Fred Gehring, the global head of Tommy Hilfiger, was born and raised in Holland, schooled in the intricacies of the European market and now leads a multinational corporation bent on global growth. Out of those worldly elements, he has emerged with a peerless understanding of how to protect and develop a brand—an all-American brand.
This was no small trick. Gehring, now 59, began his involvement with “Tommy” in 1996. That year he launched in Europe what had been one of the white-hot American brands of the 1980s, bringing Hilfiger’s signature rejuvenations of casual classics such as blazers and chinos to the Old World. But while the company flourished in Europe, some initially fruitful decisions in the U.S. carried the seeds of long-term problems, and at home Hilfiger slumped.
Eventually the branches passed one another on the flow charts: From 1999 to 2009 Hilfiger U.S. saw sales slide from more than $1.5 billion to a bit over $700 million, while European sales steadily rose to $1.13 billion. In 2006 Gehring assumed control of the American branch of Hilfiger as well, and by 2010 U.S. sales were increasing for the first time in more than a decade.
That year Phillips-Van Heusen (PVH) acquired Hilfiger, and after some reshuffling at the top of the organizations, Gehring is now set to become the chairman of Tommy Hilfiger and vice chairman of PVH Corp. He spoke to SUCCESS at the Hilfiger flagship store on Fifth Avenue in Manhattan.
Q: Many people have forgotten how popular Tommy Hilfiger was when it debuted in the mid-1980s and through the early 1990s. Then what happened?
A: By the mid- to late 1990s, preppy style caught on in urban markets. Tommy was particularly popular and we designed into that urban style—baggy jeans and so on—which brought even more success. As a result the brand exploded and sold very well, and the stock price exploded as well. But ironically that success created problems. Tommy lost credibility as a preppy brand [because of the new looks]. Consumers often select a brand to help signal to the world who they are, or who they want to be, and when the brand stops being a reliable signal, you have a problem. You can go from everybody wearing your clothes to nobody wearing your clothes surprisingly fast.
Q: But you weren’t having this problem in Europe.
A: No. In 1996, when we launched the brand overseas, we had a choice: to position the brand as street wear or as it was originally created—preppy, classic American cool. We chose the latter, which frankly was the more difficult alternative. It wasn’t an easy choice, because the money to be made in the short term was substantial.
Tommy Hilfiger and others in the American management group at the time were riding that wave of success and enjoying the adrenaline kick, so they encouraged us to hop aboard. But we didn’t think this was a good strategy for the European market. We felt the street wear would enjoy a few years of success and then burn out. We preferred the long haul. This left us in the unusual situation of trying to position an American brand in Europe that in America no longer had that position.
Q: Compared to the struggle in America, the success in Europe, along with, ultimately, the resuscitation of the classic brand, is pretty unique. What lessons did you learn?
A: First and foremost, don’t lose track of the fundamentals. It was a windfall when the American urban market latched onto the preppy look, but the attraction was temporary. Our brand is classic American cool; we lose sight of that at our peril.
The second key is to pay close attention to what consumers want. When we started Tommy in Europe, we learned that Europe is not one market but 30. The Spanish customer has different tastes, different buying habits, different credit preferences; the French customer will have a different expectation of how the cloth in a jacket should feel; neither will be able to explain the difference, but they expect to feel it. The way a sales associate approaches a customer, the tone of voice—the differences are numerous and subtle. In Italy, the customer typically prefers a payment plan that will take several months; in Germany, the customer likes getting a discount for early payment in cash.
Q: It would take a lot of talented people to recognize all those differences. How do you get the most out of your executives?
A: Set them free. You can run an organization from the top down, with very tight controls. I prefer to find highly motivated people and delegate to them a high degree of autonomy. We maintain very effective checks and balances, so nobody can run away with the company, but as long as people generally stay on the same page, we encourage people to be creative, to have new ideas, to do new work. So there is some inefficiency in how we do things, but the cost of that is more than made up by what we gain from having highly motivated, entrepreneurial executives.
Beyond that, you can also take steps to keep people from slipping too deeply into their comfort zones. Stability and experience are enormously valuable assets in an organization, but you have to guard against staleness. Transferring an executive from one product line to another or from one country to another can be very invigorating.
Q: Who was the best boss you ever had, and what did you learn from that person?
A: Without a doubt, Silas Chou, the Hong Kong-based businessman who bought Tommy from the company’s original backer, Mohan Murjani, in 1989. He now owns a big piece of Michael Kors’ company. I learned so much from him, especially about how to treat people.
Silas is unbelievably rich, but he has a complete lack of attitude, and I have tried not only to emulate that but to hire people who have that same quality. Attitude is overrated; it actually gets in the way of getting things done. What works is openness, transparency and integrity—honest integrity that comes from the heart, not some fake integrity that comes out of a textbook.