Why Goldman Sachs Believes Coach's (COH) Turnaround Is Alienating Consumers

[baglady39]

Great post as usual. But my manager told me that rebranding won't be done until 2016

Thank you...you're very sweet! You know that we get misinformation all the time, so please take anything I post on this site with a grain of salt. That's why I always try to say where I got the info since higher depts or positions might have more info than at the basic level, and some stores may be better clued in than others... and this was a store manager who said it. It may be that 2015 was the original time line and they couldn't complete it by then too? Or the manager I talked to was misinformed..or maybe it's by area too with some areas completing the transition before others. I could see the whole process taking a long time, and she also said they have been looking at test markets a while even before it was formally rolled out. Who knows...

I know what they envision for their outlets vs retail, but what I really want to know is whether they are going to continue rolling out somewhat mass quantities of cheaper stuff at the discount liquidators? We have a LOT of those stores here, and that's become a HUGE thing here for Coach in just the last 6 months to a year?! Despite being reasonable prices for the venue, a lot of it at those stores get even further discounted too whereas most of the MK and other brands don't make it to the clearance section, or if they do, it's not as often and gets gobbled up right away. I'm not going to lie- not personally a fan of the quality of that stuff, but I know a lot of people who buy it on clearance because it's Coach at a cheap deal. Maybe the point is it's my area and Coach may be pulling out of some or all of those dept stores because it's more overhead for less return, and I am super close to both NYC and Philly, but I just never see a lot of people embrace the pricier Coach bags. I'm also only speaking about the large area around these cities since I don't go to NYC or even downtown Philly that much. The mall in my area that I mostly see people carrying higher end bags from all brands is actually one where the Coach store doesn't do well at all. I rarely see Coach either. It's almost always LV. In fact, even at the highest end malls I go to, it's mostly LV or more rarely, signature Coach. I think this is why they dumbed down one of the original gallery stores. Too many luxury accessories options there, and most people weren't choosing Coach.

 

[Caspin22]

I am not sure the stores dropped the brand. I think Coach is letting their contracts expire so they can put sales associates in dept stores so they can ultimately control their merchandise. My Dillards Handbag Manager told me when the contract expires Coach will revamp the dept and add their own sales associate. Meaning they can control the sales of the product. I am sure they are not going to carry the merchandies in as many department stores. Again thats oversaturating the market which is why they ran into problems in the first place. And my Macy's no longer has Coach but there is a Coach store in the mall and My dillards is a flagship Coach so I guess Macy's lost out.

My Nordstrom SA told me they won't be carrying Coach in the stores any longer but will continue to sell it on their website.

As for Macy's and Dillard's, I've heard something completely opposite of what you heard. I was told that Coach will be moving into a large number of Macy's stores with owned space just like Herald Square, where the Macy's Coach counter will be staffed with Coach employees, not Macy's employees. There are several Macy's stores already in the process of making this change.

I was also told that they are not making the same moves with Dillard's, and that Dillard's probably will not be selling Coach for much longer.

Seems like we all get different stories, all from supposed "reliable sources", so who really knows what will happen?

 

[AstridRhapsody]

I have 2 malls within 20 minutes of me. The Dillard's at the northern one just finished a remodel in the Coach section and it is now huge and beautiful. They now carry almost everything and their larger space has now cut into MKs old space. The Macys in this mall just remodeled their coach section and it is now half the size with very little (mostly just totes and edies). MK took over the extra space that coach used to have.

Now the mall to the east of me just did the opposite. Macy's now has a huge coach section with a lot of variety and Dillard's has drastically cut back. This is the mall that also has a coach fp store that is always empty.

So far at both malls there has not been talk of bringing in any coach SAs. I'm really thinking my coach fp is on the chopping block though because it's always empty.

