Tommy Hilfiger boss explains its elevation strategy

The word “elevation” has become something of a buzzword in the fashion retail industry of late.

For the past two years, Mike Ashley’s Frasers Group has been continuously talking of its elevation strategy, which aims to “create a shopping environment that will be fit for purpose for many more years to come”, and even appointed incoming CEO Michael Murray to the dedicated role of group head of elevation in 2019 to oversee this vision.

Inditex’s Zara has also spoken of an “elevated customer experience” at its new stores over the past year, and in August PrettyLittleThing appointed former ITV Love Island contestant Molly-Mae Hague to “elevate” the fast fashion brand’s product offer.

But what does “elevation” actually mean?

It is a question I ask Martijn Hagman, CEO of Tommy Hilfiger Global, who frequently uses the term when describing the US clothing and lifestyle brand’s own future plans, which focus on product, sustainability and omnichannel.

“It’s funny you should ask, because I’ve been asked that exact question several times over the last year from people within the industry,” replies Hagman, speaking in his capacity as CEO of Tommy Hilfiger Global, for which he oversees the brand’s global strategy. “Elevation is the recognition that you constantly need to reinvest in the brand. When we talk about elevation, we talk about elevation of our product, experience and store concept, as well as the entire business.”

The 46-year-old Dutchman, who lives with his wife and three children in Amsterdam, where he is talking to Drapers via Zoom, continues: “As an example, there is a risk that if you have a bestselling product and you leave it as it is, and milk it until its done, that it is not strong enough from a long-term business point of view.

“Elevation is about innovating – bringing new sustainable fabrics into your existing garments and bestsellers, and constantly renewing, refreshing and staying relevant. All of that is an added cost, but it is a core part of elevation.”

However, he says: “That doesn’t mean per se that we want to move from premium to luxury, or anything like that. Our sweet spot is the premium sector – we are an affordable and accessible brand, and that’s how it will stay.”

Hagman is also CEO of PVH Europe, a subsidiary of New York-based parent company PVH Corp (formerly known as the Phillips-Van Heusen Corporation), the US clothing group that owns Tommy Hilfiger, Calvin Klein, Olga, Warner’s and True & Co. The PVH Europe “Campus of the Future” in Amsterdam is home to the headquarters of Tommy Hilfiger Global and Calvin Klein Europe, and houses around 2,000 employees. There are also Tommy Hilfiger regional offices in New York and Hong Kong. Tommy Hilfiger Global employs around 16,000 people worldwide.

Tommy Hilfiger was founded in 1985 by the eponymous fashion designer and has been owned by PVH Corp since 2010 (see company timeline below). It manufactures and sells men’s, women’s and children’s clothing and footwear, as well as accessories, fragrances and home furnishings. Retail price points range from €14.90 (£12) for kids crewneck T-shirts to €1,299 (£1,082) for menswear and womenswear leather jackets, and is the same price for wholesale partners. Wholesale makes up 65% of Tommy Hilfiger Europe’s sales, while the remainder is direct to consumer.

Tommy Hilfiger has more than 15,000 wholesale stockists worldwide, including China’s Tmall and JD, and Macy’s in the US. Its 275 accounts in the UK include Frasers Group, Asos, Selfridges Group, Very Group and JD Sports.

The brand has 2,000 points of sale (including full price, outlets and franchise) worldwide, and 52 full price, outlets and franchise stores in the UK. The company declined to give the store/online sales split.

Back in the black

There was a time when it seemed like Tommy Hilfiger was a brand of the past. Having ridden high throughout the 1990s, and becoming the first fashion business to float on the New York Stock Exchange in 1992, it made a loss of $513m (£320m) in the year to March 2003 as consumers fell out of love with its preppy clothes with trademark red, white and blue logo. Now, with celebrities such as model Gigi Hadid and Formula 1 driver Lewis Hamilton as ambassadors, Tommy Hilfiger has become a new retail success story, thanks to a willingness to adapt and innovate.

Tommy Hilfiger Global registered a 12% year-on-year increase in revenues to $1.2bn (£920m) for the three months to 31 October, including an 11% uplift in Tommy Hilfiger International revenues, which encompass Tommy Hilfiger Europe and Asia Pacific, and a 13% rise in Tommy Hilfiger North America revenue. It said stronger-than-expected results were achieved through strength in product, consumer engagement, and consumer experience. Although the company would not provide details, it confirmed Tommy Hilfiger global is profitable.

Group revenues from Tommy Hilfiger and Calvin Klein were up 10% to $2.3bn (£1.7bn), “despite worsening logistics disruptions” in October, including significant US port delays.

Elevating to new heights

Tommy Hilfiger, like many fashion brands, is shifting its focus to an omnichannel strategy, combining online and bricks-and-mortar shopping experiences to best cater to its customers’ ever-evolving needs. With floor-to-ceiling interactive monitors and a “smart” clothing line with embedded Bluetooth chips that reward customers with points that can be translated into rewards such as gift cards, the brand is on a mission to create “the store of the future”.

