Michael Kors Kors to Shut Down 100 to 125 Stores

[fabuleux]

Here is another interview excerpt discussing the new store design:

“The new store layout is built around a center runway opening on to luxurious rooms that distinctly showcase our accessories, footwear, womenswear, and menswear categories and allow our sales associates to provide consumers with a unique and elevated styling experience,” he said.

Kors, like other retailers, is trying to adapt to a changing retail environment in which consumers increasingly choose to buy items online. Companies with large real-estate footprints seem especially vulnerable, and cutting back on weak locations could help Kors improve its profitability.


The challenge, then, is to figure out what to do with the stores that remain. Kors thinks shoppers are still interested in seeing a bag in person before buying it, and since the company is cutting back big discounts, those shoppers might be looking at steeper prices than they’re used to. Perhaps a more luxury look to Kors’ physical locations will help customers justify big purchases.

 

[Alliekatt29]

Here is another interview excerpt discussing the new store design:

“The new store layout is built around a center runway opening on to luxurious rooms that distinctly showcase our accessories, footwear, womenswear, and menswear categories and allow our sales associates to provide consumers with a unique and elevated styling experience,” he said.

Kors, like other retailers, is trying to adapt to a changing retail environment in which consumers increasingly choose to buy items online. Companies with large real-estate footprints seem especially vulnerable, and cutting back on weak locations could help Kors improve its profitability.


The challenge, then, is to figure out what to do with the stores that remain. Kors thinks shoppers are still interested in seeing a bag in person before buying it, and since the company is cutting back big discounts, those shoppers might be looking at steeper prices than they’re used to. Perhaps a more luxury look to Kors’ physical locations will help customers justify big purchases.

It's going to take a lot more than a luxurious looking store for me to pay FP for MK. I don't live near a store so I have to shop online, which I prefer, so store changes mean very little to me. I'm probably in the minority but I've stopped buying Coach even with their changes. Their bags may be nicer but their accessories, especially shoes, seem much worse. I hope MK can find a happy medium.

 

[fabuleux]

It's going to take a lot more than a luxurious looking store for me to pay FP for MK. I don't live near a store so I have to shop online, which I prefer, so store changes mean very little to me. I'm probably in the minority but I've stopped buying Coach even with their changes. Their bags may be nicer but their accessories, especially shoes, seem much worse. I hope MK can find a happy medium.

I disagree with you. I think since Coach bought Stuart Weitzman, the quality of their shoes has dramatically increased in quality (full-price boutiques).

 

[Alliekatt29]

I disagree with you. I think since Coach bought Stuart Weitzman, the quality of their shoes has dramatically increased in quality (full-price boutiques).

To be fair, I've only bought flats from FP and none of them were leather lined. I've seen some of the heels at department stores and was not impressed. I have quite a few pairs of Coach shoes circa 2006-2010 and the quality seems much better IMO. Maybe I just didn't see the nice ones you are speaking of.

 

[katieny]

I disagree with you. I think since Coach bought Stuart Weitzman, the quality of their shoes has dramatically increased in quality (full-price boutiques).

I have always liked Coach shoes. I've continued to buy them but haven't bought a Coach bag in a long time.
Michael Kors oversaturated the outlet market just like Coach did. I've only had one MK bag and the quality was terrible. They might need to stick to clothing and shoes and get out of handbag business for a while.

 

[sdkitty]

the Michael by Michael Kors bags are all over the place - TJ Maxx, Marshalls, carried by everyone.....detracts from the value IMO

 

[Alliekatt29]

I have always liked Coach shoes. I've continued to buy them but haven't bought a Coach bag in a long time.
Michael Kors oversaturated the outlet market just like Coach did. I've only had one MK bag and the quality was terrible. They might need to stick to clothing and shoes and get out of handbag business for a while.

I only have one MK outlet item and agree that the quality is not as good. I don't like Coach outlet at all, save for the sunglasses. I have bought a few and they were decent. My biggest complaint about the outlets is when the salesperson swears it's the same exact quality as FP. They don't all do this but some do.

 

[melissatrv]

To me, Kors' biggest downfall is its failure to sell its items at full price. The constant discounting, coupons, sales, promotions have damaged the desirability of the brand. I don't blame customers for not wanting to pay full price for a bag that may be discounted just a few weeks later. There are many brands that are as ubiquitous as MK (even top luxury brands such as Hermès, Vuitton, Chanel, and Gucci). Yet they are able to convince shoppers that their items are "worth" full price.

The remodelled stores and new services (such as customization and monogramming) will help. More work needed though to change the brand perception.

