines your playground very differently,” he says, explaining how this reframing helped his company understand it was a lifestyle company, rather than just a seller of polo shirts. It operates several restaurants now (“all doing quite well”) and a thriving home goods operation.

A question of pride becomes a way to find focus

Louvet’s new definition of the company’s purpose also forced a “reality check” about whether its operations were living up to its inspiring claims. “Do we show up like we’re in [our customers’] dreams?” he asks his team. “Are we inspiring or are we just running commercial operations?”

In many cases, the reality fell far short of the dream. “We had overextended the brand,” Louvet says, by opening outlets in second-rate locations and discounting products in search of higher sales volumes.

“We had a department store presence that was very significant in a lot of places where, frankly, we weren’t proud of being there,” Louvet recalls. So he told his team to ask two questions: “Are we proud of the way we show up? And is it financially attractive? If the answer is no to either, then we should either make the intervention to address the issue or get out.”

Pulling back from places where the company did not feel proud of its offerings cost it about $1 billion in annual revenue, but Louvet sees that decision as central to its subsequent turnaround. Ralph Lauren’s stock has risen some 400% since his arrival, as a more elevated version of the brand has caught the attention of young consumers who once shunned it. A Kantar survey last year found the brand was second only to Gucci in its desirability to consumers aged under 35, and the group’s revenues have grown from $6.7 billion in 2017 to $8.1 billion in its latest financial year, despite the sales it sacrificed.

The retreat created “challenges” with department store partners, Louvet says, but “in hindsight, I wish we’d done more.” This year, he says, Ralph Lauren will close another 100 outlets in the US, and it is talking with department stores about further cuts. It will still be trimming the least desirable parts of its portfolio a decade from now, he predicts. “We’re going to continuously cull the bottom, and there’s always a bottom.”

The discipline to avoid diluting a brand anew

Nine years into his tenure, Louvet’s task now is to find new avenues of growth while avoiding repeating the cycle that devalued the Ralph Lauren brand before he arrived.

“The risk when you’re a lifestyle brand is you can do anything,” he notes.

Louvet recalls a conversation with Lauren a few years ago in which he joked that the company could probably sell bottles of Ralph Lauren-branded water successfully. “You know, Patrice, we actually really looked at that project,” Lauren replied, reminding Louvet of how the company had spread itself too thin.

Ralph Lauren is now “very disciplined” about which cities, product categories, and consumer groups it focuses on, Louvet says. His team got “very excited” about moving into footwear, for example, before concluding that shoes took up too much space in stores to generate attractive profit margins. Even so, Louvet still sees opportunities to take the brand into new areas.

“We could play much more actively in the home business, where we’re small today, and doing a lot of work on just getting the foundations right,” he says. The brand has also started to dabble in private residences, furnishing luxury properties in Crete and Dubai, and he sees a bigger future for it in hospitality.

There are “a lot of conversations” within the company around the possibility of launching a Ralph Lauren hotel chain, he says, but he wants to resist pressure from the markets to grow too far or too fast.

“I often say to the teams: It’s not because we can do it that we should do it,” he says. “The good news is we’re in business for the next 50 years. We have plenty of time to get to these opportunities.”

The gut punch that shaped Louvet’s leadership

Louvet is a believer in leaders and companies pacing themselves. It is an insight he learned the hard way earlier in his career, when Procter & Gamble sent him to Japan to fix a hair care operation that was trailing in fifth place in the market.

The young Louvet came in “all guns blazing,” quickly diagnosing what he thought the business needed and “changing everything.” But the first six months were “a complete failure, probably the greatest failure of my career.” At the end of that period, a young Japanese woman on his team came and told him, “Patrice, this isn’t working. We don’t think you’re the right leader for us.”

The feedback was “a gut punch,” Louvet recalls, but it forced him to change his approach in three ways. First, he says, he decided to slow down and listen, to better understand the problems he needed to solve. Second, he took time to “paint the vision,” and explain to his employees what they were trying to accomplish. Finally, he learned to “sequence the changes,” rather than trying to overhaul everything in a single quarter.

“Too often, particularly in a crisis, you want to roll up your sleeves and just get on with it. But if you don’t define what success looks like broadly to the organization in a way that … they want to be part of, then you’re not going to get 100% of their effort,” he reflects.

The pivot he made set P&G’s hair care business on the path to a market share lead in Japan and helped set Louvet up for his current role. He credits that “painful experience” with helping him get his current job.

Now, he tells his team members to take a longer-term view of what they are trying to do with their own jobs. “Let’s say this role is going to last three or four years. What do you want your legacy to be in this role?” he asks. The question helps lift them out of “the day-to-day churn,” he says, and forces them to decide: “What’s really going to make a huge difference — and what will I be remembered for?”