Tommy Hilfiger CEO Daniel Grieder on how innovation will help PVH grow its denim market share
Daniel Grieder, CEO of Tommy Hilfiger Global and PVH Europe, welcomed FashionNetwork.com in his eighth-floor office at the US group’s brand-new European headquarters, with an unobstructed view of the Amsterdam docks. Grieder introduced FashionNetwork.com to the group’s Denim Center in the Dutch capital, and talked about why and how PVH decided to invest in denim research, about the significance of this R&D centre and of its sustainability drive, and about the group's ambitions in the jeans market.
FashionNetwork.com: The denim market sells globally 1.4 billion pairs of jeans each year: what is your position within it?
Daniel Grieder: The first products Tommy [Hilfiger] sold in his career were jeans, from a stock out of his car’s boot. Denim is part of the Tommy Hilfiger brand heritage, and jeans are still a key product in the range. We believe that denim products are extremely important for the fashion industry, and will remain so, though the market has had its ups and downs over the years. Yet, every time a denim innovation crops up, the jeans market becomes buoyant again. This is why we are making denim innovation a priority for the company and within our collections. And it's also why we opened this centre: we want to take a leadership role in denim, and we want to do it by introducing innovations. Innovation doesn’t simply mean a new fit, design or style, it covers other aspects too, like eco-responsibility and a circular business model, for example.
FNW: What share of Tommy Hilfiger’s revenue do denim products currently account for?
DG: The share currently stands at 15%. And we think it has the potential to reach 25%.
FNW: Why are you investing in denim, which currently isn’t the most attractive market segment?
DG: Because it's going to grow! It’s 100% certain. You just need to be creative about it. We always think that denim products are among the most comfortable clothes one can wear, whether formal or casual, at the office or the week-end. We are also well-known as investors. This is of course why we decided to invest now, because interest in the segment isn’t at its highest. But thanks to effective innovation and the right kind of creativity, we will be able to gain market share.
FNW: Where do you see the denim market going, with fast-fashion brands selling jeans at €10; high-end labels potentially running into difficulties; and some of the long-established players on the wane?
DG: Indeed, when I look at the market, I ask myself what kind of innovation is there in denim. Is anyone coming up with new ideas? I see denim products all over the world. But I see no one investing as we do in a centre for denim excellence designed to foster innovation and a more eco-sustainable approach. While always churning out fresh, attractive products. You have to put many ingredients into a good product's recipe, and it isn’t something you do overnight. I believe that this centre will boost our capabilities and enable us to generate more demand.
FNW: What is the purpose of your Denim Center? Your suppliers, fabric manufacturers and finishers all have their own workshops, and good staff. Why did you need to set up your own lab?
DG: To step up the pace of our business. It's true that we work closely with suppliers. We are their client, and they follow us. For us, it’s very simple, [the centre] makes everything faster. We have direct access to 1,300 samples. All our designers can come and look at them, they don’t need to go out to some factory. And we’re able to make prototypes in 48 hours. When we send out for a sample to one of our suppliers, it can take from three to six weeks to be finalised. We are much more effective. We can run tests in-house. We are able to work independently, when otherwise designers would have to travel to factories in eastern Europe or Asia. This helps us bring new products to the market faster. Using laser machines gives us further opportunities. Thanks to laser technology, we can simply stock raw denim fabric in our warehouses. We can make any type of wash in 90 seconds using those machines. From both an operational and financial point of view, it’s all much more efficient. We can produce each day exactly the quantity we need.
FNW: At your centre you work on ideas and technologies. The challenge is then to deploy these operationally in the production phase.
DG: Exactly. What is important on the jeans market is consistency in the range. Since each wash has a different effect on the fit of a pair of jeans, variations of even a few millimetres sometimes make a difference. Thanks to our centre, we can research and experiment, and so be more consistent. It's a well-established approach. And now, the idea is to deploy it externally, aligning it with our partners’ operations. This will take an additional twelve months.
FNW: How much could this deployment cost, to you and your partners?
DG: I cannot say exactly how much, as it is a shared process. But what I can say it that the return on investment is interesting for them and for us. We are focusing on suppliers that are ready and able to share this approach with us. They have everything to gain, since it will enable them to optimise their production process. And for us, for example, not having excess stock of badly washed products would be a huge victory!
FNW: The technology you use at the Denim Center puts a premium on eco-responsibility. Why is it so important?
DG: Because it’s what consumers want. Each and every industry is seeking new, eco-responsible solutions. Of course, you won’t be able to make everything sustainable overnight, but you can get a little better every day. As a fashion label, we too have a responsibility to improve. And this won't necessarily cost more. To begin with, it might. But the more you work at it, in the long term, it will be beneficial. Being eco-responsible can’t always mean being more expensive. We need to find the way to be eco-responsible at the same price.
FNW: You develop your new products in Europe. How does this impact China and the USA?
DG: China is already part of the programme, since here [in Amsterdam] we create denim products for Europe and Asia. By 2020, our target is for 50% of our European products to have low environmental impact. It’s a different matter for the USA, where everything is much more price-driven. The way I see things, in future we will operate a denim centre in America, one here in Amsterdam and one in Asia. We will then be able to stock the raw material, create jeans directly and sell them locally.
FNW: Don't you have a centre in the USA yet?
DG: No, not yet, but we’re testing it here. If it works, it the implementation is successful, we will move on to the next stage, because being close to our suppliers is essential.
FNW: The PVH group is one of the leading players in the market. Making the denim industry more eco-responsible is a major challenge. Is it something you discuss with the other main players, like Levi’s or the VF group’s brands, to find a common approach?
DG: We are always open to finding new ways of working together. Anything we come up with in terms of eco-responsibility, we are more than happy to share. I think that, in order to improve, you have to be capable of sharing. You simply need to be ahead of the field. When everyone is on to a solution, you must have already turned to the next issue. This is why we love innovation.
FNW: You set up your denim centre to act as a magnet for innovation. Would you now be willing to invest in, or to buy a company that could give you a competitive edge to gain new market share?
DG: We are absolutely ready for it. We are already establishing partnerships with suppliers, by investing in certain fields. Specifically, in product innovation, as we’ve already done so in digital design. This is something we are pushing as much as possible, for example our digital showroom, which one day will be able to sell products. We are on it. And if we need to buy anything, or add a new solution, we are ready to do it.
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