Hagman says: “As the world has pivoted to digital sales channels, we’ve seen the size of our ecommerce business grow significantly. We want to put additional effort and focus on our own store network because in the end, that’s where we can show the best of the brand, and it’s where we engage directly with the end consumer.

“What we will see more and more of is in-store experiences. Experience can be a very small thing, like a digital screen that displays branded content that inspires the consumer. It could also be offering loyal members extra rewards. And it could go as far as hosting in-store immersive brand events that feature our ambassadors.”

I ask Hagman whether it has proved difficult getting smaller wholesale partners, who might not have the funds, on board with the move to omnichannel.

“We’ve seen in the pandemic some wholesalers really quickly pivoting to digital and omnichannel, but others were not interested,” he explains. “It’s for us to continue the relationship and the partnership with those that also want to adapt and recognise what the consumer is expecting from the brands. Some will therefore not make it, because in the end, the operations stay efficient, and the distribution needs to stay brand-right. It’s about continuous evaluation of your customer base. Overall, wholesale will remain an important distribution channel.” 

Product in the picture

Another area of focus for the brand is product. It has three main lines: Tommy Jeans, Tommy Hilfiger and Tommy Hilfiger Collection.

The core line, Tommy Hilfiger, continues the original preppy American look with a twist (think polos that blend a quirky smartness with a sporty, casual feel). It was joined by the younger Tommy Jeans denim line, and the most premium and directional range Hilfiger Collection.

“We were very fortunate in the pandemic that a lot of our product offer is casual, and so we doubled down on hoodies, sweaters and sweatpants,” Hagman says. “It’s still those casual products [selling now], but now a form of elevation within there.” The brand says this is “about surprising consumers with the unexpected while always delivering the memorable products they know and trust us for”.

Hagman continues: “Since our stores opened worldwide, we have also seen a stronger demand for occasionwear and formalwear – blazers, dress shirts and, very nicely, jeans are also coming back.

“I remember, it must have been a year ago, I saw the headline ‘Denim is dead – will it ever return?’ Of course, everyone had to laugh about it a bit – but denim is back, and denim is an important category for us.”

Category focuses include womenswear and footwear, which comprises trainers, boots and flipflops.

“We licensed out Tommy Hilfiger footwear pre-2008, but then we brought it in house in 2008,” Hagman says. “Since then, it has been a phenomenal success story. Female footwear is doing extremely well and the last four years we have seen a big explosion in sneakers. It’s become so important for us – pre- and post-pandemic.”

Hagman continues: “We have quite a comprehensive lifestyle product offer. It’s now thinking about where do we want to invest, grow and strengthen our position? We see some more opportunities in footwear and accessories [by providing a more cohesive footwear and accessories offering that aligns with each consumer lifestyle]. And the womenswear business is very interesting for us – it’s probably 40% of our business, but we still see some room there to grow, but also to elevate.” Tommy Hilfiger hopes to “enhance feminine brand expression” across marketing, product design and shopping experience.

Menswear makes up more than 50% of sales, womenswear 40%, and childrenswear the remainder. Footwear represents 17% of sales, while the remainder is clothing.

Adam Kelly, director of buying and merchandising fashion at department store chain Fenwick, says: “Through a strong, collaborative, dynamic and co-operative relationship built over the past five years or so, we have grown with the brand to a place where we currently stock Tommy Hilfiger in all nine Fenwick stores, as well as online across womenswear, menswear, kidswear or denim. Each of these categories is as strong as the other and perform well for us in each area.

“From a fashion point of view, both [the brand’s] and our consumer is evolving – the millennial customer is looking for the more casual aesthetic, which Tommy does as well as anyone. Plus its sustainable and ethical projects align with our, and our customers’, values.”

David Epstein, managing director of Frasers and House of Frasers, agrees: “We work collaboratively with all of our partners to ensure we have the very best product across our stores and digital portfolio, and Tommy Hilfiger is the perfect example of how a brand makes best use of all Frasers Group brand channels.”

The future of fashion

Looking to the future, Tommy Hilfiger is considering how it can move into the metaverse – another buzzword circling the industry right now. The metaverse is a combination of technology, including virtual reality, augmented reality and video where users “live” within a digital universe.

“You hear a lot about the metaverse and brands moving into the metaverse,” Hagman says. “It’s a bit of an undefined territory and a new frontier that we are very excited about.”

In December 2021, Tommy Hilfiger announced that it had partnered with eight user-generated content (UGC) designers from online platform Roblox to create and promote a Tommy x Roblox Creators collection of 30 digital fashion items that people can use to dress their avatars within Roblox. The virtual Tommy x Roblox Creators digital collection is available for purchase globally in the Roblox Avatar Marketplace. Prices range from 60 “Robux” – the in-game currency – for a bow to 120 Robux for a backpack. Users can purchase 800 Robux for £8.99.

“Back in 2010 was when we started to be interested in ecommerce. That 2010-2015 period was where we were testing and learning on ecommerce, and it was exciting period, and I feel that same feeling now that we are now entering 2021-2025 – this is a period when we will start to test, learn and invest in those new virtual worlds. It will be about making digital twins of products, and making virtual copies of your stores. It’s about epic product development and games.

