Last week Mark Ritson charted the rise and fall of Calvin Klein. This week he looks at the brand's revival under the ownership of PVH.
At the start of the new century, Calvin Klein was struggling. Superficially, the brand appeared to be healthy, with strong revenues coming from the brand's presence in more than 40 categories. But the reality was a brand that had lost much of its equity because its consumers had encountered it in inconsistent brand extensions, at too many price points, in contradictory retail locations.
However, help was on the horizon. In 2002 Calvin Klein was bought by PVH, a fashion conglomerate that also owned brands such as Van Heusen and Kenneth Cole. Over the past five years this great brand has been slowly, but effectively, rehabilitated by PVH's assiduous application of classic brand management principles.
First, it bought back the bad licensees. Calvin Klein will always be a brand that makes most of its revenue through licensing - but there are good licences and bad ones. PVH bought out those that directly damaged the status of the brand. In the past, for example, the company had relied on a licensee to produce its high-end Calvin Klein Collection, but the Italian company repeatedly delivered the merchandise late, often with uneven quality levels. PVH regained control of the production in 2007 and expanded its manufacturing team in New York to enable its own people to produce more of what was selling faster and more efficiently. It was a lesson learned from Burberry 10 years earlier, which also reined in, but did not eliminate, its licensees.
Second, a new creator was installed at the heart of the house in 2003. Calvin Klein, now in his 60s, was asked to handpick a successor. He chose 34-year-old Brazilian Francisco Costa. Although it seems to contradict the brand's ideals, Klein was no longer the creative force he once was. A fresh impetus at the heart of the brand was the only way to get the blood pumping again, as happened when Louis Vuitton recruited Marc Jacobs as creative director a decade ago. The young downtown designer helped to bring constant rejuvenation to the iconic French brand through his collections.
Third, after initially closing down the Calvin Klein Collection outlets, PVH began to open new ones. By the end of 2008, eight flagship outlets will be in operation. Flagships are key for a fashion brand. Although they rarely generate huge profits, they enable the consumer to enter the world of the brand and experience it first-hand.
Fourth, PVH tapped into the brand's heritage in a modern, contemporary way. Calvin Klein was born out of the fabulous fashion cauldron that is New York City. Licensees had distracted the brand from its true origins, but PVH successfully brought the brand back to its roots.
The company has worked hard to convince leading Manhattan retailers to restock its collection - not just because of potential sales but also because this is where the brand began.
Similarly, Calvin Klein under Costa's stewardship, is taking a more central role in New York Fashion Week. Its 40th birthday bash earlier this month was deemed by many to be the highlight of this year's events.
Gradually, the life is returning to this great US brand, and no one is more excited than Costa. 'The respect that we had somehow lost from retailers has been suddenly restored,' he says. 'We're back in business.'
- Mark Ritson is an associate professor of marketing, and consultant to some of the world's leading brands
30 SECONDS ON ... THE REJUVENATION OF CALVIN KLEIN
- Global retail sales of Calvin Klein products reached $5.4bn in 2007, up 93% from $2.8bn in 2003, when the PVH handover occurred. The company aims to reach revenues of $8bn within the next five years.
- Speciality flagship stores are 'an important step that will provide us with a showcase for the full breadth of the Calvin Klein brand,' according to Emanuel Chirico, chairman and chief executive of PVH.
- Chirico will also deliver better products at higher price points, which he hopes will serve as 'a marketing halo'.
- The brand's reception among New York retailers has been positive. Bergdorf chief executive Jim Gold cites PVH's 'aggressive commitment to ... the infrastructure of business' as grounds for 'renewed confidence in their production and delivery'.
- On handing over the brand's creative duties to Costa, Klein said: 'He's carrying the torch. He's good. That's why I picked him. I haven't left, but I don't have that constant day-to-day stress.'