Interesting Article on Forbes on Coach Sinking North American Sales

[JenUgas]

Oddly enough this doesn't surprise me, when I stopped buying coach back in 2007 it was already heading in this direction. I bought bags in the fp stores, department stores and outlets but none of my bags were mff bags. I lived about a half hour away from an outlet store, and learned fairly quickly that the rejects from the fp store would eventually end up there. It frustrated me to spend so much fp only to see it or a similar one in the outlet a few months later for a deep discount. I did benefit from some great deals at the outlet but they stopped getting so many of the rejects which meant they were producing the mff bags. The discounts weren't as good as before either, I no longer was able to find good quality leather bags for around $150. Many of my friends love shopping at the outlet store and I try to be excited for them, but in my opinion the outlet store and mff bags really cheapened the brand. I moved on to other premium designers and have gotten rid of quite a few of my coach bags. I rarely carry any of my coach bags which is a shame because I still do like the ones I have left. I got classic styles so I could have and use them forever, but since so many people in my area carry them I would rather use my other bags.
I wish coach could figure out who they want their target market to be, that would solve a lot of issues. When I would shop with my mom we ultimately stopped shopping there because all of the bags looked to be targeting a much younger demographic with all the bright colors and bold prints. They were moving away from the leather bags which were really what we wanted. While I have a couple signature pieces they are in brown and black and are stunning bags. I should also mention that I don't just buy neutral bags but where coach was concerned I wanted classic pieces since that was what they were known for best.

 

[emilybug]

This is a great thread. I am a classic example of a tpf'er and handbag lover that can afford Coach (and premium brands) and have left the brand due to Coach's cheapening of it.

First I want to say hi to all the long term tpf'ers that know me and haven't seen me around for awhile.

During the boom years of ten years ago, I bought a lot of premium bags and got caught up in the hype of them. Then when we had a recession, I moved to Michigan (I am from nyc) and got more down to earth. I fell in love with the Kristin line, and loved the value for the money. The leather was supple and high quality, the bag was a classic timeless style, and I became a Coach fan.

I NEVER shopped at outlets, and thought that getting a high quality Coach bag for pce price was a good deal.

Then things started to change. The leather started to be less high quality, they killed the Kristin line, and redid it as a cheap mff bag with low quality leather, and they sent bags to the outlets after only a month or so in the stores. I felt like a fool for constantly overpaying for the same bag everyone else was paying half the price or less for.

When the legacy line came in they dumbed down the details, trying to hide the fact that the bags were cheaply made with very little hardware and expensive details. I hated legacy. I started to eye premium bags again and stray from Coach.

Then Phoebe came out and I got excited again. I loved the simplicity, cool colors, and practicality of Phoebe. But almost immediately they started dumping Phoebes in large quantities at the outlets and offering way less color choices.

That was the straw that broke my back. The last Coach I bought was the espresso haircalf Phoebe at pce price early last fall. (now available at outlet prices somewhere I am sure). The haircalf started wearing off almost immediately (on a $1,000 bag). I am through with Coach.

My story is really a metaphor for the whole Coach experience. I am a customer that buys premium brands and can afford them. Coach wants to market their new look to me at a new price point. I bought into the hype and bought one of their new $1,000 bags (that I paid $750 for with pce but still...) and they immediately dumped the bag to the outlets within a few months and the bag that I bought is falling apart way before its time. A company that cannot hold a high price point and cannot deliver quality at that price point is a company should get bought out by Target or Kohls or whoever and stop trying to rebrand itself.

I now buy Reed Krakoff, Balenciaga and an occasional Gucci bag and am not wedded to any one brand.

I don't think Coach will recover from their identity crisis this time, but that is just my opinion.

I agree.
I've strayed away from Coach because the styles aren't intersting to me and I feel overwhelmed with the constant turnaround in product. The last Coach I bought was a studded duffle last year before they were even on the website. I now have a substantial Balenciaga collection, as well as a few Chloe bags, Bottega Veneta, and RM. I rotate between these and am quite content for the time being.

 

[dcsurfergirl]

This is a great thread. I haven't kept up with Coach lately so this was an eye-opener.

I just bought a new bag yesterday (the last Coach bag I bought was two years ago ( a man's messenger bag). I just treated myself after a lot of tight budgeting. It's hard to think about buying a new bag in a tough economy.

Why can't Coach stop trying to be a luxury brand? If they make decent quality bags in a good range of sizes and styles and have decent customer service in both the boutiques and outlets, they would haver better sales figures in the long run.

 

[snoflinga]

I agree.
I've strayed away from Coach because the styles aren't intersting to me and I feel overwhelmed with the constant turnaround in product. The last Coach I bought was a studded duffle last year before they were even on the website. I now have a substantial Balenciaga collection, as well as a few Chloe bags, Bottega Veneta, and RM. I rotate between these and am quite content for the time being.

