Chapter 4
Analysis and interpretation of results
Tommy Hilfiger Europe's inception and growth
It was in July of 2001 when Tommy Hilfiger Europe was acquired, thereby serving as the company's largest and fastest growing geographic licensee, and securing a powerful vehicle for additional growth, profit, and diversification. Since its initiation in 1997, Tommy Hilfiger Europe, or TH Europe as it is more commonly referred to, has become a thriving business with a pan-European operating platform, diverse distribution channels, and abundant opportunities for expansion. Success of TH Europe could be widely attributed to the carefully and strategically-crafted awareness-building campaign for the Tommy Hilfiger brand through selective distribution and marketing. As interest grew, TH Europe capitalized on this demand through the sequential introduction of new product categories, thereby generating significant momentum. TH Europe found it wise to locate its headquarters in Amsterdam because of its geographic location and multinational characteristics. TH Europe now has nine showrooms across the continent, and sales agents to support selected territories and a centralized distribution center in Tegelen, Netherlands. The Company also now has third-party distributors in select countries such as Turkey, Italy, Norway, Greece, Portugal and Israel, where market conditions warrant local expertise.
Consequently, Tommy Hilfiger's launching of its jeanswear, women's casual wear, and boy's sizes clothing lines were met with huge successes. Success of these strategies in Europe was widely manifested in the successful debut of Tommy Hilfiger's jeanswear line in 1999, and the missy sportswear in 2001, now representing about 500 points of distribution across the continent. Annual revenues for TH Europe reached to a peak 188 million euros in 2002.
But as mentioned earlier in the study of Garreau (n.d.), there are major cultural differences even among European nations in the way they conduct business transactions. Garreau clustered Europe into two groups: northern Europe (Scandinavian countries, Benelux, British Isles, Austria and Germany) and southern Europe (Italy, Spain, Portugal and Greece). Garreau pointed out that in the north, there is much more of the consensus-type approach in business dealings, whereas it is a more autocratic and authoritarian in the south. To remedy this, TH Europe came up with a diverse and well-experienced in-house management team to handle its multi-cultural operations, while giving utmost focus on capitalizing on imminent growth opportunities. This management team is composed of peoples from various nationalities from all over Europe, thus enabling the company to execute a pan-European approach. To facilitate coordination among divisions and to ensure proper focus on product ad geographic priorities, divisional management is organized by geography as well as line of business.
Moreover, putting premium on the value of local preferences, TH Europe designed their products to meet varied style preferences across the regions through styling, fabrication, fit, and a variety of flag logo treatments. All these, while maintaining Tommy Hilfiger's signature style and image of traditional fun, fresh, and "classics with a twist".
The great cultural divide: US-based Tommy Hilfiger in Europe
Pre-conceived cultural and other barriers confronted Tommy Hilfiger, as well as other US-based apparel companies, in penetrating in the European market. Just as any other company aspiring to enter into any foreign market, Tommy Hilfiger was faced with apprehensions on the difficulty of US-based companies in specializing in the European fashion business. In a swift glance, there would seem to be a cultural difference between United States and European nations, mainly due to geographical segregation, thus having different cultures.
But Tommy Hilfiger's growing presence in Europe is proof that even geographical boundaries these days can be transcended, proof to the continuing cultural and behavioral modification brought about by advancements in information technology and modes of transportation. Other US-based apparel companies would have thought otherwise in investing in Europe, hindered by the prevailing belief that US and Europe are on the opposite sides of the coin – which is in fact true. Though both located on the western hemisphere of this planet, both the US and Europe have huge differences - linguistically, religiously, economically, politically, socially, and institutionally – many overlooked the fact that all these factors can be "programmed" culturally. As earlier mentioned in this study, culture is learned, not inherited. With proper brand positioning and image building, Tommy Hilfiger, and any other apparel company for that matter, is likely to enter and achieve growth into any foreign market.
Moreover, societies with low-context culture, such as most European nations, allow for relatively easier integration of foreigners to the society, which could attribute to Tommy Hilfiger's success in Europe. Moreover, cultural patterns that are not as ingrained as in high-context societies, thereby allowing for greater ease in cultural change, allow for opening of great opportunities for Tommy Hilfiger, along with other foreign fashion companies, across Europe.
Coping mechanisms Tommy Hilfiger with rapid changes in European fashion trends
Fashion trends can be as erratic as a bipolar person. Fabrics, cuts, and styles could very much outshine each other in a matter of seasons. But a strong brand could stand tough tests of time and tastes. Part of Tommy Hilfiger's success in the European fashion industry could be attributed to the fact that it has a strong brand to build upon. Presently, the company enjoys a premium position in the European marketplace, a well-developed operational infrastructure and a diverse pan-European customer base, attesting to the global appeal of the Tommy Hilfiger brand.
Just as other successful clothing brands such as Gant, Mexx, Levi's, and Ralph Lauren, TH Europe capitalized on the strength of its brand and well-executed marketing strategies to create its niche in the European fashion market. Tommy Hilfiger has been known as a "fashion-right" brand, and is being marketed as a "classics with a twist" clothing line that appeals to a wide range of age classes, lifestyles, and even races. Having such an "objective" marketing strategy – meaning free of any racial connotations – signified that the company is more likely to extend its perceived style and status to an individual, rather than to a defined set of peoples or races, thereby attributing to the company's growth worldwide. Further, the fact that the company offers an individualized style of clothing greatly helped in edging its way to the European fashion market, as European as a whole, just as Americans, tend to be individualistic, and put great emphasis on the role of the individual in society.
