Interesting Article on Forbes on Coach Sinking North American Sales
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I agree with so much written here. Coach"s attitude has turned me off the brand. The Coach math, banning, reseller issues, milking styles for MFF. All of it.
I would like to buy one of the Boroughs, i think even though I've never seen it in person. But i look at the skinny straps, not substantial as in years past, and the lack of or dumbed down hardware and the price point and I pull back.
Plus I figure there's a good chance it will show up at the outlet in a few months anyway. As someone else wrote if it doesn't that's ok too.
I would like to buy one of the Boroughs, i think even though I've never seen it in person. But i look at the skinny straps, not substantial as in years past, and the lack of or dumbed down hardware and the price point and I pull back.
Plus I figure there's a good chance it will show up at the outlet in a few months anyway. As someone else wrote if it doesn't that's ok too.
I read this whole thread, right after I learned from my mom (also a Coach lover; she got me into Coach) what was going in with their business. I think it's sad. Unlike others on here, I guess I'm surprised. I thought Coach was actually doing well. But maybe I was stuck in a bubble -- I'm always on tpf, and I saw so many positive comments re: the new direction Coach was heading in w/their handbags, I loved it myself, bought tons from their Fall 2013 line.....
......but I guess that I WAS really in a bubble. I'm dismayed to learn the truth, but the reasons make complete sense - the FOS banning nonsense certainly alienates and drives away customers, not everyone likes the new streamlined/minimalist look....I think Coach really banked on the Borough doing unbelievable well....maybe they banked too much on it. (I personally like it quite a bit and have the alpine moss medium, but use it only when I'm in a "no frills" mood). I've seen people on facebook refer to it as "the Boring Bag" instead of "the Borough Bag." (Eek!)
And I agree that while the Carries are beautiful, not everyone wants to shell out $700-$800 for a bag. AND I agree with the comment that there are many slingbags, mini bags, etc, and huge bags, but no so many medium sizes.....
Within the past 2-3 years, I've definitely "moved on" and branched out to different designers, even biting the bullet and getting some "premier" bags (whatever that word is supposed to mean). But I will always love and carry Coach, for reasons that involve quality, and for sentimental reasons (my mom), and for the fact that I was a loyal, "Coach only" customer for years (I still feel a bit guilty having branched out to different designers).
I'm dismayed by the outlets. I remember going to outlets with my mom and there were NOTHING BUT deletes from full-priced stores. Nothing against MFF bags - I do think the quality is improving slightly - but I feel upset/sad that there are so many women in there buying them, thinking they're getting these amazing prices for a Coach bag, when really, to be honest, the quality is NOT the same as a full price boutique bag. It really irks me.
Sigh. My mom said she heard/read that Coach would be branching into "more apparel, and even dog collars." What?? No. Concentrate on developing a wide range of good quality bags at affordable price points. Get rid of MFF altogether. Have semi annual sales at FP stores. Get your act together, Coach! You're better than MK or Kate Spade, in my opinion (whom my mom read were now "white hot" with consumers).
At any rate, it will be interesting to see what happens. In the meantime, I'm holding onto the Coach bags I love.
......but I guess that I WAS really in a bubble. I'm dismayed to learn the truth, but the reasons make complete sense - the FOS banning nonsense certainly alienates and drives away customers, not everyone likes the new streamlined/minimalist look....I think Coach really banked on the Borough doing unbelievable well....maybe they banked too much on it. (I personally like it quite a bit and have the alpine moss medium, but use it only when I'm in a "no frills" mood). I've seen people on facebook refer to it as "the Boring Bag" instead of "the Borough Bag." (Eek!)
And I agree that while the Carries are beautiful, not everyone wants to shell out $700-$800 for a bag. AND I agree with the comment that there are many slingbags, mini bags, etc, and huge bags, but no so many medium sizes.....
Within the past 2-3 years, I've definitely "moved on" and branched out to different designers, even biting the bullet and getting some "premier" bags (whatever that word is supposed to mean). But I will always love and carry Coach, for reasons that involve quality, and for sentimental reasons (my mom), and for the fact that I was a loyal, "Coach only" customer for years (I still feel a bit guilty having branched out to different designers).
I'm dismayed by the outlets. I remember going to outlets with my mom and there were NOTHING BUT deletes from full-priced stores. Nothing against MFF bags - I do think the quality is improving slightly - but I feel upset/sad that there are so many women in there buying them, thinking they're getting these amazing prices for a Coach bag, when really, to be honest, the quality is NOT the same as a full price boutique bag. It really irks me.
Sigh. My mom said she heard/read that Coach would be branching into "more apparel, and even dog collars." What?? No. Concentrate on developing a wide range of good quality bags at affordable price points. Get rid of MFF altogether. Have semi annual sales at FP stores. Get your act together, Coach! You're better than MK or Kate Spade, in my opinion (whom my mom read were now "white hot" with consumers).