I agree with the part I bolded. I'm new to Coach, but I've noticed that they go through styles very fast. I went back and looked at posts from a few years ago, and they don't sell those styles anymore. I found a bag that I fell in love with that was sold last year, and that one is gone forever too. I envy people who buy Hermes or Chanel, because you can fall in love with a bag and it'll still be made a few years from now. With Coach, you blink and it's gone. I'm new, so I might be wrong, but that's what I'm seeing from my research. I'm hoping to buy myself a Borough in a few years, hope they're still making them by then

 

[tickedoffchick]

The last time I was in a Coach outlet, last summer, I knew things were going south, fast. There were a number of Asian tourists. But as I waited in line I saw people, who, no disrespect intended, you'd expect to see in Walmart. One couple was trying to pay for a bag with a combination of credit cards (at least two) and cash. There was a woman on a scooter whose pants were falling down, exposing her crack. There was a woman who was returning a bunch of stuff while her child kept slamming into and then climbing on top of the counters, totally unsupervised. Another child was crying in the back of the line. You cannot be a "luxury" brand and cater to the mass market at the same time. Not being snobby - I was there, too, clutching a Legacy bag for 70 percent off.

 

[glittermaven]

I am new to the Coach brand too, as handbags were never really a point of focus for me until recently (shameful I know)! lol


As a sales rep working for a high end 'luxury' brand of skincare, I can tell you that there is a sort of crisis in these types of markets right now. Unfortunately, the upper-middle class is rapidly shrinking in this country. This creates a real problem for brands like Coach, as well as others. The fact is, the number of people who can pay $500++ for a purse is decreasing, NOT increasing.


It seems like brands like Coach are trying to hit both markets by creating outlet styles for those with less expendable income while trying to keep their high end clientele (a shrinking market each year and that's a fact!) So while it may seem to 'cheapen' the brand, I can totally understand where they are coming from. If they don't have a large enough clientele that can afford to buy their products, what else are they supposed to do?

 

[ecj*waxy]

I am new to the Coach brand too, as handbags were never really a point of focus for me until recently (shameful I know)! lol


As a sales rep working for a high end 'luxury' brand of skincare, I can tell you that there is a sort of crisis in these types of markets right now. Unfortunately, the upper-middle class is rapidly shrinking in this country. This creates a real problem for brands like Coach, as well as others. The fact is, the number of people who can pay $500++ for a purse is decreasing, NOT increasing.


It seems like brands like Coach are trying to hit both markets by creating outlet styles for those with less expendable income while trying to keep their high end clientele (a shrinking market each year and that's a fact!) So while it may seem to 'cheapen' the brand, I can totally understand where they are coming from. If they don't have a large enough clientele that can afford to buy their products, what else are they supposed to do?

This is interesting...something I hadn't considered before.

 

[vesperholly]

Why can't Coach stop trying to be a luxury brand? If they make decent quality bags in a good range of sizes and styles and have decent customer service in both the boutiques and outlets, they would haver better sales figures in the long run.

Absolutely. I honestly think there is a huge market for under $300 purses, versus $500+. I have been trying to up my purse collection from crappy PVC bags to better quality fabric and/or leather bags, but there is a huge price jump. It seems like it's either a $40 bag or a $400 bag, very little in between. One of the reasons Rebecca Minkoff and Michael Kors have been so successful is that they hit that $150-$300 sweet spot.

 

[tickedoffchick]

I am new to the Coach brand too, as handbags were never really a point of focus for me until recently (shameful I know)! lol


As a sales rep working for a high end 'luxury' brand of skincare, I can tell you that there is a sort of crisis in these types of markets right now. Unfortunately, the upper-middle class is rapidly shrinking in this country. This creates a real problem for brands like Coach, as well as others. The fact is, the number of people who can pay $500++ for a purse is decreasing, NOT increasing.


It seems like brands like Coach are trying to hit both markets by creating outlet styles for those with less expendable income while trying to keep their high end clientele (a shrinking market each year and that's a fact!) So while it may seem to 'cheapen' the brand, I can totally understand where they are coming from. If they don't have a large enough clientele that can afford to buy their products, what else are they supposed to do?

Nails it! The housing bubble and stock market enabled a lot more people on middle-class incomes to buy (via home equity lines) luxury goods, take vacations, etc. even as wages were stagnant (when compared to inflation). Now that's over, and even the people who still have jobs and good incomes are more conservative when they spend. This is where the lower tier brands are cashing in - like those Walmart ads that say "save money, live better."

