Tommy Hilfiger - The Rise and Fall...And Rise Again

[Music] tommy hilfiger for decades now has been one of the world's most well-known fashion designers we can instantly recognize his brand from that red white and blue nautical flag logo for the longest time and this might be the case for you i've always thought of them as one of those 90s brands early in that decade they were known for their preppy clothing you know collared shirts and sweaters and khakis but then by the end of that decade surprisingly they had attracted a more urban hip-hop crowd and that clothing would better be described as street wear they would wear everything way oversized with all of these really large and obvious logos on them looking back on it today i have to say it all still looks really cool but in a more ridiculous sort of way the reason you might consider them to be a 90s brand is because almost as soon as the 90s ended people stopped wearing them they weren't considered to be cool anymore and as a result their sales started to fall here's what i mean all through the 90s they were growing at an unbelievable rate in less than a decade they had grown 20 times larger from 100 million in sales to just under 2 billion well that 2 billion stands out as a high point because in the years following they held somewhat steady but with an obvious gradual decline however it is not that straightforward if you happen to be from europe watching this you may be really confused right now because those lower later years represented are probably when you first heard of them tommy hilfiger started selling clothes in europe in 1997 but it wasn't significant enough to even report separately until 2002 that year they accounted for a tenth of their total sales three years later it was a third of their sales and by 2009 it was over half making that the primary part of their business so here when you only see a slight decline in their total sales remember it's sort of averaging out because their success in europe is making up for their failure in the us but then if i extend this graph through 2019 we can see that they have made a really impressive comeback tommy hilfiger sales have continued to grow in europe they've reversed the trend in the us and have grown in other parts of the world as well all of that totaling it to almost 5 billion dollars in sales so i want to provide reasons behind this graph and talk about the rise fall and rise again of tommy hilfiger and i have to say there is a lot to respect about this guy despite having no formal training in fashion design for decades now he's been one of the biggest names in fashion he is from a town called elmira it's in upstate new york about a four-hour drive from the city his first exposure to the fashion industry was when he was a teenager he would take that four hour drive to buy some jeans from the city haul them back and sell them out of his car in his hometown by the time he was 18 years old that business had evolved into an actual retail store called people's place and most of the stuff that they sold there was inspired by fashions and music this was 1969 when the beatles and jimi hendrix were big so it ended up being a lot of this colorful hippie type of clothing and this is important he would actually design some of it the fact that he owned his own retail store gave him the rare opportunity to learn how to design clothing people's place did grow to a chain of seven locations before ultimately closing down and filing for bankruptcy in 1977. the reasons for it aren't completely clear but i would assume that being young and inexperienced combined with a poor local economy had something to do with it from there he continued designing clothes both on his own and for other companies until 1985 when he teamed up with a man named mohan murjani to start the famous tommy hilfiger brand that we all know today see mergani was already a successful clothing manufacturer famously known for making gloria vanderbilt jeans they were very popular they had her name stitched into the pocket one of the first to do it so when he wanted to make a line of tommy hilfiger clothing it was a big opportunity i think this is great for the launch of the brand in the fall of 1985 their primary way to tell people about it was this giant billboard right in the center of manhattan and this has to be the most amazingly confident billboard that i have ever seen it said the four great american designers for men are and then it turns into a fill in the blank where the first three answers are obviously ralph lauren perry ellis and calvin klein the fourth name on the list was implied to be tommy hilfiger it had the logo and said that he was the least known of the four but think about what it was doing remember this was for the launch of the brand he hadn't proven himself he did not deserve to be on that list he was simply telling people how great he was without proving it in any way that billboard didn't even have any examples of his designs well thousands of people saw it the late night hosts were talking about it and because so much of fashion is about perception of the brand many people started believing that tommy hilfiger was indeed one of the great american designers it really did prove to be a clever outside the box way of establishing his name after three years he separated from rajani when he got together with some investors to buy the brand from him and establish a new company that was named after himself in 1992 that company had an initial public stock offering and that's when they quickly became one of the biggest fashion brands in the country as i said before they started the decade by focusing on that preppy look which proved to be the perfect timing because casual fridays were becoming common in offices across the country so the market for clothes like that was suddenly growing and then it came the hip hop community i don't believe that this was the start of it but a big jump for that demographic was in 1994 when snoop dogg performed a song on saturday night live wearing one of their shirts where the name tommy could not have been more prominent from there it just naturally started becoming part of the urban community so then tommy hilfiger