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Tommy Hilfiger returned to New York Fashion Week last night, with a show complete with NFTs and egame influencers. But for the brand’s first runway outing since the pandemic, Brooklyn’s Skyline Drive-In wasn’t the only venue: users around the world tuned in to the virtually streamed fashion show, which ran simultaneously on gaming metaverse Roblox, complete with digital goods available for purchase from the new collection.
“Returning to New York is an amazing moment for the brand,” Tommy Hilfiger CEO Martijn Hagman says. “We felt strongly about returning to the fashion show but in a new way, so not just an in-person event leveraging the platform of NYFW, but also combining that with the digital world and connecting with gaming to reach the younger generation.”
Hagman hopes the digital innovation behind the runway will make noise. The goal is to elevate and futureproof the Tommy brand for a younger generation. Its see-now-buy-now approach, previous collaborations with celebrities like Zendaya and Gigi Hadid, and an accessible luxury positioning have all contributed to this strategy in recent years. Work is also underway to realign its inventory and navigate supply chain issues to unlock potential in its domestic market. Now, the PVH-owned brand is realigning itself around a play for Gen Z customers, with the Roblox-streamed show at the epicentre.
“During Covid, I was thinking of what we should be doing for the future,” Tommy Hilfiger, the brand’s namesake founder and principal designer, told Vogue Business ahead of Sunday’s show. “We created this buy-now fashion show [in 2017], which was really successful for us. We travelled around the world [holding runway shows in different locations], and that was a game changer. How do we change the game going forward? And what will the community really embrace? So I decided that we should be in the metaverse.” The brand first collaborated with Roblox in December 2021, creating a collection of 30 digital fashion items people could use to dress their avatars.
“We started to test and learn with Web3, and we felt that the bigger gaming platforms like Roblox are a great way to learn about and connect with Gen Z,” explains Hagman, who became CEO of the company in 2020 and also serves as the CEO of PVH Europe. “It's about bringing a unique experience that connects the brand to the end consumer while driving conversion as well.”
Roblox users could watch a virtual rendering of the AW22 show, or a live stream of the in-person event, both within the platform. Mirroring the brand’s see-now-buy-now format for its physical collections, virtual versions of select pieces seen on the runway were made shoppable. Pricing ranges from 50 Robux (63c) to 200 Robux ($2.50), the platform’s currency.
In addition to Roblox, last night’s show was streamed on Tommy’s e-commerce sites and social media platforms, including TikTok and YouTube, as well as promoted on 3D billboards across China and in London and through in-store VR experiences and product displays. Members of the public were also invited to attend the show (as with the last show in February 2020).
“The Tommy Hilfiger event allows people to feel a part of this unique moment that they typically wouldn’t have access to,” says Winnie Burke, head of fashion and beauty partnerships at Roblox. “Roblox is a very social place where our community spends billions of hours every month connecting, creating, and making friendships. Brands that create value and offer safe and civil spaces for people’s shared experiences are finding long-term success.”
Tommy Hilfiger is not alone in pivoting for a younger generation. Hugo Boss rebranded to better target Gen Z in January, with lower-priced Gen Z brand Hugo tapping TikTok talent like Khaby Lame to push product (Boss, the sister brand, is for millennials). US brand Coach is pivoting to target younger consumers with “expressive luxury”, the company announced on Friday. Tommy Hilfiger has been positioned as a youth-focused premium brand since its inception, presenting new challenges as it tries to retain market share in the competitive environment.
PVH sales for the second quarter ending 31 August were down 8 per cent, to $2.1 billion. Tommy Hilfiger sales fell 5 per cent. The parent company, which also owns Calvin Klein, plans to reduce its workforce by 10 per cent in the next year to “streamline [the] corporate organisation, drive efficiencies and fuel strategic investments”, said PVH CEO Stefan Larsson during the company’s Q2 earnings call.
The bet on Web3 makes sense for an established player like Tommy Hilfiger, say analysts. “The world has changed; the various points of entry are growing,” says Jay Sole, executive director at UBS. “The next generation of consumers that will drive growth are very digitally savvy, and they have tons of choices. Brands need to meet them where they are.”
For a brand like Tommy Hilfiger, scale is an enormous advantage versus smaller challenger brands, Sole adds. “However, they will need to increase digital to connect with consumers, implement better distribution and more sophisticated data analytics if they’re going to stand out,” he says.
