After The "Cold Winter", Can Coach Transformation Turn The Corner?

This reminds people of the change of COACH in the 90s of last century, which made COACH reach its peak in 2005~2006.

　　 Observer Looking forward to this famous "light luxury" brand, once again positioning itself as a popular brand, however, they may be disappointed. COACH insiders confirm that "First Financial Daily" confirms that COACH will become a "modern luxury" brand that corresponds to "traditional luxury".

In the difficult time of earnings and profits continue to decline, can COACH's transformation turn the corner?

Reduce discounts

In North America, which accounts for 70% of COACH business, total sales decreased by 11% from US $3 billion 480 million in the same period last year to US $3 billion 100 million, while same store sales fell 15%. COACH expects sales in North America will continue to shrink significantly in the 2015 fiscal year ending June 2015.

"Compared with China's primary market, in such a mature market in North America, consumers now prefer more fashionable and personalized fashion brands or designer brands, which will cause great market share and performance pressure on COACH." Zhou Ting, President of the Institute of wealth and quality analysis.

Take COACH competitor Michael Kors for the first 2015 quarter of June 28, 2014, benefiting from a 24.2% increase in same store sales, retail revenue increased 47.5% to 480 million 200 thousand US dollars, net profit of 187 million 700 thousand US dollars, a 50.2% increase from 125 million a year earlier.

COACH's backwardness in fashion and personalization is only one of the reasons why it has gone to the bottom. Excessive distribution in Oteri J is considered another important reason for COACH getting into trouble.

At peak times, outlets accounted for 65%~70% of COACH sales. In contrast, Michael Kors has been criticized for so much, but its sales in outlets are only 30%.

"At first, the COACH outlets helped to increase sales and profits, but it soon puzzled consumers: no one knew that a COACH bag came from the COACH store first class real product, or from the outlets of two outlets. Although there are many videos on the Internet to tell how to distinguish between them, it is not easy for ordinary consumers to identify them. Paris HEC business school MBA project luxury marketing and strategy professor Vincent Bastien to the first financial daily analysis, the result is too many outlets stores hurt the brand sales network.

In contrast to revenues and profits, COACH shares fell 39% from the end of this year to the end of June. Vincent Bastien said: "luxury strategy gives the brand a high value, which is also reflected in the stock price. As people realize that you are not (or no longer) a luxury brand, share prices will fall sharply.

COACH also said in June this year that it will close some online outlets and some outlets, so as to enhance the store's shopping experience and reduce discounts.

　 "Modern luxury"

A massive closed shop campaign took place in North America, and 70 COACH outlets closed. At the same time, it is to reorganize the global store network and inventory.

COACH pushed to the dead end to start transformation. COACH starts mapping from location. From "Accessible Luxury" to "Modern Luxury".

Explaining the positioning of "modern luxury", COACH insiders told reporters that it is not the positioning of the outside interpretation from "light luxury" to "popular fashion brand", but mainly to respond to changes in consumer attitudes, which means more emphasis on product quality, fine handwork, brand purity, originality, confidence and affinity.

For the "lifestyle brand" in the new positioning, an important measure of COACH is to expand the product line. Over the past 4 years, sales of COACH men's wear range from $100 million to $700 million, accounting for 14% of the brand's 5 billion dollar performance. COACH hopes that the existing shop will make more room for men's clothing.

In September this year, the global COACH stores will be synchronized with the listing of men's shoes including boots, sports shoes and so on. Greg Unis, senior vice president of COACH global menswear Sales Department, plans to form a complete series.

Other initiatives are also reflected in changes in the retail stores that directly contact consumers.

It seems that COACH is actively making changes, but forced to embark on the road of transformation, positioning from second tier leather goods brands to first-line lifestyle brands, COACH will undoubtedly face enormous challenges.

Relevant

COACH can Chinese market continue to thrive?

Compared with sales in the 2014 year of the 11% year, the sales in the North American market dropped by 11%, and the same store sales fell by two. The COACH market in China was thriving. The annual sales increased by 25% to US $545 million, while the same store sales increased by two digits.

Turning to the high growth that has been maintained in the Chinese market, COACH China stakeholders told the first Financial Daily reporter that in 2003, COACH, who entered China in 2003, recalled the Chinese market (including Hongkong and Macao) in 2008 and 2009, and carefully observed the preferences of Chinese consumers.

However, the pace of luxury brand development in China in recent years is slowing down. How long can COACH continue to thrive in the Chinese market?

COACH insiders told reporters that COACH's brand transformation is an important strategic layout of the world, not against the North American market. Therefore, China will cooperate with the global brand transformation plan.

Of course, the observation of Chinese consumers has made targeted adjustments in product development and procurement. For example, the proportion of Chinese female consumers is relatively high. Therefore, COACH has launched a multifunctional bag that can meet the needs of women to go to work and work. For example, it can put down the A4 and iPad handbags. In addition, COACH provides shoes for Asian (Asian stores) feet to increase comfort. Over the past few years, COACH has found that more and more consumers are losing their enthusiasm for high-profile LOGO products. Instead, they tend to be more low-key and express their style accessories. Therefore, more LOGO dilute leather bags are launched.

Stephanie Stahl, director of global marketing and strategy at COACH, said earlier that while China's middle class is increasing, the pace of urbanization is accelerating. The potential of China's two or three tier market can not be ignored. China has 200 cities with a population of more than 1 million, which is far more than that of the United States or Japan. COACH expects China to bring about an opportunity of $1 billion in sales. (