“We already have a very strong history of leading with digital and driving digital transformations with our digital showrooms and we are ready for it.” Tommy was one of the early adopters of 3D design and development, beginning its journey in 2017.

A “Hands On” approach

The use of 3D renders for develeopment reduces waste from creating samples. Tommy Hilfiger also wants the future of fashion to be fully circular, one that limits its carbon and water footprints, and where all the materials it uses can be part of a sustainable loop.

In its autumn 21 collections, Tommy Hilfiger has 61% more sustainable styles – including knitwear made with one material to ease future recycling – an increase of 32% from autumn 2020. This is led by Tommy Jeans, in which 91% of the collection is made with more sustainable styles, such as 100% recycled denim and lower-impact denim, followed by Tommy Kids (86%) and footwear (77%).

It follows the launch of Tommy Hilfiger’s “Make it Possible” programme in 2020, and vision to “Waste Nothing and Welcome All”, which focused on circularity and inclusivity. The programme includes 24 targets to hit before 2030, including phasing out the use of virgin oil-based polyester in favour of alternatives with lower environmental impacts.

“As the world evolves and new opportunities arise, we’ll continue to update our progress and build upon our targets to push the boundaries further and contribute towards a more inclusive, circular future of fashion,” Hagman says. “What you see now is a focus towards circular, so making sure we have closed loops, making sure product is designed and enabled to be recycled later. We also do repairing and cleaning product through our Tommy for Life initiative. There is an enormous amount of work going on.”

Hagman launched the brand’s first sustainability programme, Hands On, back in 2010 when he was group controller. It focused on reducing waste (in product and operations), building communities through education, and mobilisation of all staff to work towards a more sustainable future.

“Sustainability has been one of my loves within the brand, and actually I started the big sustainability programme myself back in 2010,” he says. “I still have it under my personal responsibilities today.”

Hagman first joined the company in 2008 (see CV, above) as group controller from auditing firm EY, where he was an auditor. He then worked his way up to become CFO at PVH Europe in 2013, before moving to CFO Tommy Hilfiger and PVH Europe in 2014, then took on addition role of COO PVH Europe. He was appointed as CEO of Tommy Hilfiger Global and PVH Europe in June 2020. 

“I joined in 2008 and the Lehman crisis [investment bank Lehman Brothers filed for bankruptcy in September of that year, precipitated by the US subprime mortgage crisis] was later that year. Sales dropped dramatically. We went into restructuring, and had to just change direction and change strategies for a period of time, and work to the recovery – similar to what’s happened over the last few months.

“I had to think about that [crisis] when I got promoted to CEO because it was the second time I had stepped into a new role during a crisis [after joining Lehman].

“I had seen almost all aspects of the business already for many years as a co-pilot, knew the key players and also helped shape the strategy and the strategic plans for many years already, so I was prepared in that sense. That said, you’re never ready for a CEO role.”

In September 2020, PVH Corp, parent company to Tommy Hilfiger Global, announced plans to streamline its North America operations to align its business with the evolving retail landscape, including reductions in its office workforce by approximately 450 positions, or 12%, across all three brand businesses and corporate functions. It also completed the sale of certain intellectual property and other assets of its Heritage Brands business, which includes the Izod, Van Heusen, Arrow and Geoffrey Beene brand trademarks, to Authentic Brands Group (ABG) for $223m (£165m), in August 2021.

Following Hagman’s interview with Drapers, the Netherlands went into a tough lockdown from 19 December to limit a feared Covid-19 surge from the Omicron variant. All non-essential shops, restaurants, bars, cinemas, museums and theatres were forced to stay shut until 14 January, while schools closed until at least 9 January. Gatherings outside were also limited to a maximum of two people.

During previous lockdowns, the global brand managed to cope with varying governmental restrictions across different countries as it is a “decentralised organisation”. Tommy Hilfiger has a global office in the Netherlands, as well as regional offices in the Americas, Europe, and Asia.

Hagman says: “The momentum of recovery has been different from region to region. Recovery in North America has been good, but our business in the territory is very dependent on international tourists, and there’s just no international tourism.

“In Asia and Australia, the momentum has been good, but they also struggled with lockdowns throughout 2021. But they’re in a good place, and they are getting back to pre-pandemic levels. For Europe, the recovery was also very strong, and we traded above pre-pandemic levels in the region during the year.”  

Nevertheless, Hagman warns of “renewed uncertainty”: “What keeps me up at night is what I would call the ‘perfect storm’ in the supply chain. There has been so much disruption in the supply chain over the last two years, and still that is going on. On top of that we now have cost inflation, energy price increases, raw material price increases and a labour shortage. It will take another good year probably before those supply chain disruptions are evened out and we’ve got to a more steady state.”

Despite this, Hagman is confident about the elevation strategy and Tommy Hilfiger’s omnichannel approach, believing that “2022 will be a very exciting year”: “Brands, consumers, and the world are looking for a renewed start, and I’m optimistic.”