Pivoting to Web3 to compete for Gen Z
For more than six seasons, Hilfiger’s fashion shows have focused on celebrity collaborations, from Zendaya (AW19) and Gigi Hadid (SS18) to Lewis Hamilton (AW20). This season, however, the house collaborated with London-based designer Richard Quinn on a gender-neutral capsule collection, which featured in the NYFW show. And British illustrator Fergus Purcell has designed a monogram used in the collection. This chimes with its Tommy Drop Shop project in 2021, when it tapped artists to “bootleg” Tommy work.
“We strongly believe that for a brand to stay relevant and to stay current, you always need a level of collaboration. We always see that that brings a unique spark of creativity and newness that excites young consumers,” Hagman says. “This time, it’s not celebrity-focused, but that’s not to say we won’t do that again.”
Tommy first collaborated with a handful of Roblox creators on 30 virtual pieces in December 2021 before launching its own gaming environment Tommy Play in June this year, which has 18.9 million visits in the first 90 days. For last night’s show, the brand’s focus was on visitors to the virtual show and live stream but also on time spent within the environment as a marker of success.
“You need to have modern, forward-looking collections, true to your DNA, your target consumers and keep innovating, keep showing newness while considering sustainability, diversity and inclusion,” says Hagman. “Then you layer on top new business models, new innovations like Web3.”
Tommy Hilfiger believes Web3 is the key to keeping his eponymous brand youthful and relevant. “I think we're killing two birds with one stone because from a marketing aspect, we're reaching a consumer we wouldn't ordinarily reach in the tens of millions,” he says. “They're buying the skins. And if they're getting approval from their peers on the skins, they're buying the physical [product] as well.”
Unlocking potential in North America
Tommy Hilfiger’s global business has rebounded to pre-pandemic 2019 levels, Hagman says, but the recovery in North America has lagged behind Europe and Asia. “The North America business has always been relatively dependent on tourism and international travel,” explains Hagman. “Our strategy now is having a stronger focus on engaging with the domestic consumer.”
Tommy isn’t seen as a premium brand in the US domestic market in the way it is in Europe, some analysts say. Hagman is looking to boost brand appeal in the US with tailored product development and marketing activities (notably last night’s show). “It’s definitely achievable, but I agree with the way PVH management has explained this, it's gonna take some time, potentially multiple years, to reach,” says Chris Nardone, vice president, equity research at Bank of America.
Analysts are confident that Hilfiger has a lot of growth potential in the US, even if it’s not playing out this quarter, because of the brand’s focus on improving product development and investment in marketing. “We are seeing shifts that should benefit the gross margin,” Sole says. “And we still see a strong opportunity in the market.”
Europe and Asia are stronger in terms of revenues, per PVH. However, Hagman is cautious about softening demand globally due to inflationary pressures and the energy crisis. “Consumers around the world are becoming more cautious in their spending. If you look at Europe, say in Germany or the UK, these consumers are worried a lot about what's gonna happen now this Autumn/Winter.” Retail partners are already applying “conservatism” in their buys, he adds, to adapt to the climate. (Tommy Hilfiger has thousands of stockists globally.)
Combatting inventory woes with digital innovation
Inventory management is a challenge for fashion brands globally, including PVH Corp, says Nardone, who points out that stock was limited last year thanks to supply chain issues, which minimised promotional activity for brands like Tommy Hilfiger. “Fast forward to today, the supply chain is improving, and brands are starting to order product earlier,” which has prompted a return to discounting to move excess.
In order to lift its gross profits, Tommy Hilfiger will need to reduce the amount of unsold inventory it holds, says Sole.
As a solution, Tommy Hilfiger is in a “test and learn” phase with on-demand manufacturing while innovating 3D product development and sampling to reduce delays and improve buying processes, says Hagman in response. Over the last two years, the company has digitised its design processes to reduce shipping and the impact of sampling. Fifty per cent of collections are now designed and developed using 3D, with a goal to reach 100 per cent by 2025. All wholesale selling is now also done via digital showrooms.
“Today, the fashion industry is wildly inefficient: how we plan, how we produce, where we produce,” Hagman says. “There's a lot of estimation happening on what to produce and what will be on trend, so we are slowly moving towards on-demand manufacturing, where you bring supply and demand much closer to each other.”
Tommy Hilfiger is aiming for a model with minimal held inventory and no waste, but it will take a long time, Hagman admits. For now, the brand is starting small, testing on-demand T-shirt printing. “We are all very optimistic about that north star for the industry. It's one of the bigger bets for the future.”
Maghan McDowell contributed reporting.
Correction: A previous version of this story stated that Hagman is COO of PVH Europe. He is CEO of PVH Europe.
Correction: A previous version of this story stated last night's show is Spring/Summer 2023. The show season is Autumn/Winter 2022.
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