 

[jan1124]

The Macy's San Francisco flagship store already has a "Coach employee". This Macy's is a few blocks from the Coach flagship, which is why I think they put an employee in place. Strong competition, with all of the Macy's promotions, and being a flagship, they carry more than most Macy's. (on another note, this Macy's has sold very little Stuart Vevers - Dakotas, Rhyders, Tatum Totes). This Coach employee approached me - youngish - and, though I didn't let on, she wasn't very knowledgeable about the styles/names. We chatted, and I found out she is from the wholesale division - formerly a vendor rep - that went into several Macy's to straighten displays, help with new floorsets in Macy's etc. The reps haven't had as strong as strong a presence since the economy tanked - and I'm guessing this one is fairly new. They have absolutely nothing to do with Coach retail stores. I don't think they've quite figured out what they're supposed to be doing - other than straightening displays - and how often can you do that, when very few people are shopping? They can't ring up sales, can go into the Coach stockroom - however - can't get holds, as they are in a different area. I saw her on another visit, and she immediately acknowledged me...... but still doing the same boring trying-to-look-busy-straightening-up. Makes for a long 40-hour week. If she's supposed to be "selling" people on the new Coach.....it's not working. Not aggressive at all (unlike some of the Coach FP) - so what's her incentive - or any other "Coach employee" they place in retail stores (other than Coach)?

 

[ms-whitney]

^ it's been awhile, I remember reading this article dated awhile back recently, which prompted me to this thread, with ceo victor, who says "coach funded sales specialist"

Re : http://fortune.com/2014/06/20/coach-ceo-victor-luis/

It's worth a read for anyone who is interested in what the ceo says of the direction COH is going, I was thinking about buying the stock, thus the research and me in this thread

So they're implimenting it, and maybe with the SF location it was a testing market? And that's why it's already there or, could be based on when that interview was done it was already being rolled out. Who knows

I know that when lew was ceo he would walk to the department stores and boutiques to inspect the display and quality of sales people and managers--because when he finished walking at Macy's flagship, downtown Union square, he would come to our boutique and have a "inspect, meet greet and talk"

I **think** there's always going to be discrepancy between department stores that hold the merchandise and the sales associates hired at the boutique not only in terms of pay and compensation BUT also the training, when it's under boutique, there's more room for control..cuts the middle person so to speak

Either way, coach knows that it's too much in the market and they're scaling it back, how they do so, and whether they do it successful or not, that's where I'm thinking in terms of whether to buy or not (COH)

 

[bluebellrose]

I think Michael Kors has become a lot like Coach. Where I live (a suburb of Manhattan), everyone has a Coach and now everyone has a MK. I think over saturating the market and making the items so affordable dilutes the brand--and then it is not considered a "luxury" any more.

it's considered an affordable luxury now. Besides what better way to counteract the fakes?

 

[ktheartscoach]

I literally only buy Coach, the exceptions being my beloved Dooney Florentine satchel and shoulder bag. This summer, DH surprised me with a Field Bag reissue discovered during a chance outlet visit. Miraculously, I received a PCE last week and used it with $100 in boutique only gift cards (Mom's credit card rewards) to buy the Stewardess reissue. I love them both, and have absolutely zero desire to buy any of the new bags. The ones I love are so far outside my "squeak-point" (love that!) price range it's laughable, the ones I can justify just are not my taste.

Started buying in 1990-ish, have added through the years, and the vast majority of my collection is Legacy/Classics. That's my style. I was so disappointed when the 2012 Legacy styles didn't stick around, because I loved the colors and accessories. Have several of those, will carry them forever.

If there were the equivalent of the Legacy or Classic styles as a staple, they would be taking all the money I could throw at them. I have all of the styles on the Coach Classics that I want, and the Stewardess was to get a reissue to match my BT Field Bag. I've read all over the forum how the old ones are better, but my NYC black Stewardess is the same bag.

If Coach is aiming at professional women with dollars to spend, I wave hello. If they're aiming at younger people, the ones I see have raided Mom's closet for a Rambler or Station Bag. If they're aiming at ladies who lunch, that's a *totally*different*consumer*who*likely*is*not*shopping*at*Coach*. There is no way I would consider a bag that will end up on every discount table as an investment. As others have said, the iconic style they refer to is not reflected in the merry-go-round of confused direction and pricing. And, for what it's worth...SNOOPY?!?! I'm not sponsored by MetLife, yo.

So...end rant. I hope Coach turns it around, but given the chaotic direction over the last few years, the strategy seems to be "They like this? Let's take it away! They like this? Let's take it away! They are lukewarm on this? Let's lukewarm them TO DEATH."

TL;DR - Coach, get someone to read this thread. My only marketable skill is making money. If I had a client dying to give me money if only I made the one thing I based my reputation on (but had sacrificed to go on a snipe hunt), I'd beat feet to production and order it up in stacks of every color, and offer it on a silver platter.

