Coach Of The Luxury Market

Maintaining balance between "easy to get" and "image high end". When others are thinking about how to create a sense of distance while trying to face the consumer face to face,

It is destined to be an alternative in the luxury industry.

Luxury Coach

Use Cheap Monday's Retro jacket to match Petit Bateau striped coat, and then use Ralph Lauren scarf to embellish, this is Serena's appearance.

In the American drama "Gossip Girls", the typical girl in the upper east side of Manhattan, New York, is just turning around at New York central station. She has already shown the new aristocratic identity symbol, and of course, the Coach handbag in her hand, and the fine quality of her fashionable temperament also belongs to the brand from Manhattan.

In 70 years, Coach grew from the family workshop in the first Manhattan loft to the high-end brand with a total market value of more than 18 billion dollars.

Trying to make handbags from the early production of single leather products, the product line has also been extended to fashion accessories such as shoes, scarves, perfume and so on.

However, since the brand was founded in 1941, Coach has positioned itself as a "Accessible Luxury" which is readily available.

Unlike Prada and Chanel's unchanging black and white ash, no Louis Vuitton (LV) has touched the classic design of several generations, and tranquil colors and changeable design elements, which add a lot of fresh flavor to Coach, and Coach also becomes lively in different materials such as mixed leather, silk and textile fabrics.

If there is no more than 10000 yuan to put LV in its own wardrobe, and more than tens of thousands of Hermes will not dare to make it happen, then the price of 1000 yuan, the same high quality Coach, is obviously very tempting.

Perhaps strictly speaking, Coach is not the top brand in the luxury sector, but it makes consumer luxury goods no longer out of reach.

Compared with the history of Europe's top luxury brands, such as LV, Hermes and so on, only 70 years old Coach is slightly younger in the luxury goods industry. In the United States, where the luxury culture is shallow, Coach is far from the noble brand of European luxury brands. However, Coach has opened up a different road with its unique self positioning and alternative practices, challenging the authority of the old luxury goods in Europe with the attitude of the people.

Good market performance

Although self positioning is somewhat different, Coach, who lives in luxury camps, has been competing with all kinds of high-end brands.

Take the American market as an example, middle and high-end fashion brands.

Calvin Klein and the traditional top brands from Europe, Prada,

As a competitor to Coach, Coach successfully occupied 32% of the market share in the American luxury handbag Market in 2011, becoming the largest luxury brand in the US.

In addition to the local market, Coach began to enter the Japanese market in the way of flagship stores and independent retail stores as early as 2001. In the 2011 fiscal year, the sales contribution of Coach Japanese market has reached 18%, while the share of Coach in the Japanese boutique market has increased from 17% to 17%, surpassing the original Gucci and Prada, which ranks second, becoming the only luxury brand in the Japanese market after LV.

Japan is undoubtedly the most successful overseas market of Coach.

In recent years, the demand for luxury goods in China has been increasing. Even though the global luxury market is facing a recession in the 2009 financial crisis, Chinese consumers' desire for luxury goods has not diminished.

In a 2009 study of the Chinese market, Pao Principle, a market research firm, showed that about 90% of the Chinese rich interviewed had bought brand-name handbags in the past year, while 2/3 men and 1/3 women had bought brand-name watches in the past year.

Coach also saw the potential of the Chinese market.

So when the world was cutting costs all over the world, Coach bought the agency retail business in China from Hongkong Junsi group and changed it into a direct camp. Since then, Coach has begun to play a big role in China.

In the third quarter of 2011, the Coach brand has 85 stores in the Greater China region, with a total sales of $185 million in China.

From 2000 to now, over the past 10 years, it seems to be a golden age for Coach.

In fact, in the late 1980s, Coach, which was purchased by consumer product giant Sara Lee, had experienced 10 years of rapid development. But then the fashion trend of the US market gradually changed, and people's dressing began to pay attention to the bright and colorful feelings. But Coach was still a rigorous and durable but somewhat old-fashioned face.

Just like LV, Gucci, Prada and other European fashion brands waiting for the opportunity to enter the US market, Coach has been in trouble for a while.

Until 2000, Sara Lee, which had streamlined its business due to poor stock performance, was also concentrated on its main business. Coach became independent again from Sara Lee and began to make a difficult pition.

In 1995, with the accession of Coach global chairman and CEO Lew Frankfort and the implementation of creative director Reed Krakoff, Coach began to expand its product line, and launched more fashionable products such as shoes, belts, sunglasses and so on. Coach also became colorful.

Coach then repeated his own strength with market figures.

