With fashion sales falling in the United States due to a looming recession, design houses have begun to focus more intensely on emerging markets, such as the Gulf. On his first trip to attend a show in the Middle East, Tom Murry, President and Chief Operating Officer of Calvin Klein, spoke to Emirates Business about the health of the fashion industry and the retail sector.
While the brand still attributes half of its profits to the US market, Murry said growth has moved abroad. He shared insight into what it takes to maintain a successful global brand and explained why now is the right time to focus on the UAE.
Why have you decided to attend a collection-launching event in Dubai – and the region – for the first time?
Having a show for the first time in Dubai is significant since we have been doing business here for few years. It is a static presentation though rather than a runway show. It is a milestone event for us to be here along with a number of our management team.
How has business in Dubai and the wider Middle East been?
It is a relatively small percentage of our total activity, but we are seeing double-digit growth every month in our business. We think the potential will be robust in the UAE over the next five to 10 years. We have nine stores in Dubai and a total of 18 in the region. And we plan to continue to have more freestanding stores.
Why pursue freestanding stores? Is it to help distinguish the CK brand?
Freestanding stores tend to be branding platforms rather than commercial ones. They play a major role in presenting and strengthening the brand. One of the great things about the brand is that it has an identity and also a brand image. Everywhere you go and ask consumers if they have ever heard of Calvin Klein, they have heard the name. They articulate the same words – clean, modern, sexy and classic – all come to mind when you think of the brand. Fortunately, our business is good all around the world where we are present in more than 70 countries. And we see solid growth even in the US, where the economy is going through a slowdown.
What helps to shape the CK brand worldwide?
Consistency, which we have created over the past 25 years through advertising and also through product. We spend $250 million (Dh917.5m) a year on advertising in different media outlets. But there is some variation from country to country and from region to region on what we sell. But for the most part, we sell the same thing everywhere. We do specialise regionally with our products but it is not radical specialisation – more so a little bit in timing. We offer a wide selection of products for what is most appropriate in terms of time and region. We are trend rhythm rather than trendy. We certainly offer seasonal trends in all of our categories. I think one of the things we concentrate on is that all of our creative directors and designers are to be correct from a trend standpoint, but not being over trendy. Some of these things can get adapted or adopted into our collections, but usually not in a way that would be into today or tomorrow. There is always a little more duration associated with the kind of trends we do.
Are you planning a store in Burj Dubai? Is that another reason for your trip?
Not this particular trip, but we have an organisation constantly scouting new locations for us. And we will not rule it out. We are planning, however, to open new Calvin Klein Collection stores. The emerging markets – such as Dubai, Delhi and Shanghai – tend to be the most difficult because they do not have enough malls and awareness necessary. In established markets, people are trying to get into the action and take their spots. There is optimism and excitement of what is going on here in Dubai. I see this as compelling. However, while we have the capacity to expand, we are in a wait-and-see situation to see how Burj Dubai will turn out.
It was reported earlier that CK Beauty will be launched this year. Is this true? Are there any plans to launch other product lines in 2008?
CK Beauty has had a slow global roll-out but it will be entering the marketplace for the rest of the world by this fall [autumn]. We are launching Calvin Klein Performance Wear in the US this spring and are envisioning a global entry of that over time. We are launching a furniture collection in spring 2009, which we also expect to be a global business for us. We are always looking for additional product categories that are appropriate for our brand and continue to expand the Calvin Klein lifestyle and do classification to serve the Calvin Klein consumer.
Does CK plan to adopt fashion designs rooted in Arab culture?
Our designers and creative directors travel around the world to look for influence and inspiration. What has been seen in our collection is a combination of what they see around the world, which is then influenced by Calvin Klein fashion. When it comes to our line of fragrances, Asia and the UAE do influence some of the products we develop in that particular sense. The consistency of the company and the brand is the potential of product. Fragrances are the best example.
What share of CK’s business comes from the Arab world?
Half of our total business is done in the US, but outside the US, Europe and the Middle East represent 25 per cent combined and the rest is in Asia. We have been witnessing a faster growth rate in Commonwealth of Independent States. Most of the business we do in the Middle East, however, is in the UAE. But the biggest percentage of growth in the next decade will come out of China, India and Russia. Regionally, we expect Saudi Arabia will be our next growth spot after the UAE.
Why do you think CK does so well in the UAE?
There is a lot of money here, which has been created quickly. This is then combined with tourism. Calvin Klein works very well in this region and I expect consistent double-digit growth. For other markets, Saudi Arabia has a lot of potential for our brand and we expect continuous growth rates in Lebanon and Jordan.
How does CK see itself as different from the competition?
I believe there is no other brand like Calvin Klein that I can describe as global fashion lifestyle brand with a luxury component. We reach multiple economic levels of consumers all around the world and they co-exist together at the same time. I see this as remarkable. When we look at the world through Calvin Klein, it is important to have a global identity with regional specialisation where it is required. We are eager to provide products to our consumers and to stay consistent on the brand image or in other words, our brand DNA.
How has the weak US dollar affected CK’s performance and sales globally?
We have been affected in various ways. On the positive side, we have been seeing a lot of Europeans shopping in the US. On the negative side, products that are manufactured in Asia have witnessed an increase in labour costs, which has put pressure on our margins to maintain appropriate retail prices. We have also seen a kind of squeeze on the American consumers with high oil prices impacting their income. But we are still keeping a steady growth. We are also seeing an opportunity to pick up market share. This situation may last for a year, but then I expect a recovery.
Profile: Tom Murry
President and Chief Operating Officer, Calvin Klein
Murry has directed day-to-day operations of one of the world’s largest and most successful designer fashion companies, a wholly owned subsidiary of Phillips-Van Heusen Corporation, since February 2003. He arrived at Calvin Klein in 1996, initially as president of the cK business in the United States. In 1998, he assumed responsibility for the Calvin Klein Collection for women, including apparel and accessories, and in 1999 was promoted to the position of President and Chief Operating Officer of Calvin Klein. Prior to joining Calvin Klein, he spent six years as corporate president, Tahari, a women’s apparel manufacturer in the US – and currently serves on the board of Unite (Union of Needletrades, Industrial and Textile Employees), CK Jeanswear Europe, CK Jeanswear, and CK Watch and Jewellery Co. He earned a BS from Oklahoma State University.
Murry, who was born in Texas, now lives with his wife in Florida and New York.