 

[tannedsilk]

I am new to the Coach brand too, as handbags were never really a point of focus for me until recently (shameful I know)! lol


As a sales rep working for a high end 'luxury' brand of skincare, I can tell you that there is a sort of crisis in these types of markets right now. Unfortunately, the upper-middle class is rapidly shrinking in this country. This creates a real problem for brands like Coach, as well as others. The fact is, the number of people who can pay $500++ for a purse is decreasing, NOT increasing.


It seems like brands like Coach are trying to hit both markets by creating outlet styles for those with less expendable income while trying to keep their high end clientele (a shrinking market each year and that's a fact!) So while it may seem to 'cheapen' the brand, I can totally understand where they are coming from. If they don't have a large enough clientele that can afford to buy their products, what else are they supposed to do?

Exactly!

 

[ltbag]

I am new to the Coach brand too, as handbags were never really a point of focus for me until recently (shameful I know)! lol


As a sales rep working for a high end 'luxury' brand of skincare, I can tell you that there is a sort of crisis in these types of markets right now. Unfortunately, the upper-middle class is rapidly shrinking in this country. This creates a real problem for brands like Coach, as well as others. The fact is, the number of people who can pay $500++ for a purse is decreasing, NOT increasing.


It seems like brands like Coach are trying to hit both markets by creating outlet styles for those with less expendable income while trying to keep their high end clientele (a shrinking market each year and that's a fact!) So while it may seem to 'cheapen' the brand, I can totally understand where they are coming from. If they don't have a large enough clientele that can afford to buy their products, what else are they supposed to do?

This is an insightful comment and right on target. The problem is, if Coach lowers its price points to capture a larger market, they are driving away people like me, who expect, quality, longevity of style, service, durability with the convenience of a full price local store. I don't shop at outlets. And I don't want to be the sucker who buys a bag a higher price point so that everyone else can feel they got a bargain when the bag goes to the outlet. If no one is buying the bags at full price then the outlet price becomes the defacto real price of the bag. It's all perception. If the outlet price is now the defacto full price of the bag then it is not a bargain. And if people like me are no longer buying the bags at full price then there will be a collapse of the full price store concept and there will only be the outlets remaining.

This will mean that Coach will not maintain both markets, but will have collapsed into a discount outlet brand only. That is what I see happening.

Just my opinion of course.

 

[lizmil]

I've been wondering about that too. I have a couple of "wants" on my list, but they are just that "wants" not needs. I refuse to pay FP for them. I hope to buy with the next sale. If not, I won't buy at all.

Profit analyses I have seen for Coach (I'm not really up on this, though) seem to suggest that the outlets not FP are driving sales. People on this board have mentioned FP stores converting to outlets. That would seem to support the theory.

 

[Iv7]

It seems like brands like Coach are trying to hit both markets by creating outlet styles for those with less expendable income while trying to keep their high end clientele (a shrinking market each year and that's a fact!) So while it may seem to 'cheapen' the brand, I can totally understand where they are coming from. If they don't have a large enough clientele that can afford to buy their products, what else are they supposed to do?

I feel like they just have to stop deleting lines so quickly and sending those deletes to the outlet. I've noticed some outlets are getting less deleted styles but they've got to really hammer the nail.

If they want to be like middle tier so badly and charge 500+ for a bag, don't just send the bag to an outlet in a few months. And they should not make cheap versions of the expensive lines. I'm sure they can still create higher end bags and cheaper factory styles to compete. FP Retail stores can still do well if things can't just be found in the outlets easily.

 

[proffashionista]

http://www.businessweek.com/article...-sales-by-raising-prices#rshare=email_article


This article highlights COH 's tanking stock price seen today on Wall Street. Here's a salient point worth noting: "Meanwhile, Coach’s best-performing offerings are handbags that cost a lot more than an iPad (AAPL) (Weekend Borough Bag: $1,200).
Acknowledging that demand, Coach is in the process of trimming its line of bags to around 100 models; a greater share of those offerings will be “upmarket.” Meanwhile, the company is making it harder to find its goods at discount. It has stopped selling merchandise on third-party flash sales sites such as Gilt and has limited access to its own online flash sales channel."

 

[ponytail]

http://www.businessweek.com/article...-sales-by-raising-prices#rshare=email_article


This article highlights COH 's tanking stock price seen today on Wall Street. Here's a salient point worth noting: "Meanwhile, Coach’s best-performing offerings are handbags that cost a lot more than an iPad (AAPL) (Weekend Borough Bag: $1,200).
Acknowledging that demand, Coach is in the process of trimming its line of bags to around 100 models; a greater share of those offerings will be “upmarket.” Meanwhile, the company is making it harder to find its goods at discount. It has stopped selling merchandise on third-party flash sales sites such as Gilt and has limited access to its own online flash sales channel."

Hmm are they talking about the North American market or Chinese/Japanese markets here? I thought that Coach was making most of it's money through Factory store sales