In 2008, the global market was facing the pressure of subprime mortgage crisis. Besides the Chinese market, the global luxury consumption demand weakened obviously. In 2009, the first luxury price of luxury goods in mainland China was the first collective price cut in 2009. At that time, the 29 stores in the mainland of China set up a low 2%-7% on the basis of the original price. Even a lot of first-line brands such as Ferragamo, Gucci, Prada and so on also lowered the price of goods one by one. This kind of fine-tuning has become an anecdote for the luxury industry that "every year will rise in price and will not be discounted".

However, Lew Frankfort now believes that the economic crisis has changed consumer spending habits and decided to permanently change the pricing strategy and reduce the average price of Coach packets by 15%.

In 2009, Coach even launched the Poppy series as a selling point. Its average price is only 260 US dollars, which is 20% lower than the traditional Coach handbag price.

Sales of European traditional luxury brands were frustrated in the crisis.

According to the 2009 earnings report, LV net sales fell 1% in 2009, while Dior followed a 3% decline in 2008. It also welcomed another 7% decline in the first quarter of 2009.

However, the bold move brought good news to Coach. In the 2009 fiscal year, Coach still achieved $3 billion 230 million net sales, an increase of 1.6% compared with $3 billion 180 million in 2008.

Since Coach listed on the NYSE in 2000, the stock price of Coach has risen from the initial $2 to more than $75.

Coach has also gone out of a luxury line defined by itself.

{page_break}

Alternative luxury positioning

Since Coach's first flagship store landed in Shanghai in April 2010, the products of Coach may appear in shopping malls or in department stores. However, the site selection principle for big brands has not changed. Beside the quiet and restrained LV stores and the rigorous Cartier, there will often be Coach stores with different ambience. It will turn the wooden frame dominated by peach wood color into an open white space.

The choice of Coach is a bustling area with more than one million passenger traffic. As a result, consumers are easy to place Coach in the same place as the top brands.

Unlike traditional luxury goods practices, Coach no longer chooses to launch new products on a quarterly basis, and tries to renew it every month, and ensures that the number of new products changed monthly is about 20% of the total volume.

Although in the luxury goods industry, Coach chooses outlets as the main selling channels, but the practice of large-scale discount stores has touched the bottom line of "no discount" of luxury goods.

However, the products of Coach discount stores are not delivered from the exclusive stores.

Coach found in the market research that the stores and discount customers are not the same. The consumer groups of the stores are mostly under 35 years old, young women who are interested in fashion, while those in discount stores are mostly married women who are over 45 years old. They are not sensitive to fashion factors, but they have higher requirements for price performance and practicality.

Therefore, Coach creates different product lines for two channels, and produces old styles for discount stores.

In fiscal year 2011, the contribution rate of Coach discount stores to total sales has reached 40%.

But last year, Lew Frankfort has revealed that the number of Coach discount stores in the United States will not exceed 100. After witnessing the failure case of Calvin Klein's expansion of discount stores and leading to image damage, Coach also has its own insistence on the maintenance of brand image.

Moreover, in the eyes of luxury peers, Coach's openness to e-commerce is even an "impulse". In 1999, when the same brands still disdained e-commerce, Coach launched e-commerce websites in the United States. After 2005, Coach also worked with the US shopping network and Messi net to expand sales channels.

And Taobao mall two months hand in hand, also completed the market test for self built online shopping platform.

What Coach does seems to be unreasonable, but in fact it all stems from some other self positioning of "luxury goods at hand".

In the description of Jonathan Seliger, President and chief executive officer of Coach China, "this positioning means that every handmade product of Coach has quality materials and processes that are comparable to European luxury brands, but the price is not so high that they can not be expected, only their 40%-60%".

Bain consulting has divided the global luxury market into three levels.

Brands located on the top of Pyramid account for about 1/4 of the entire luxury market. They are among the most wealthy people in the world, such as Hermes, VanCleef&Arpels and Harry Winston.

European traditional luxury brands including LV, Prada and Gucci belong to the second level, accounting for about 36% of the market share.

In Bain's analysis, brands, including Coach, Burberry and Tiffany, are located on the third level, and this brand, which accounts for 40% of the market share, also raises the trend of new luxury.

"The exclusiveness of too many consumer groups" was once the most disgusting way of European luxury management in Lew Frankfort. Jonathan Seliger also admitted that Coach had different target groups with other high-end luxury brands. "In the United States, the target group of traditional European luxury brands only lock the top 3% of high-income families, but Coach extends the range to 20%."

"At the same time, it also distinguishes Coach from the medium priced fashion brands, and finds its own position between the extreme minority and the vast number of consumer groups." Jonathan Seliger said frankly, "the United States is an immigrant country, where there is no luxury brand that has gone through a century. However, the Coach price is reasonable and there is no lack of pure texture. It allows everyone to enjoy the luxury of power and share the same spirit of fairness and fashion in the United States."

