Coach Raising Prices

[tannedsilk]

EXCELLENT analysis and post.

Coach cannot become an upscale brand until the mass dumping of merchandise to outlets ceases. Since the outlets are the only place Coach is really selling items reliably, this presents a huge cash flow and sales issue for Coach.

If fp non-sold items are not sent to the outlets but are instead destroyed or held in a warehouse, or left on the fp shelves, then there will be a cash flow issue. If fp items are sent to the outlets enmasse then there is an corporate image issue in regards to Coach being an upscale brand. Either way, Coach ends up failing at it's strategy to revitalize and upgrade it's corporate niche.

Simply selling high grade mff merchandise does not solve Coach's problems in my opinion either. For those that buy merchandise at the outlets and only buy "deletes", how happy would you be with the purchases you made, if those same bags had never been sold to a few of us at FP, but were always sold at the price you paid for them. How much of the driver of outlet sales is related to the notion that the outlet bags were once full price bags? Just a question......

That's the WHOLE point of my outlet shopping, getting bags that I COULD have paid FP for but now getting the same bag for much less. I'm fortunate to have access to outlets, Macys, Dillards etc. Fact is that I probably buy more from these sources than I would if I paid $600 for a new bag every quarter. If you time it right Coach practically gives away bags at certain times of the year.

I agree they have to solve the outlet cash cow issue versus the maintaining the integrity of the FP product by not slashing the prices every three months. Either way it's gonna hurt them, the issue is how long can they sustain the pain before they cave and start offering discounts again. In the past it has not lasted long. Regardless, it's going to be very interesting to watch.

ETA: I can't see them destroying excess inventory, what they need to work on is predicting accurate merchandising levels. It's the mass over production that leaves them with the excess inventory that they have to sell somehow. Let things REALLY sell out and create some scarcity. Once consumers begin to realize that Coach won't always bring a item back they will be motivated to buy something they really want opposed to seeing if it will end up at the outlet or FOS. JMHO

 

[GA Peach]

^^^ YES! All of this is true!!!^^^

Coach has taught me that no matter how much I like a bag when it first comes out to wait a couple months or so because there will be a PCE or someone will have it on sale.

 

[Pixie RN]

That's the WHOLE point of my outlet shopping, getting bags that I COULD have paid FP for but now getting the same bag for much less. I'm fortunate to have access to outlets, Macys, Dillards etc. Fact is that I probably buy more from these sources than I would if I paid $600 for a new bag every quarter. If you time it right Coach practically gives away bags at certain times of the year.

I agree they have to solve the outlet cash cow issue versus the maintaining the integrity of the FP product by not slashing the prices every three months. Either way it's gonna hurt them, the issue is how long can they sustain the pain before they cave and start offering discounts again. In the past it has not lasted long. Regardless, it's going to be very interesting to watch.

ETA: I can't see them destroying excess inventory, what they need to work on is predicting accurate merchandising levels. It's the mass over production that leaves them with the excess inventory that they have to sell somehow. Let things REALLY sell out and create some scarcity. Once consumers begin to realize that Coach won't always bring a item back they will be motivated to buy something they really want opposed to seeing if it will end up at the outlet or FOS. JMHO

I think you ladies really nailed it!!!!!

 

[pandorabox]

I was just at the Coach store the other night. The sales person said that this fall there will be big changes, They have apparently hired one of the LV designers to do Coach bags and those bags will come out in Fall.

Not sure how true but that is what I was told.

I was there this afternoon and the SA told me she heard nothing of price increases, but they do have a new fall line up and new designer working on it, she mentioned a name and I forgot. (not sure if the person is associated with LV) she also said they were moving more into a men's line and had a huge display in the shop for the mens line which looked really really good!

 

[Reitelle]

I definitely agree with you, they have to find some level ground. I was so elated that one of my bags that I have was LITERALLY the LAST one of it's kind in the US (I had to have it shipped from Juneau, Alaska.) This elation turned to frustration about 3 months later when the bag magically appeared on the FOS late at night.

 

[lizmil]

I think many of us on this forum are "delete, score a deal, outlet shoppers." I sure don't buy much at FP and unlike many here have little access to Macy's or the like. Of course I've complained that I don't get PCEs.

I will not be a FP shopper, without a discount of some sort. If there are no good deletes at my local outlet, I walk out empty handed, or occasionally buy a fob, or two.

The previous posters in this thread have hit the nail on the head. Coach needs to decide if it is going to lose the "discount for FP" shoppers or make MFF en masse, or be strictly FP and have an MFF line. The current stock tanking techniques are not sustainable.

The manager at my local outlet says she wishes Coach would send more of the MFF brown and black siggy tote styles, she says she could "blow those out the door" all day long.

Do they listen to the "boots on the ground" in the ivory tower?

 

[GA Peach]

I was there this afternoon and the SA told me she heard nothing of price increases, but they do have a new fall line up and new designer working on it, she mentioned a name and I forgot. (not sure if the person is associated with LV) she also said they were moving more into a men's line and had a huge display in the shop for the mens line which looked really really good!

