COACH How Can China Expand Its Market Space Instead Of Expansion?

An obvious sign is that, compared with the previous preference for European and American models, more and more Asian faces began to be launched in the COACH commercials. It will release the latest 2014 spring global advertising film to enable the internationally popular Chinese supermodel Liu Wen to be the heroine. In 2012, another famous Chinese consumer Lee Hom has become the spokesperson for her men's accessories products. COACH is trying to copy its brand recognition in the US market to the Chinese market by 80%. According to the survey, COACH's brand awareness in the Chinese market is currently only 16%, and COACH still has huge room for expansion in the Chinese market.

At the beginning of this year, COACH There has been a significant change in the store. From the previous emphasis on handbag accessories as the main body, it has been extended to the display of all product lines such as garments, shoes and so on. "Now we have begun to transform COACH into a lifestyle brand." Jonathan Seliger, President and chief executive officer of COACH China, said.

Because of the impact of China's "three restriction" consumption policy, COACH is in the Luxury industry Growth rate is slowing down, including LV, GUCCI and other traditional luxury brand performance growth began to decline. COACH, which relies on cost-effective people, has opened up a way of light luxury for itself. According to Jonathan Seliger, this is exactly the opportunity for COACH in China.

　　 New opportunities

For the big luxury brands in the past two years in the Chinese market, the good days are gone, and the two digit growth is hard to sustain. This is a very important reason for cracking down on the policy of "three consumption".

CLSA estimates that in 2013, China's luxury spending growth rate was 18%, far below 28% in 2012 and 43% in 2011. This makes the traditional luxury brands begin to lower their sales performance expectations and development strategies in China. Lu Wei Ming Xuan (LVMH) reported that the revenue of fashion and leather products declined slightly in the third quarter of this year. Remy Martin has warned investors recently that business profits will fall by at least 20% this year, mainly due to the "significant decline in China's performance" in 2012.

With more than 20 years of experience in the luxury market in China, Jonathan Seliger, who speaks fluent Chinese, thinks that the rapid growth of COACH in China is not accidental. "First, we redefine the luxury goods and make the luxury goods within reach. Our brands have three cornerstones, one is that products are closely related to consumers' lives, second is innovation, third is value for money, and these can resonate well among consumers. Secondly, we know that fast changing Chinese consumers, Chinese consumers are much faster than consumers in Japan, North America and Europe. China's young consumers are growing up quickly. They want to express their own style, their own consciousness, and their understanding of luxury goods. COACH can satisfy consumers' desire in this area. We will launch new products every month to meet their changing demand for fashion. Jonathan Seliger said.

Being positioned as a luxury, the COACH market is not just a gift market, but also a self consumption. COACH China's total sales in fiscal year 2013 still rose by more than 40%, while same store sales grew at two digits.

"We can not predict the future changes of government policies, and these policies do affect traditions. Luxury brand Business. But we think this is our opportunity, mainly for two reasons. The first reason is that COACH is a relatively low-key brand. We are not an extravagant luxury brand, but a luxury that is within reach. So our position is not contrary to the present government policy. The second 40%-60% that we price is European traditional luxury goods can attract a broader customer base. " Jonathan Seliger indicates.

"Compared with LV, Hermes and other European luxury brands, COACH has opened up a different way of" light luxury "by virtue of its unique self positioning and alternative practices. It has" affordable "high cost performance, excellent retail service for the people, challenging the old luxury goods in Europe, and has successfully" counterattacked "in such an emerging market like China to please more Chinese consumers. In particular, when the anti-corruption policy of the Chinese government has spread to many traditional luxury brands, COACH relies on "accessible" positioning in China instead of relying on the traditional big brands and can rely on a broader customer base to grow rapidly. A professor of management at the International Business School of the University of foreign trade and economics believes that

　 Layout all line products

In the face of the opportunities in the Chinese market, COACH began to gain more market share by enriching product lines, expanding the scale of stores, increasing brand awareness, building teams and providing excellent retail services.

At present, China has become the third largest market for COACH outside the United States and Japan. "To surpass Japan and let China become the largest overseas market outside the United States" is my goal in office. Jonathan Seliger said.

