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The World Series Versus the World Cup

The makers of designer brands and luxury brands are not thinking only about finding one or two channels of distribution in the United States. They’re thinking, How I can expand globally, and what do I need to do to get there? To this day, there are still very large American companies whose products are earmarked for sale only in North America, and they can make a living doing that. Donna Karan International has been a global brand since it started in 1991. One of the original partners was of Japanese origin, and he obviously understood the world. Of course, LVMH was always a global company too, because it’s rooted in the tradition of European companies that didn’t have the huge American market and therefore had to look outside their borders even before there was a European Union. As a result, European companies adapted early to the demands of doing business internationally and shipped products and built stores all over the world, whereas most American companies took a while to catch on to the fact that the world is their marketplace.

Many American companies delayed going global because the United States has such a huge marketplace right here at home. However, the size of our market is both a blessing and a curse. It’s a blessing because we can sell so much product domestically. It’s a curse because we didn’t need to learn how to sell internationally and as a result were very late in figuring it out. For example, the first time General Motors tried to sell automobiles in Japan, it built cars with the steering wheel on the left side, just as it is here in the United States. However, the Japanese drive on the right side. And GM wondered why it wasn’t successful in the Japan market.

The United States may have a great impact on the world, but we’re still only a small part of it. I learned that when PVH bought Gant, which was very successful internationally and very weak in the United States. We were running the U.S. part, and our licensed partner consisted of three guys based in Sweden: two designers and an operating guy who had built a brilliantly profitable company that they were running internationally. Because we owned the Gant trademark, the Swedish licensee had to answer to us, and one day when the CEO of the Swedish company and I were having a difference of opinion, he said to me, “You Americans think the World Series is a baseball game played in Yankee Stadium. The rest of the world realizes the World Series is the World Cup playing football [soccer] in every country of the world.” That was his way of telling us, Wake up, guys: there’s more to the world than just the United States.

When you think about products and style and fashion, you have to develop a content or a line or a plan that considers all markets. In fact, there may be significant differences even within a single country, especially one as large and diverse as the United States. For example, the product concept or line for one geographic region could be very basic, whereas in another area of the United States such as New York or Los Angeles it could be very sophisticated. There are also markets in Europe and Asia that prefer more sophisticated designs, for example, Italy and Japan, where people dress very fashionably.

Therefore, when you are developing product and building a business, you have to ask, How can I make this universal? You need to consider how your product line takes into consideration the fact that there is a world out there that goes beyond our borders, and you have to be able to set up a network that provides product for the world.

Also, you need to recognize that every market is different. There are unique differences in every country and there are unique similarities, and when you do business on an international basis, you need to be thinking about this. At the same time, you can’t assume that all your customers around the world are going to come to New York: you have to swim where the fish are swimming. For the European markets, you have to be represented in Paris, Milan, or London or all three so that you can reach your Europe-based customers. Many people from Asia or the Middle East also go to Europe because of these marketplaces, and so you have to be set up in those locations with a contact, sales help, and information for those customers.

The opportunities for businesses are global, and so you must think globally and develop a product line that works around the world. Many companies make the mistake of thinking they need different product lines for different regions, and ultimately that hurts them, because we now live and work in an instantaneous global society. What happens in New York today is seen around the world, and what happens in China is seen here. Runway shows are now seen all over the world, and so when customers go to your shop in Beijing or Rome or London, they’re expecting to see what they saw on the runway, not some second-class product line. Yet to this day there are people working in our industry who don’t understand that and still develop different product lines for different countries. There are sometimes small “capsule” collections or items that can be developed, but product lines must be universal.

Although the product design should be the same the world over, you do need to consider how the fit may differ in various countries, and you may need to expand the sizes. That doesn’t mean the size itself changes: a size 2 in Hong Kong should be identical to a size 2 in New York. However, the difference may be in the range of sizes: for example, you might start with a size 00 in Asia, whereas the smallest size in the United States might be a size 2. Also, you may not find sizes 12 or 14 in Hong Kong, whereas you probably will find those sizes in New York and throughout the United States, because Americans are larger than people in many other cultures. Women’s clothing in Asia may go up only to a size 8. Yet there are still companies that haven’t figured out how to fit their merchandise for the entire world.

If a designer is catering to tourists from around the world, it should offer the full range of sizes. However, I’ve seen companies that have gone to Asia with a fit that just doesn’t make any sense: their sleeves are too long or their hemlines are too long. These are nuances of doing business internationally that you have to learn. First and foremost, when you’re building a global brand, it should represent the same thing throughout the world.

Unfortunately, I’ve worked with partners internationally that tried to persuade my company that we didn’t understand their culture’s marketing or that we needed a different product line because the one we had wouldn’t work in their market. However, consumers are the same all over the world. There are some factors you need to consider when developing a product line that will work internationally: for example, in Asia, some of the blush colors don’t work well with people’s complexions, and so clothing in those colors won’t sell as well as it will elsewhere. But you should have enough product that buyers can purchase from your line offering without your having to make special products for them that don’t exist anywhere else.

You also need to think about your pricing when selling globally. For example, many countries have VATs—value-added taxes—on which consumers pay an additional purchasing tax. In some countries, this tax can be as high as 20 percent, and that additional cost can have a significant impact on your pricing structures. For example, if I buy a designer brand men’s suit in New York for $1,000, that suit might cost $1,250 in London because of the VAT. As a result, those taxes could push your product mix out of whack with patterns of global travel. You need to decide whether you’re going to pass along that additional cost to your customers. In addition, some companies set up their websites so that consumers are not able to see what the same product costs in different countries. For example, if you’re living in Hong Kong and you want to see what the price is in New York for the same product, you will probably be barred from the U.S. website.

Finally, even the advertising or editorial is a factor when you’re doing business globally. Some companies choose the same thing for every editorial, whether it’s Vogue in the United States or Vogue in Japan or Hong Kong. Then there are other items that are picked up by different geographical regions that would appeal more to their customer base than what we might have here or somewhere else. It’s a big world, and our line is designed to encompass it all, recognizing that there are differences in geographic regions. In the Middle East, they’re not allowed to show shoulders; they’re not allowed to show skin. If we’re doing ads, we have to make sure during the photo-shoot process that some of the women are covered up.

Remember, the World Series is not a baseball game in Yankee Stadium: there’s more to the world than just the United States.