His name is Stuart Vevers and he is the Executive Creative Director. He worked for Calvin Klein, Bottega Veneta, Givenchy, Louis Vuittion, and Mulberry so he has experience with luxury brands which I'm sure he will need........

 

[pandorabox]

His name is Stuart Vevers and he is the Executive Creative Director. He worked for Calvin Klein, Bottega Veneta, Givenchy, Louis Vuittion, and Mulberry so he has experience with luxury brands which I'm sure he will need........

Yes!!! That was his name. Thank you.
She said it fast and I had not heard it clearly. Experience is right. Wow.

 

[TejasMama]

I think it will be interesting to watch. Certainly, many of the most loyal customers Coach has are on this forum so one would think that they'd be interested in what customers have to say and how they act when prices are raised. I agree that one of the biggest issues, in addition to getting people to see Coach as a more premium brand in the USA, is one of cash. The factory stores bring in most of the cash for Coach, so if they want to really raise prices and stick to their guns, they're going to need the ability to weather several quarters of falling prices and pushback from customers and the Street. If they can fund it long term, they might have a shot --Coach is considered much more upscale in Asia than in the US so maybe that is their new goal.

However....

Expectations are different in the US, so it remains to be seen if they will have the fortitude and the endurance to see this through a 3-5 year rebranding cycle, minimum. Again--looking at Mulberry--they took a strong brand with loyal customers and it only took 3 profit warnings in 18 months for them to get rid of the Hermes-groomed CEO and to return to evaluating how to woo back the loyal customers they lost.

I'm always rooting for this brand. That said, I realize that the people making decisions are not always loyal to its diehard customers. It's business and at this level, it means making tough decisions so they are going to gamble if they think there's a long term upside.

I've carried Coach for over 20 years, but if the pricing gets out of hand and the product designs don't meet my tastes, I'm more than happy to take my business elsewhere. I'm simply not someone that's going to drop four figures on a handbag. I'd rather put that money into other things. It will be interesting to see how it all plays out.

 

[jade]

Well coach has been throwing the 25% offs way more often lately. Like every 6 weeks.

I'll likely still get coach bags (on sale) since my Kate Spades have sucked quality wise. Most have needed repair. One is on repair 2 in 6 months with minimal use. MK is hit or miss. And Tory Burchs logos are too big. Rebecca Minkoff isn't classic enough. And I haven't seen any winners between. $600-$1200.

 

[jane]

To me the only RMs worth owning are the "old school" pieces made in the US. I own three Minkoffs (two MAMs and one MAC) and all have that buttery glazed leather, finished tassels, leather trim on the pockets, all the other nice details. The current RM bags are an absolute shadow of their former selves.

I didn't know that about Kate Spade. I used to have a few Kate Spades from years ago. I had a wallet from when they were still made in Italy, it was soooo nice. But it was a checkbook wallet so over time I never used it anymore. MK doesn't do anything for me. I'm also not a fan of his personally, so there's that. I like some Marc by Marc Jacobs bags, and own one, but they are at an even higher price point, and still made in China, and the leather used can make the bags heavy.

I just keep coming back to Coach, it seems. But my collection is now pretty big (for me) and I'm officially out of closet space for it too. I like what I have and I am going to try to go down to one new bag per year, two at most. I guess that will make higher prices more accessible for me. I actually rather liked the orange fringe bag in the Fall preview. Maybe I will save up for that.

 

[Kansashalo]

Everybody is raising their prices (under the guise of exclusivity, etc.) but it's really about revenue growth/margins. This is the case for Coach, LV, and many other brands because as their prices increase, the quality standards of their products are not following suit. This is what bothers me the most when anyone raises their prices.lol

Regardless of the brand, once I think the price does not justify the quality, I either (a) move to only purchasing via the secondary market or (b) move on to another brand. I don't care if 1,000 are carrying a bag or 100, at the end of the day, it still a product of sub-par quality that does not justify the price.

 

[CaliChic]

So does that mean that if i really want a bag that i see at a fp store i should just wait until its at the coach outlet? Thats crazy!

 

[GA Peach]

So does that mean that if i really want a bag that i see at a fp store i should just wait until its at the coach outlet? Thats crazy!

For me it depends on how much I want the bag and how much I'm willing to pay. I've never paid full price for Coach. I either wait for a PCE or buy on sale from a department store. About 90% of my FP bags are from the Factory Store or FOS and I got them for 50 - 70% off. Lately I've been finding great deals on eBay for Legacy items from 2012.

 

[Zahrah]

For me it depends on how much I want the bag and how much I'm willing to pay. I've never paid full price for Coach. I either wait for a PCE or buy on sale from a department store. About 90% of my FP bags are from the Factory Store or FOS and I got them for 50 - 70% off. Lately I've been finding great deals on eBay for Legacy items from 2012.

What are your Legacy finds on ebay? Please share!!!

I am also aiming at very slowly building up my Legacy collection. There is nothing from newer styles which would make my heart beat so fast as beautiful legacy.

I was able to grab a bright coral Rory, pre-owned and on its way to me.