embraced it by making them in giant sizes and making the logos bigger and bigger really it's just such a weird transition but by the end of the decade it seemed like all of the biggest musicians were wearing it i am talking about michael jackson and britney spears here is a photo of destiny's child dressed entirely in the brand posing with tommy hilfiger himself i need to pause this and say that this is an extremely 90s picture and actually that sort of became part of their issue i think that all of us would agree that these oversized colorful clothes that had become the image of the brand have since fallen out of fashion it was a trend and in the words of tommy hilfiger we made the mistake of following a trend that was going to be short-lived because any trend is short-lived in addition to that the brand simply became too common and started to lose that premium exclusive image also in the words of tommy hilfiger the large logos in the big red white and blue theme became ubiquitous it got to a point where the urban kids didn't want to wear it and the preppy kids didn't want to wear it so the perception fell sales went down and then they weren't able to sell it at that higher premium price anymore knowing that the tommy hilfiger company decided to lower the quality so that they can afford to sell it at lower prices which just made the brand appear cheaper and cheaper it really is strange but what started out as a higher end preppy brand was turning into lower end street wear we can see how things were snowballing in a bad way and it took some strategic moves to bring everything back so here's what they did remember they were doing better than ever in europe so it would probably be a good idea to look at what they're doing and try to imitate it back in the u.s well it turned out that what they were doing over there was extremely similar to what they started doing in the u.s at higher prices higher quality less exposure and as a result a more positive stronger brand image overall but in order to imitate that to bring tommy hilfiger back to basics back to what has proven to work it was going to take some time it would obviously require some major changes where they may not see any benefits from it until years down the line investors in public companies are famously and maybe understandably not willing to stick with a company for years while they figure things out so to execute it they needed to return to a private company for the first time in 14 years well in 2006 they executed a perfect plan where the management found a private equity firm willing to buy them for 1.6 billion dollars and give them the freedom to make these changes the manager leading that buyout was fred gearing who was previously the head of the european division and became their new ceo that's when they raised their quality raised their prices and started designing smaller somewhat more subtle clothing in an effort to better control the quality they made a deal with macy's where they would be the only other retailer that could sell the clothing and then they opened this large 22 000 square foot flagship store in manhattan that was meant to function as a giant advertisement for the renovated brand they did all of this by the way while continuing to grow their european presence at an even faster rate like they had expected their overall sales took a little time to recover but by 2009 their 2.2 billion dollars in sales was more than they had ever had before which as i said in the beginning was their first year their european sales surpassed the ones in the us then in 2010 the brand was sold once again this time to phillips van heusen for the price of 3 billion dollars when you compare that to the 1.6 billion that they paid for it in 2006 it means that the brand had almost doubled in value in less than four years by the way the company who bought it phillips van heusen they own a bunch of other fashion brands that you may recognize such as well van hewson izod and calvin klein i think it is really interesting to mention that one because back in 1985 tommy hilfiger put his own name on a billboard right under calvin klein when he had no business being there and now decades later they coincidentally are part of the same company where tommy hilfiger repeatedly outsells calvin klein that is an incredibly inspirational thought right now i encourage everyone that aspires to do something to write your own name on a list alongside some of the leaders in that field now ideally you would publish that on a giant billboard in the middle of a big city but i suppose it also works if you just kind of hold on to it for the next few years and then look back at the list and see where you stand that is pretty much what tommy hilfiger did honestly it may be hard to actually beat his results but i still think it's a cool exercise all right to summarize tommy hilfiger is back they fell into the trap of following trends and overexposing themselves it was reckless it was short-sighted and they found themselves in need of some changes to repair the brand that they had let slip new owners and new managers took over to execute a plan to improve their image and to bring them back to popularity soon after they were able to make that turn a new set of owners took over who were in the position to further grow the brand to a ridiculously new height this figure of almost 5 billion in sales proves that many people around the world once again see tommy hilfiger as a cool designer brand let me know in the comments what do you think of tommy hilfiger and how has your perception changed over the years and when i ask that i guess i'm asking about the brand and the person but either way you have to respect what they've accomplished not only building one of the most popular fashion brands but actually being able to fix some of their mistakes and bring it back into popularity so any thoughts about tommy hilfiger or this rise and fall and rise again leave them in the comments i'd like to hear what you have to say thank you for watching you

Channel: Company Man

Views: 458,146

Keywords: Tommy Hilfiger, Fashion, Business, Rise and Fall

Id: ms1k-h_g9wI

Length: 11min 44sec (704 seconds)

Published: Wed May 05 2021