Can you guess which retailer might have commented, “We haven’t provided sufficient context around our brand” or “We haven’t been innovative enough?” Thinking maybe Sears? Macy’s? Try Coach.
You might be surprised to hear a $4 billion mega luxury brand saying such things out loud, but it’s no secret the handbag market has become super competitive and soft in some places. And it really shouldn’t be a surprise that this 76-year-old iconic brand isn’t about to rest on its laurels.
Things got dicey for the brand a few years back when “people started looking at Coach and said, ‘that’s a great space with no seasonality, no sizes, styles that go on for years and good margins,’” explained Coach president, chief administrative officer and secretary Todd Kahn, addressing the annual Executive Summit of the American Apparel & Footwear Association earlier this spring.
The market was viewed as a “honey pot,” said Kahn, and the likes of Tory Burch, Michael Kors and Kate Spade piled in, and “some did it better than us,” he noted frankly.
Coach knew it had to push hard on innovation, and that didn’t mean a “new colorway.” In a fast-moving, social media-driven consumer environment where you “only have a second” to engage a consumer, Kahn says new significant objectives had to be crafted. They included:
• Position Coach as the global modern luxury lifestyle brand;
• Drive relevance with category drivers and millennials and re-energize the broad premium market;
• Cut through competitive messaging with a consistent, yet innovative and disruptive approach;
• Achieve competitive share of voice across the touchpoints that matter; and
• Strategically target message by medium and segment by customer.
Achieving these goals set Coach on a major transition. There is no way to transform a brand in “little pushes,” says Kahn. “We had to do it all.”
Among its moves was the savvy purchase of the Stuart Weitzman footwear brand, which has performed well. The company also decidedly pulled back on promotional activity and flash sales — in fact, it eliminated Coach-specific promotions in North American department stores and it cut down its outlet store promotional emails by 1 billion.
Other steps on the journey included converting 700 stores to modern luxury, to create a bespoke vs. a mass experience. Outlet stores got a facelift too, and while the products are different, value remains key. (At the same time some 105 underperforming North American stores were closed.)
On the product side, the company launched Coach 1941 to appeal to customers who wanted a more exclusive Coach label, and it also expanded its leather assortment while pulling back on logo handbags. Coach’s marketing spend jumped $50 million from 2015 to 2016 and it began telling its historical story as America’s original house of leather.
On the horizon, Coach is looking for growth in China, among other places, given that there are 144 cities there with a population of more than 1 million, as compared to 25 cities in the United States, says Kahn. And come this fall, the new face of Coach will be singer/actress Selena Gomez, who as of this writing has more than 114 million Instagram followers. (And I mean literally as of this second; you can get an update online every 10 seconds on a live counter.)
Despite the glitz and high profile, I think what’s interesting about the Coach reinvention is that most of its principles are not exclusive to $4 billion brands. Indeed, the steps it took to examine its place in the market, consider the competition, speculate on the future and the changing consumer, and make hard decisions about what’s working and what’s not, are the basic questions every firm big and small needs to be examining today. No one ever said it’s easy, but it’s the only way forward in this hyper-competitive space.
Susan S. Nichols is brand director of Apparel.
She can be reached at email@example.com.