Wrong Prescription for Coach’s Ills

Coach continues its downward slide. Sales in 3rd quarter 2015, dropped 15%. Some blame currency issues and the over-proliferation of outlet stores. Note to leadership, it’s the merchandise. Stuart Vevers strategy is stodgy, European and not much fun. The sleepy handbags are more matron than Millennial. Note to pundits, Millennials love outlet shopping. I still contend that their turnaround strategy is seriously flawed and too dependent on overly competitive apparel. I wrote this post in 2014 and not much has changed except Michael Kors and Kate Spade are hitting some headwinds, as well.

Coach’s 2014 first quarter profit fell 20%, while aspirational fashion rivals such as Michael Kors and Kate Spade continue to ratchet impressive gains. Coach experienced a steep drop in North American accessories sales. Coach’s strategy for slumping sales is a planned full lifestyle assortment, to include apparel and a greater emphasis on higher priced bags over $400, the volume sweet spot.  They recently hired a new creative director Stuart Vevers, to take over for Reed Krakoff (who is resigning); his first product introductions will be in Fall 2014.

Coach spring 2014 styles

Coach spring 2014 styles

As a Coach watcher and stock holder, this strategy goes down like bad medicine. Instead of aiming to win in the sweet spot, they are abdicating to the competition. Michael Kors’ apparel is a footnote to his successful handbags, watches and shoes. Kate Spade offers some of the most whimsical, colorful, bags, shoes and accessories and apparel is secondary. Tory Burch is a shoe and bag story with apparel paling in comparison.

Accessories are the democratic categories in which women of all ages and sizes can play, women’s apparel is stuck in a highly competitive funk.

Coach was riding high, in the early 2000’s. Their then colorful, fresh, “C” logoed bags were the “it” bags for the aspirational designer masses. Over time, they became ubiquitous, as every hairdresser and soccer mom carried them. As they down-trended, they didn’t follow with renewed  innovation, instead made the critical mistake of looking back and doing a rehash of the sturdy, vintage Legacy styles. These unrefined bags, although colorful, looked like a clunky 1980’s LeBaron instead of a chic 2013 Audi. The competition was forging ahead with exciting materials, color and patterns, like Michael Kors’ glam styles, Kate Spade’s playful totes and tech cases, the silicone Furla Candy bag and styles by Rebecca Minkoff, Marc Jacobs, Ted Baker and Longchamp.

The current assortment is sleepy at best. It feels like a lightly-veiled nod to Salvatore Ferragamo. They played it safe and sexless. There is no emotional must-have draw. Even with 25% off coupons, one is hard pressed to spend the deal. The prospect of a larger selection in the $600 plus range is a miscalculation of opportunity. They need to focus on modern, forward  materials, shapes and details in the $400 range sweet spot; then offer additional showstoppers in the $600 plus range.

Coach went too safe.

Coach went too safe.

A  key asset for Coach is their well-priced, quality shoe line. They offer slightly more wearable shoe heights than Kors and at prices lower than Kate Spade. I hope they don’t think they need to raise prices and heel heights to get a new customer. Maintain the $198 average price point and expand the selection to include more options of fashion-forward sandals, pumps, wedges, loafers and boots.

This great American brand has had a small stumble. When you take fashion risks as good brands do, you will trip-up sometimes. This brand has a cold, but certainly isn’t terminal. They just need the right prescription for renewed health.

Dix&Pond is the blog of Dix & Pond Consulting Creative and strategic consulting for retail, wholesale apparel, footwear, consumer products and branding agencies. Follow me to get the latest posts

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Coach – Stellar to Stumble

On the short-list of first-class American fashion brands, Coach certainly makes the top ten. The nature of market leaders is their willingness to take chances. No one becomes an Olympic skater holding the rail.

Coach fourth quarter 2012 North American sales were down 2% over last year, which sent the stock tumbling this week, in spite of increased international sales. North America accounts for two-thirds of the company’s business.

I have great respect for the aspirational luxury bag and accessory seller. They have turned a 72-year-old leathery dowager into a fashion powerhouse with their risk taking market leadership. There are far too many lackluster brands, that stand for nothing. I give them credit for ground breaking newness and willingness to take bold moves.

As an avid Coach watcher, the answer for the poor results is obvious. For many successful years, they addicted their logo-adoring masses to fresh shapes and colors of their iconic fabric “C” patterns. These signature looks fulfilled the fantasies of mainstream wanna-be social climbers. Unfortunately, the patterned bags have become, all too common on the arms of every stroller pusher and tweeny bopper in the mall.

Fall 2012 Coach Legacy bags

Fall 2012 Coach Legacy bags

They saw this coming. In second half of 2012, they took a radical step and introduced the Legacy collection. I never warmed up to this collection of vintage leather Coach styles in bold colors. They bet the ranch on Legacy and it dominated the second half assortment. I awaited its pending arrival and wanted to love it. Somehow, it didn’t feel modern, and the traditional leathers seemed a bit dowdy in a digital world. Perhaps it is the sea of wristlets and cross-body bags, aimed at an over-indulged teen? It doesn’t have the freshness of their more innovative styling. The only thing it had going for it was color. I give them an A+ for trying. This is the fashion business and leaders sometimes stumble.

CEO, Lew Frankfort is blaming the lack of demand on “competition.” Some say Michael Kors is taking a bigger share. I think the iconic Kors bags with the MK charm, are getting a tad stale, too. Kors does a larger shoe collection and dominates in uber-hot fashion watches. Kors stores have a consistent mix of accessories, apparel and shoes and isn’t reaching for an entry-level teen. I think Marc Jacobs, Kate Spade, Tory Burch and others are sucking the aspirational luxury winds in bags.

Coach won’t stay on the rails for long. This champion will bounce back. In bags, I think they need to explore more luxe leathers, modern materials like colorful patent leather and even silicone, as well as bold new shapes. They are talking about relaunching their shoe collection. I think their shoes offer tremendous value in terms of fashion quality to price. Expanding fashion jewelry and watches is an opportunity as well. Stay tuned. See Coach.com

Fall 2012 Coach loafers - A modern twist on a classic

Fall 2012 Coach loafers – A modern twist on a classic

Dix&Pond is the blog of www.dixandpond.com Creative and strategic consulting for retail and wholesale apparel, shoe and consumer product companies. Follow me to get the latest posts

Accessories Update: Graphic Art

Designers are getting graphic this spring with dramatic, scene-stealing black and white accessories. These mighty shoes and handbags are going to command the attention of classic style icons and fashion-loving city slickers alike.

Dynamic black and white houndstooths, checks, stripes, dots, geometrics and florals are adorning wedges, espadrilles, pumps, sling backs, platforms, sneakers, flip-flops, totes, shoppers and more. These high-contrast patterns make a huge statement and generally prevail over an entire outfit. They are emotionally driven items and highly useful in a woman wardrobe, so are sure to fly out of the stores.

Graphic black and white accessories are seen on all levels of the market, but the some of the best shoes and bags are from Salvatore Ferragamo, Ann Klein, Sam Edelman, Kate Spade, Stuart Weitzman, Christian Dior, Alice and Olivia, Marc Jacobs, Tory Burch, Charles David, Pour La Victoire and Converse.

Scene-stealing graphic accessories for spring 2012.

Scene-stealing graphic accessories for spring 2012.

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