 

[abl13]

Just wanted to throw out there that I am a member of another forum where a member posed the question of what bag to buy their wife that was under $500. There were a ton of Kate spade and michael kors suggestions and a number of people went out of their way to suggest not going with coach as their quality has declined in recent years.

 

[MrCoach]

Thanks for posting this. It's so discouraging to see some of their strategies. Coach has a major identity problem, they want to make the brand accessible to everyone at the factory stores, all the while marketing the boutique items as luxury, they can't have it both ways. Maybe if they stopped switching the floor set so quickly and rewarded loyal customers with PCE's and stopped pretending to be something they're not (I think the $650 price point on the Rhyders is unjustified), then MAYBE I would consider shopping at the boutique again.

I really like some of the stuff on this new floor set and would consider some of the items but I am happy to wait for them to show up at 50% off or more at my local outlet by Christmas time. That's just what Coach has taught me to expect as a customer.

Sounds like you can't afford it anymore. I get what they are doing because everyone and their dog is shopping discounts and lower costs bags. Why? Because they can't afford the New Direction of the brand.

Luxury Retail is just that...a luxury...meaning it's a luxury that you can afford it. Don't forget that we live in a society where it is all about status quo and your income.

I was raised that it's a gift if you can afford it or treat yourself to luxuries if you have that lifestyle.

 

[MrCoach]

Just wanted to throw out there that I am a member of another forum where a member posed the question of what bag to buy their wife that was under $500. There were a ton of Kate spade and michael kors suggestions and a number of people went out of their way to suggest not going with coach as their quality has declined in recent years.

On that note as well, COACH bags are hand made. Kate Spade, MK, and Cole Haan are not. They are mass produced by machines. Cut a COACH open and then cut one of the brands listed above and you will see the difference.

Again, unfortunately we live in a world where people treadily believe the media or "gossip" by mouth.

 

[pinkngreenpurse]

I mentioned this in another thread....but as much as it would initially hurt they need to close a good number of outlet stores. There should be no more than 15-20 nationwide. Re-train customers that the FP stores have good deals and sales then people would not constantly run to the outlet.


I would say for the past number of years I had been a loyal outlet shopper only...and never went into the FP stores....that was until I saw new designs that were worth my money. Now I only shop FP.......and when I recently ventured back into the outlet to see what they had, I could immediately tell the difference in the quality.


Now if they can convert me from an outlet only shopper they can convert others.


A similar price point brand.. Dooney & Burke which I also shop only has a handful of outlet stores/ and FP stores for that matter and are still profitable.

 

[MiaBorsa]

My local Macy's just dismantled the Coach counter and moved all the bags over to the side where the Dooney bags were (the Dooney bags are in a corner where all the Fossil and Tignanello bags were). In place of the Coach counter, there is now a Michael Kors shop with fancy lighting and shelves. The SA was gushing about it, and I was like "meh". They didn't have much of a selection of Coach at all. Nothing really caught my eye. Gee whiz...

At my local Macy's this week, there are twice as many Dooneys and 5 times as many Kors bags as Coach. The MK section is as you stated...fancy displays and lighting, obviously highlighting the brand. The Coach "section" is pathetic with a few tired looking styles and definitely out of the limelight. It won't surprise me to find Coach totally gone from that store after the holidays.

 

[MiaBorsa]

On that note as well, COACH bags are hand made. Kate Spade, MK, and Cole Haan are not. They are mass produced by machines. Cut a COACH open and then cut one of the brands listed above and you will see the difference.

Again, unfortunately we live in a world where people treadily believe the media or "gossip" by mouth.

Excuse me, but I own plenty of each of those brands, and you will never convince me that Coach is superior in any way. They are all well-made bags. Do you honestly believe that Coach is not "mass produced?"

 

[ArmCandyLuvr]

At my local Macy's this week, there are twice as many Dooneys and 5 times as many Kors bags as Coach. The MK section is as you stated...fancy displays and lighting, obviously highlighting the brand. The Coach "section" is pathetic with a few tired looking styles and definitely out of the limelight. It won't surprise me to find Coach totally gone from that store after the holidays.

Since I made my post, the FP Coach store in the same mall as the Macy's has closed. The Macy's has recently stepped up to the plate somewhat by creating a dedicated Coach section with its own lighting, shelves, and checkout counter. There are even some nice glass display cases for the small goods. It's definitely better than before, but the selection is still much less than what you would have gotten from the FP Coach store.

 

[MrCoach]

Ohhhh