Being an established and mature company, Tommy Hilfiger found it wise to remain true to its design roots and maintain its broad customer base to confront a the various changes within Europe's fashion market. Specifically, the company focused on improving their value proposition to their loyal patrons, with trend-right fashion at sharper price points, knowing that customers nowadays prefer to put more value on costs. Moreover, the company utilized their leverage in operations by reducing cycle time to market and continually testing new items to find out the desirability of their new products. Through these strategies, Tommy Hilfiger Europe was able to enhance the reach of its brand, thus enabling it to introduce such accessories as handbags, intimate apparel, swimwear, jewelry, footwear, eyewear, bath and body products, and golf wear. Moreover, through these strategies, Tommy Hilfiger Europe was able to provide its significant share in the sourcing and production capabilities of the company's wholesale enterprise – all these, while tailoring the company's products to meet the specific needs of their individual markets.
Tommy and globalization
Moreover, further globalization of economies has greatly aided TH Europe, along with other US-based fashion enterprises, to gain greater ease in entry to foreign markets. Prevailing international trade agreements have made possible freer product interchanges between and among countries, aided in great ways by the advancements in information technology and modes of transportation. As many experts would say, the world is getting smaller and smaller by the day, as people are being constantly technologically interconnected – thus revolutionizing the ways and speed of knowledge transfer and behavioral modifications across cultures and every geographical boundaries.
Coping mechanisms of selected apparel companies in the UK fashion market
Gant
Gant is now established in 54 countries around the world, with overall sales amounting to MSEK 3,400 in 2001. With its more than two decades of existence since it was first launched in Europe in 1990, Gant has been earning 20 EM annually in Europe, accounting a modest share of the fashion market. Gant has been for its product quality and consistency, especially in men's wear.
Gant's main business concept focuses on building profitability and brand equity through efficient bran management and a low-risk wholesale and retail marketing concept. Gant aims to further its growth in major cities, including Europe, in the next five years by launching directly-operated stores. Gant also intends to intensify its global marketing efforts to promote their growth and brand recognition. Moreover, Gant intends to expand its operations while keeping risks as low as possible. Quality enhancement is also at the top of their list, in cooperation with their various franchises and licensees.
However, Gant still has to contend with its weaknesses – it appeals to customers as being very regional. Moreover, high prices of its products discourage lower end customers in patronizing Gant products, even with its known quality. With intense competition in the European fashion industry, Gant will also need to expand its product lines, such as venturing into women's wear and denims to appeal to a broader customer base.
Lacoste
Lacoste was launched in 1933, short of a couple of decades to reach a century as one of the oldest apparel companies operating in Europe. With estimated profits of 200 EM per annum, Lacoste's products are best known for the casualness and consistency of its clothing lines it has built through its long decades of existence. However, just as Gant, it has to work on operating in wider regional territories. Moreover, Lacoste has to diversify its products to provide greater style options that customers could choose from.
Levi's Strauss
Levi's is probably the most successful apparel company in the world. Launched in Europe in 1959, it is now earning about 1,240 EM per year in Europe alone. Levi's is best known for its marketing strategies that elevated it to the status of a highly recognizable brand. Levi's prides itself in embodying key core values that have enabled it in meeting its customers' needs. Specifically, Levi's live by these four core values: empathy, originality, integrity, and courage.
Levi's prides itself in understanding and appreciating needs and customer insights, in being empathetic with their customers – that has allowed the Company to meet its commercial success.
Levi's deems itself inclusive in that the company was able to provide for diverse consumers, from all ages, lifestyles, and locations around the world. Levis, as they say, reflects a diverse world that the company serves through the range and relevancy of their products and the way they market it.
Levi's also strives for innovation by creating trends, setting new standards, and continuously improving through change. Levi's considers constant and meaningful innovation to be critical in its commercial success. To be successful, Levi's sees the imperative to change and compete in new and different ways that are relevant to the shifting times.
Moreover, Levi's considers integrity as one of its most valuable principles in that it considers ethical conduct and social responsibility as core to its business. Levi's believes that integrity includes a willingness to do the right thing for its employees, brands, the company and society as a whole. This principle of responsible commercial success, Levi's believes, is embedded in the company's experience. It continues to anchor its beliefs and behaviors today, and is one of the reasons why consumers trust the Levi's brands.
Presently, analysts believe that Levi's only needs to enhance its trade relations and may need to further it brand repositioning strategies in the European market.
Mexx
Mexx is earning modestly in Europe, with 380 EM in revenues per year. Launched only two decades ago in 1980, it is known already for its strengths in marketing and affordable price for the consumers who are mostly women. Though very regional in its operation, it needs to upgrade its products on the aspect of selling menswear.
Polo/Ralph Lauren
Polo/Ralph Lauren was launched in European fashion market during the early 1980's and quickly made its mark in the European fashion sense. In its two decades of existence in the volatile European fashion market, it is already capable of earning 300 EM per annum, a successful enterprise by the standards of the European fashion industry. Ralph Lauren is known for its consistency and is perceived as a quality apparel company that mostly caters to men's wear. However, the company may need to adjust the pricing of its products, in response to budding apparel competitors that can also offer quality products, but at much affordable and practical rates. Ralph Lauren may also need to reposition its marketing strategies in women's wear and denims; and with an aging client base, should focus more in attracting a broader client base.
Looking ahead
With these, it will be strategic for TH Europe to leverage its existing multi-channel, divisional, and pan-European platform further to expand throughout Europe. In addition, the company must also be on the constant look-out for further opportunities to introduce its new licensed products in Europe.
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