In recent years, the new luxury style represented by Coach seems to have touched Giorgio Armani, Hermes and other traditional brands. They have tried to launch their own sub cards to attract younger consumers who are more sensitive to price.

How to have both?

Coach's alternative luxury positioning, though ingenious enough, seems to have taken a step further. If we want to eliminate the price distance and maintain the high-end image, Coach can only balance both the selection, procurement, design, production and sales of all aspects, so that we can have both.

Coach handbags are purchased from raw materials and traditional European luxury fabric suppliers, and professional fabric and metal parts purchasing teams are set up to assist designers in sourcing high quality fabrics, leather and metal accessories.

The procurement team will also take strict control of balanced expenditure and reverse procurement, and use a strict cost control system to track past expenditures.

Generally speaking, luxury brands never seem to need to explore the needs of consumers, just tell them what will be popular next year.

However, what Coach wants is precisely to meet the needs of consumers, insist on rigorous consumer research, and analyze the data to predict the trend of the trend, and find the design elements of the product.

The Executive Creative Director, Reed Krakoff, will also lead the team to search for new inspirations to inject innovative elements. Of course, every new product will also make an impact assessment in the market.

Jonathan Seliger said, "Coach conducted a survey of over 50000 consumers worldwide, including 8000 Chinese consumers, through the Internet, e-mail, telephone and group discussion and interviews last year. In his view," high repurchase intentions that satisfy consumer demand are more conducive to maintaining a good brand image for Coach. "

The luxury production link has some aura of mystery in the consumer's impression. It seems that only like LV, clothing and accessories from France, bags and shoes from Spain and Italy, or Hermes always insist on the whole hand to create, only to truly call it a senior aristocracy.

However, in order to cut costs, the luxury brands moved to China in 2008 after the financial crisis are increasing.

Unlike Prada, which is shy of mentioning production lines in China, since 2000, Coach has moved more than 9 of its factories to Asian countries with relatively low labour costs. The manufacture of most of Coach's products in China has become an open source of Coach, and Coach has saved a lot of labor costs.

Of course, this move that may damage the high-end image has been repeatedly criticized by local competitors.

However, the production of Coach products is mostly in Asian countries, but Coach will carry out strict quality assessment for each co factory, and Coach professionals will be trained in manufacturing technology, production standards and quality control.

The whole process of professional management, from fabric selection, sample preparation to product evaluation, is eventually set up for final inspection in the United States.

This is also the secret of Coach to ensure the exquisite workmanship of each product, and high quality products are also the most direct way for Coach to create images.

In recent years, although all brands are facing the pressure of rising cost of raw materials and labor, various product lines extend the selection range of fabrics, so the cost of Coach is much higher than that of other brands.

Because of the strict cost control in every link, the gross profit of Coach also gradually increased, and gross profit margin in the third quarter of fiscal year 2012 remained strong, reaching 73.8%, much higher than the average gross profit margin of 60% in the luxury industry.

Although Coach has always been strong in the North American and Japanese markets, the European market has always been a field that Coach has not conquered.

But until two years ago, Coach still held a wait-and-see attitude towards the European market that had no choice but to quit and was heavily invested in traditional luxury brands. It was not until June 2010 that it opened shop in Paris, France to enter the European market. However, Lew Frankfort also revealed last year that although the company is still expanding its European market, the development of the European market is also difficult because of the fierce competition in the brand.

In addition to the development of the European market, it has been the initial attempt of Coach to move the Japanese model to China.

Although sales of Coach in China in fiscal year 2011 have increased by 71% over the same period last year, compared with the total sales of 4 billion 160 million dollars in fiscal 2011, the contribution rate of China's market is only 5%-6%, while Coach's brand recognition in China is only 16%, much lower than that of 79% in the US and 64% in Japan, so there seems to be more room for Coach to penetrate into the Chinese market.

So, after the end of last year, Hongkong launched a new plan to enhance its brand awareness. Coach also has a new plan. Jonathan Seliger said, "the Coach plan is increasing at the rate of 30 stores per year, and it is estimated that sales in fiscal 2012 will reach US $300 million."

When people think about how to create a sense of distance and try to meet their customers face to face, Coach is destined to be an alternative to the luxury industry.

In fact, the phrase "Coach is not a luxury brand" has always been there, but Coach also has its own insistence on how to maintain the balance between "easy to get" and "high-end image".

But in the final analysis, Coach is still a rising star with precision positioning in the luxury brand industry. He knows the consumers and develops new markets. Every step has the brand of "Coach".