Coach Continues Brand Transformation To Remain Competitive
By Anna Rose Welch, Editorial & Community Director, Advancing RNA
With a new marketing strategy, limited edition collections, and a new future CEO, Coach strives for “brand vibrancy” and long-term growth through expansion
Coach, the luxury accessories company, released its first quarter earnings report last week, outlining the company’s future initiatives to improve sales and enhance the Coach brand as a “head-to-toe lifestyle” brand. Sales and revenue were tepid for Coach coming out of its first quarter, with sales totaling $1.5 billion — a slight sales gain in constant currency— and net income totaling $218 million.
The market has become increasingly competitive for the company, with rivals Kate Spade, Tory Burch and Michael Kors growing increasingly stronger and attracting the attention of the 25-30 year-old millennial age group. However, over the past year, Coach has been going through what it calls a “transformational period” in an attempt to redefine the brand. In response to more competition in the handbag market, the company has begun diversifying its products to encourage sales in other departments. In March, the company began with a roll out of footwear, installing “shoe salons” in some of its flagship stores to enhance product presentation. This rollout was followed by increased offerings of clothing, watches, and jewelry — all designed to promote the customer experience with the brand.
Redefining The Brand
Recently the company launched its Legacy collection, a higher-priced line of dual-gender footwear, accessories, and apparel that introduced customers to the brand’s new vision. Rather than having customers view its products in a “functional way,” the company was hoping to speak to consumers in an “emotional way.” With the launch of the Legacy collection and future collections, the company’s long-term goal is to inspire customers to think of Coach items as a lifestyle choice.
Brand president and executive creative director, Reed Krakoff says, “Instead of designing accessories to fill a need, we’re thinking more about the woman, who she is, where she goes, what is her life like... now when you think of Coach you will think of a woman or a man and you will think of their lifestyle.”
Following the release of the most recent quarterly results, Victor Luis, Coach CCO, elaborates upon some of the company’s current initiatives being put in place just in time for the holidays. Luis says, “Customers will see a fuller expression of the Coach brand through the arrival of a limited edition capsule collection across all product categories.” This capsule collection will comprise higher priced items. As CEO Lew Frankfort said earlier this year, the company believes “there’s a larger opportunity at higher price points.”
Similarly, Luis says this capsule collection “will be supported by our new, fully integrated marketing campaign, Coach New York Stories, showcasing top fashion models, dressed in Coach, set against recognizable New York backdrops.”
Expansions On The Horizon
In addition to changes in store offerings and presentation, CEO Frankfort plans to promote current CCO Luis, former president of the Coach international team, to take over as CEO in June 2014. This appointment suggests that the global company will continue to expand its presence abroad, with Luis looking into Europe, the Middle East and Latin America. The company currently has nearly 550 domestic stores and an additional 400 in Asia. Roughly a third of the company’s sales come from the international sector. Luis’ future expansion goals will be important for the Coach brand considering rival Michael Kors has begun to make progress into China — a country that has always shown great demand for Coach. Despite this competition, however, the company is confident in its new strategy and is reassured by the brand’s history of “successful reinvention” when looking into the years ahead.