Not only that, Hermes has convinced customers they need to be "invited" to buy a bag. And it may not be the style and color you want, but you better buy it or you may not be invited to buy another, LOL. You gotta love the marketing genius who was able to sell that "experience" These brands also tend to have significant price increases each year and it does not impact their sales

 

[melissatrv]

Are they closing all full price stores or just some?

 

[fabuleux]

Are they closing all full price stores or just some?

Just some.

 

[chasy093]

“Our product and store experience did not sufficiently engage and excite consumers,” Chief Executive John Idol said.

Store experience? What store experience? Maybe Vienna and Brussels are not representative, but all SAs did was hang around looking bored, they weren´t up to the latest info on models, sizes or colours, and they didn´t even seem very interested in finding out what it is you were looking for. Basically, "what you see is what we have", period... When I compare their SAs to those of Longchamp or Tumi, what a difference there is at all levels...

I agree with you! Their SAs don't know what they are selling!

 

[cdtracing]

I stopped into the Premiere Boutique this weekend (the only boutique that sells his Collection Bags in my area). I was carrying my Black Miranda (the original style) & the SA was gushing over it but didn't know the name of the bag. When I mentioned I had one in snakeskin, she asked the manager of the store if her "red one" was like mine. The manager said yes, she had a red & black snakeskin bag like mine. I had to tell them the name of the bag. When I asked the manager if her bag was Mangrove Watersnake, she said she didn't know, just knew it was snakeskin. I thought that was odd....and it didn't give me any confidence to take their word on very much. My usual SA was not there. She's very informative & tends to keep up with styles, types of materials, what's coming, ect.

 

[fabuleux]

I stopped into the Premiere Boutique this weekend (the only boutique that sells his Collection Bags in my area). I was carrying my Black Miranda (the original style) & the SA was gushing over it but didn't know the name of the bag. When I mentioned I had one in snakeskin, she asked the manager of the store if her "red one" was like mine. The manager said yes, she had a red & black snakeskin bag like mine. I had to tell them the name of the bag. When I asked the manager if her bag was Mangrove Watersnake, she said she didn't know, just knew it was snakeskin. I thought that was odd....and it didn't give me any confidence to take their word on very much. My usual SA was not there. She's very informative & tends to keep up with styles, types of materials, what's coming, ect.

I doubt that Kors employees receive a sophisticated training in leathergoods.

 

[all7s]

I don't know why people assume that 'full price' is what MK expects to sell its products as. By listing MSRP as higher than what they want to sell, they are able to create an illusion of value. And at that price level I think they beat most competitors of other mall brands.

I don't buy a bag because of its perceived status or exclusivity. I do not need a bag that makes me appear more wealthy than others. I actually really hate to feel that way. I want a bag that I like the style and is at a price I am comfortable paying. MK on sale hits that sweet spot.

I've had varying experiences in stores. Some sales associates have been standoffish or overly bubbly and vapid. Some have been fantastic and have been friendly, knowledgable and helpful. I do not live in a large city so only visit when on vacation in various cities. So I know it can vary from the store or the day.

TJ Maxx carries a lot of outlet MK and Kate Spade. So appearance of heavy discounts is often because the outlets ridiculously price merchandise for lesser quality.

Hermes has the population of people who want to spend $10,000 for 1 bag. MK wants to sell 50 bags at $200. Same gross income, maybe similar costs. MK just has a large base of consumers that can afford that amount. It's a sound business strategy and even if profits are down in a quarter it doesn't mean they aren't still very profitable.

Malls are fast becoming dinosaurs and MK closing its mall locations over its outlets just falls in line with that trend. It really doesn't say anything about the brand to me.

 

[fabuleux]

I don't know why people assume that 'full price' is what MK expects to sell its products as. By listing MSRP as higher than what they want to sell, they are able to create an illusion of value. And at that price level I think they beat most competitors of other mall brands.

Analysts and even Michael Kors itself disagrees with you. You are being shortsided about the pricing strategy. Does MK still make a substantial profit when it sells a discounted bag? Absolutely. But the real issue is the erosion of its brand power. A lot of people have been turned off by MK's pricing strategy of heavily discounting bags (a strategy that clearly depreciates the brand value over time), and simply walked away from the brand. There are a lot of other companies that compete in what you refer to as the "$200 handbag market." If people don't find the urge to buy a handbag at full-price, they soon won't have a reason to buy the same bag 30% off.

Clearly, MK is aware of these challenges and intends to address them, which is smart. Let's see how it plays out.