COACH spends $5 million annually on market research, and the number of consumers surveyed is 50 thousand to 60 thousand, of which 8 thousand to 10 thousand are Chinese consumers.

Through a lot of research, COACH is once again concerned about the recent changes in the luxury market. COACH survey found that in the global luxury accessories consumption, men's luxury bag consumption accounts for 15%-18% of total luxury consumption, but the proportion of Chinese luxury goods business can account for 40% of the total luxury goods accessories business, which means that the consumption of men's luxury accessories in China is far higher than the global average. "In China, we feel that the market for men's luxury goods is very potential." Jonathan Seliger indicates. In the 2013 fiscal year, COACH has launched a worldwide scale of male business to $600 million, and its retail sales grew by about 50% year-on-year.

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With the strength of the men's business in the Chinese market, COACH announced this year that the accessories brand, formerly known as lady handbag, has been transformed into lifestyle brand. Compared with the North American market, COACH has become a highly recognizable brand of handbag accessories. COACH has been positioned as the New York fashion brand in the Chinese market, making it easier to transform its brand in the Chinese market.

In the latest quarter of the global advertising, China's supermodel Liu Wen wears jacket, sweater to leather pants, inside and outside, wearing New York style COACH. "Through a lot of market research, we know that besides handbags, if we have shoes, clothing and other products, our customers will have a high willingness to buy. They are more willing to see a complete image from head to toe. Jonathan Seliger said that at present, COACH's willingness to repeat purchases in China reaches 80%, almost approaching the level of the fast moving consumer goods industry.

And aiming at the difference between Chinese consumers and foreign consumers in terms of consumption concepts and consumption habits, COACH has launched a product design that is aimed at the Chinese market. "For example, the newly launched shoes, because of the difference between Asian and European and American feet, put forward the design of shoes for Asian people in the Chinese market. Chinese women have more work than Japanese women, so they have higher demand for bags and practicality, and can put A4 in a better size and require more versatile functions. COACH an executive in China said.

But for luxury brands, the biggest risk of overall expansion is how to ensure the expansion speed does not dilute the brand image. "LV is the lesson from the past. In the process of rapid growth, brand value has been declining and performance has gone from bad to worse." The above professor of foreign economic and trade university thinks.

But Jonathan Seliger is not worried. "This is not just the richness of the simple real estate product line. Our brand transformation includes product categories, store environment (such as store design and product visual display), marketing, brand communication, retail operations and services and other different aspects. It is a major move covering all aspects. What we see now is only the early stage, and the process will last three years and longer."

For COACH, the greater motivation comes from its target customers, China's new middle class every year. "The size of the Chinese middle class is growing at 15%-20% per annum, so there are many new customers entering the market every year. We not only consider the first tier cities, but also two or three lines of cities. We have 114 stores in 49 cities, but there are more than 200 cities in China with more than one million people, so we still have many opportunities to systematically open stores. Jonathan Seliger said.

In addition, COACH regards digital marketing as a very important part of its future strategy. "Digital marketing is actually one of our global initiatives. We are also actively expanding the field of digital marketing in China and directly controlling it. Our company has a team responsible for digital marketing, including social media." Jonathan Seliger said.

In 2012, COACH built its own e-commerce platform on its own official website. The online flagship store included all the COACH's products. Besides, online shopping products will enjoy the same warranty and after-sales service as the physical stores. "At that time, we were not optimistic about the COACH self built e-commerce platform. First, we think that luxury goods are not good at making electricity business by themselves." second, the price of electricity suppliers is chaotic, and it is easy to damage the brand image. A competitor's brand marketing staff think.

But COACH has its own logic. "Online shopping in China is generally the nature of discount and promotion, and this is exactly what we want to avoid. We want to ensure that customers experience online and offline simultaneously, including product display, pricing and customer service, so we must make our own online shopping platform to keep our image consistent." Jonathan Seliger indicates.

It is reported that in the 2013 fiscal year, the number of visitors to the website exceeded 15 million, and the total traffic volume of the official website increased by over 50% after the introduction of e-commerce services. "Our strategy is to create a multi-channel distribution system, which will be more flexible than traditional European brands and will have a larger sales network." Jonathan Seliger explains.