At any rate, it will be interesting to see what happens. In the meantime, I'm holding onto the Coach bags I love.
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I agree with so much that has been said here. The Coach math, FOS lockouts, reseller which hunts, PCE games, have left a bad taste in my mouth. I returned a bag I’d bought in 2011 two days ago. I felt bad doing it, I believe the return policy should be shortened too, but it is what it is. I hadn’t used it, still NWT receipt in the pocket. The SA said it would be gone before the end of the day.
I think I would like a Borough but I compare them to the bag I returned and others I already have, less and thinner hardware, higher price point. I haven’t seen a Borough in person, but I have little doubt they will end up at the outlet at least at some point, nearly everything does. If they do not, that’s ok too.
Coach is alienating long time customers and betting the farm on the new customers they don’t already have. Hope they are right.
There are so many brands out there, MKors mentioned here as a top competitor, competing for the mostly middle class dollar. A lot of my friends, most of them in fact, cannot fathom paying $100 or more for a bag. They carry the $30 Kohl’s specials. Sometimes I cannot believe I spend $200 and up on Coach without blinking. $400 is about the point where I squeak. I am curious where that point is for most Coach customers? Does Coach know? I hope so.
I will never be a mainly FP customer, first off I don’t live near one. Second, I’ll stick to the outlet, FP deletes. If the Outlets close, I probably won’t buy anymore Coach. I have plenty anyway.
One more comment – Coach clothing. I’d love some of the jackets and coats, but I’m plus size. When I go to the outlet near me, frankly, most of the women are built like me. I don’t see many 20 year old fashion models like Karlie what’s her name. I’ve asked the store manager time and again to pass on to Coach larger sizes, but Coach doesn't listen. The manager at my outlet told me they are making men’s in extended sizes, especially smaller to cater to the Asian market. Well hello! How about the other way? The same with shoes-- not everyone wants spike heels or crappy slip ons or sneakers with no arch supports that hurt your feet. I am quite sure they are high profit though, they are incredibly cheap looking in construction.
[FONT="]Ok rant over![/FONT]
I think I would like a Borough but I compare them to the bag I returned and others I already have, less and thinner hardware, higher price point. I haven’t seen a Borough in person, but I have little doubt they will end up at the outlet at least at some point, nearly everything does. If they do not, that’s ok too.
Coach is alienating long time customers and betting the farm on the new customers they don’t already have. Hope they are right.
There are so many brands out there, MKors mentioned here as a top competitor, competing for the mostly middle class dollar. A lot of my friends, most of them in fact, cannot fathom paying $100 or more for a bag. They carry the $30 Kohl’s specials. Sometimes I cannot believe I spend $200 and up on Coach without blinking. $400 is about the point where I squeak. I am curious where that point is for most Coach customers? Does Coach know? I hope so.
I will never be a mainly FP customer, first off I don’t live near one. Second, I’ll stick to the outlet, FP deletes. If the Outlets close, I probably won’t buy anymore Coach. I have plenty anyway.
One more comment – Coach clothing. I’d love some of the jackets and coats, but I’m plus size. When I go to the outlet near me, frankly, most of the women are built like me. I don’t see many 20 year old fashion models like Karlie what’s her name. I’ve asked the store manager time and again to pass on to Coach larger sizes, but Coach doesn't listen. The manager at my outlet told me they are making men’s in extended sizes, especially smaller to cater to the Asian market. Well hello! How about the other way? The same with shoes-- not everyone wants spike heels or crappy slip ons or sneakers with no arch supports that hurt your feet. I am quite sure they are high profit though, they are incredibly cheap looking in construction.
[FONT="]Ok rant over![/FONT]
I feel like I wrote this post. Thanks for taking the time, you said it all so well! If I add anything else, I will be just blithering on.
I think the decline in Coach sales has a lot to do with its position as the current market leader in the mid-luxury handbag market. It was just in the past several years that Michael Kors, Kate Spade, and Tory Burch really started being more aggressive with both full price retail and outlet sales to hit Coach at both sectors, which is definitely having a big impact in the U.S. When you're at the top, there's nowhere else to go but down.
That being said, I think this is relatively short term. Coach is huge in Asia and still held growth of 25% in the region to offset North America. There is a 'luxury' factor that Coach has lost in the U.S, due in part to the majority of sales at outlet stores, but mostly due to designs. I think a lot of the Factory inventory in women's is dated and somewhat cheap, though it seems to be getting better with more leather bags and less fabric.
As for FOS and outlet deletes, I'm not sure that Coach makes much margin over these since they are much better quality product discounted by as much as 70 percent. I'm mostly a delete buyer so I don't think my business contributes any profit to their bottom line =).
The new Coach Executive Creative Director Stuart Vevers (who comes from LVMH) has a new collection that drops in Sept., which should steer current designs in a fresh direction.
