Lacoste chief executive José Luis Duran aims to play on the brand’s sporting heritage and take a bite out of international markets.
As we sit discussing the details of the empire José Luis Duran commands, the Lacoste chief executive is inundated with well-wishers, business partners, acquaintances and family. We’re in the thick of the racket of Roland Garros during the French Open and the weather isn’t playing ball, meaning the Lacoste corporate area is packed with frustrated tennis fans. Duran seems at home among the hubbub; his confidence could be mistaken for Gallic flair was the man not of German-Spanish descent and his favourite player Rafael Nadal, rather than one of the Lacoste-sponsored players.
But this is the only time Duran is off-brand the entire afternoon as he sets out his plan for the future of France’s most iconic sports-fashion brand. Barely six months into his tenure at the head of the croc, Duran has been busy.
“In the medium term it has to be more efficient,” he says of the advantages afforded by parent company Maus Frères’ acquisition of all shares to create single ownership in November last year, valuing the company at about €1bn (£858m). “The difficulty of a brand like ours is to connect everything together,” he continues. Up until then, Lacoste was still part-owned by descendants of the brand’s founder and famous tennis player René Lacoste, which made high-level decision-making a struggle. “Today is the first time we have a unique, lean team with a unique direction,” Duran adds.
Andy Rubin, chief executive of Lacoste’s footwear licensee Pentland (where he predicts the brand’s global retail sales will hit €730m [£626.1m] in 2013, up 26% on 2012), explains that Duran “has established a new executive team in France to help co-ordinate activities across the brand and drive innovative marketing and product initiatives”. Duran installed this new management team at the beginning of March with the aim of taking Lacoste into new territory, in the face of challenging circumstances. “We have had steady double-digit growth in all previous years,” Duran reveals.
“Despite the difficult environment, Lacoste sales will grow again by single digits in 2013 as a result of our action plan.
“There is more coherence - when you put too many people together it is never the right decision,” he adds. On moving over from his job heading up Devanlay, Lacoste’s US licensee, it was clear to Duran - a man Rubin calls “a unifying leader” - that the brand needed more focus. Previously each business area and licensee had its own strategy and direction, but Duran’s new structure has seen that streamlined.
As we sit surrounded by the latest campaign imagery and videos, Duran references the marketing strategy to illustrate his point: “For the first time the brand has a marketing team with a marketing vice-president. Before we had a Lacoste marketing guy, a Devanlay marketing guy, a Pentland marketing guy and everybody was more intelligent than the others,” he says with a wry smile.
Duran believes that in the immediate future this type of approach will deliver efficiencies in-house before giving the customer a better-rounded brand in the medium term.
It is the branding of Lacoste that Duran feels most optimistic about. While Luca Solca, luxury goods analyst at investment firm Exane BNP Paribas, is of the opinion that Lacoste “has a long history, but it faded a lot in recent years”, Duran is eager to look back to the brand’s history to keep Lacoste moving forward. Especially in this, its 80th year, which it will be celebrating by launching a raft of special luxury projects with famous fashion houses and graphic designer Peter Saville, known for his sleeve designs for Factory Records.
“Other brands have to invent a fake story and play it much better than we do with our real story,” says Duran, in a nod to the tale of how René’s relentless playing style gave rise to his nickname “the crocodile” and the birth of an iconic logo. “But we should not abuse it,” he says. “It’s about how we bring to a bigger stage our sports heritage, our authenticity, our quality. It’s challenging but if we get it right I think we have huge leverage to play with.”
This heritage will be an important part of the brand’s armoury as Duran plots an assault on international markets both new and established. “There are no easy opportunities - we still have room to grow in Turkey, Russia, Brazil and China,” he explains, also citing countries not on the “usual suspect list” such as Indonesia and Mexico, as places where Lacoste has yet to maximise its presence.
However, as a country, the US is the brand’s biggest market, making up 23% of the business. Asia contributes 22% and Latin America 12%, while Europe (not including France) accounts for 32%, with the brand’s home country still representing a sturdy 12%.
“We are doing great in France where we perhaps over-invest in relation to the relative weight of business,” Duran reveals. “But I think if you are not good in your home market you can’t roll out internationally.”
Despite his new overarching management structure, the former Carrefour chief executive is aware that understanding individual markets is vital in order to resonate with the local customer. “This is new for us. Should we not treat Paris differently to the rest of the country? In China should we not treat Beijing and Shanghai differently?” Duran
asks “Until today we have never spoken about this. All our stores look the same,” he says. “The consumer and the brand should evolve - the customer doesn’t expect to see the same thing everywhere he goes.”
And he (or she) definitely won’t see the same thing in New York, home of Lacoste’s biannual catwalk show. It is the US city and not Paris that Duran sees as playing a key part in the brand’s future. “I have asked my team, ‘why don’t we treat New York as that place where Lacoste should stand out more in brand positioning terms?’ It will take two to three years but it will be a very interesting project, not just for New York but for the international markets.”
This approach could see Lacoste offer something completely bespoke in the city, working with the clothing teams and the likes of licensees Pentland and Procter & Gamble to create new upmarket products, as well as potentially scrapping promotions or Sales in an effort to create a new premium brand image.
This will also be reflected in a new pricing strategy. “Pricing and product go hand in hand, because our customer is asking for value for money,” says Duran. “Our customer is ready to pay €130 (£112) for a shirt, but it can’t be a normal ‘me too’ shirt. This is one of the main challenges I’ve given to my new product team: it’s not about pricing it’s about added value.” Duran believes he can stretch the brand - for example, although 95% of Lacoste’s shirts retail below €100 (£86), his aim is to reduce that to 75%, creating better quality shirts to appeal to a premium audience.
“We are three or four seasons away, but we are going to start seeing new things coming in from autumn 14,” he adds.
Next year is set to be a big one for Lacoste. Duran will unveil a new type of marketing campaign for the company, a new brand promise, a new investment into its retail window displays and a more premium product offer. “The second half of 2014 will be a real moment of truth and [that] is tomorrow morning, it’s not far away,” Duran says. Solca believes Lacoste presents “a formidable challenge and a formidable opportunity”.
With his plans set out, this is one match Duran intends to win.