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Richemont and Ralph: A Deal Made in Heaven?
Jewelry Scene

When Polo Ralph Lauren introduces its first namesake watch line next year in Geneva, Switzerland, it will be the culmination of the longtime goals of two major companies. The watch line, reportedly to retail between $3,000 to $5,000, will be produced by a new watch company, S.A.R.L., a joint venture created by Ralph Lauren and Richemont, the luxury good giant whose brands include Cartier, Van Cleef & Arpels, Montblanc, and Panerai.

According to published reports at the time of the announcement, Polo Ralph Lauren, the $3.7 billion clothing and accessories company, and Richemont, a $5.74 billion company, took nearly three years to compose the deal. The watch license for Ralph Lauren, one of the most desirable, recognized consumer names, had been shopped around the U.S. watch industry several years ago. But most watch companies objected to the monetary and design demands of Ralph Lauren.

Johann Rupert, chairman of Richemont, says that although Richemont typically owns its own brands, rather than licenses them, the joint venture was the best option. "I don't have licenses. The question with licenses is always who is controlling the design and who has the final say. Now when you have a watch with the Ralph Lauren name, you'll know it's the real thing, with Ralph Lauren's attention to detail. He signs off on everything."

No sales projections were given for the new venture, but executives of both companies confirmed that watches and high-end jewelry will be included. While Ralph Lauren hasn't had its own watch brands before, the company did sell sterling silver jewelry several years ago through a license agreement with Carolee Designs. Richemont has made no secret of its goal to expand its influence in branded jewelry. Besides Cartier, which accounts for about 52 percent of Richemont's jewelry volume, the conglomerate also has jewelry for its Piaget, Montblanc, and Dunhill brands.

Some see the joint venture as a means to attract a younger, affluent consumer to fine watches and jewelry. Pam Danziger, a consumer analyst and president of Unity Marketing, says that Richemont may have realized that its "old world strategy" doesn't necessarily work everywhere, especially in the U.S. "Ralph Lauren is the quintessential American luxury fashion designer. American brands such as his take a much more democratic approach to the marketplace, something that Richemont hasn't mastered. Richemont brands cater mostly to older, more traditional luxury consumers, with the exception of Chloe, and don't necessarily connect with young affluent American consumers," Danziger says.

But just because you have two premier names from the fashion and watch industries joining forces doesn't automatically guarantee future lines will be successful. "There's a caveat here. Polo Ralph Lauren is a wonderful name for fashion. I can see how the look could easily, and successfully, enter the jewelry category, but watches are an entirely different story," says Paula Peterson, CEO of Crown Luxury, a consulting firm that advises luxury brands on marketing and merchandising.

While a company such as Louis Vuitton has met with success for its high-end watch collection, "most affluent customers who can afford to buy brands such as Louis Vuitton or Ralph Lauren want to buy watches with a pedigree, such as Rolex, Patek Philippe, Ulysse Nardin or Girard-Perregaux," says Peterson, a former executive at Tiffany & Co., Van Cleef & Arpels, and Harry Winston. "Most fashion brands have introduced a retail under $1,000 targeting primarily aspirational customers. It would be more authentic for a brand such as Ralph Lauren to enter the category with a vintage or antique watch collection. Joining forces with a Fred Leighton perhaps would have been a more interesting venue for the brand."

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Rolex watch on model
In his image ads for his brands, Ralph Lauren traditionally has placed watches on modelís wrists. Here, a Rolex is visible in an ad for his Purple Label collection.