Also, the men's category is growing at a much stronger rate, and I think the FP Men's product has been strong, particularly with collaborations like Hugo Guinness in 2012 and Billy Reid in 2013. I'm also a fan of the new striped Bleecker product for spring 2014.
While Coach's gross margin was 69 percent in Q2, down from 72 percent, the company has no debt and great management. As they introduce more lifestyle items, i.e. clothing, footwear, accessories, which all carry a high margin, I think they have a good chance to recover.
That being said, I think this is relatively short term. Coach is huge in Asia and still held growth of 25% in the region to offset North America. There is a 'luxury' factor that Coach has lost in the U.S, due in part to the majority of sales at outlet stores, but mostly due to designs. I think a lot of the Factory inventory in women's is dated and somewhat cheap, though it seems to be getting better with more leather bags and less fabric.
As for FOS and outlet deletes, I'm not sure that Coach makes much margin over these since they are much better quality product discounted by as much as 70 percent. I'm mostly a delete buyer so I don't think my business contributes any profit to their bottom line =).
The new Coach Executive Creative Director Stuart Vevers (who comes from LVMH) has a new collection that drops in Sept., which should steer current designs in a fresh direction.
Also, the men's category is growing at a much stronger rate, and I think the FP Men's product has been strong, particularly with collaborations like Hugo Guinness in 2012 and Billy Reid in 2013. I'm also a fan of the new striped Bleecker product for spring 2014.
While Coach's gross margin was 69 percent in Q2, down from 72 percent, the company has no debt and great management. As they introduce more lifestyle items, i.e. clothing, footwear, accessories, which all carry a high margin, I think they have a good chance to recover.
One thing I've noticed is that Coach seems really focused on men's products lately. I can't imagine that very many men want multiple designer bags, so they won't get the repeat business the way that they do from women. I enjoy having a lot of different bags that I can switch between once or twice a week, and at Coach's price point, this is very doable for me and I think returning customers make up a lot of their business. The men's products do look like they are great quality, but I find them a little too masculine still and they seem to show up heavily discounted in the outlets so it doesn't really seem like anyone would buy them FP. Just seems like funky marketing to me!
I agree with this. I think that men's accessories are a small percentage of the total market, so even if they are seeing an increase, is it enough to make up for the other issues? I don't see men, as a whole, being repeat customers. Let's face it--out of all women, those who will spend even over $100 on a bag is a small segment and the men's market would be a fraction of the women's category. Also, a lot of women actually buy off the men's line simply because they like it.
I think there is a struggle between who Coach wants to be (more high end/luxurious, towards LV demographic) and who their customers see them as a brand (affordable luxury, outlet sales, attainable for many). They are going to have a tough time rebranding themselves to reach premier-scale customers because, quite frankly, I don't think many people are willing to pay over $500 for any Coach bag, which is why we see so many of those bags ending up at the outlet for 50% off. If they want to really retool the brand, they would have to abandon much of their outlet strategy and the outlets account for a substantial percentage of their sales, and they simply can't give up that revenue--it's too risky. It's as if some of the decision makers are closing their eyes and ignoring what their customer base is telling them.
Agree....and along those lines, I don't want to pay more than $200 for a MFF bag. Some of these are even coming in close to $300. Which makes me think the Coach's New Business Model was right. The FP stores will no longer have bags under $400-$500 and anything under that will be MFF at the outlet. We'll see if that is the true strategy or not soon enough
I think if Coach wants to reposition itself as higher end, it should use another name for that higher end line, as many other designers (as well as cars) do. Coach has been around for so long that the association of Coach with a middle range brand is almost impossible to break; and let's face it, many people pay for the brandnames, and they will not pay the same amount of money as for higher end brandnames for a name (Coach) that is already associated with lower end (especially when you can get Coach bags, yeah still the same name Coach, at outlets)
I agree with many things said on here, I work at the Mall of America and see people with all levels of bags. There is a rise in MK sightings and the MK boutique is quite busy most of the time. I've been a fan of Coach for many years and have a nice collection of vintage bags when the leather and hardware were sturdy, I'm loving the new borough bag, I've gone into the Coach boutique a couple times to see it, my first thought was the handles seem to be slim and skinny for such a big bag, I'm Leary of the price point as well, the price tag of $850 is not what I would normally spend on a Coach, I would reserve that price for a higher end bag. I sell luxury handbags and have become knowledgable in leathers and craftsmanship, I've seen the quality go up for Coach but as many of you have said, I fear spending that much on a bag to only see it end up at the outlet months later. If Coach really wants to go after the LVMH customer then some changes have to be made, I'd start with the new store uniforms, if I'm spending $850 on a bag I'd like the sales associate to be dressed in something a little nicer then denim, I'd also branch of and start a higher end line in separate boutiques, I wouldn't let the unsold merchandise end up in a outlet, bite the bullet and destroy the unsold. Just my thoughts, I wish Coach well as they have a rich history and have made a mark in the American branding.