Coach - The Success Story

'Classic American Style', the style embodied by Coach, has defined its soul and essence for over 80 years now. In these 80 years, the brand transitioned from a small family business based in a New York loft to an international company with worldwide sales of $600 million in 2001. Today, Coach, Inc has carved a niche for itself as one of the leading modern luxury lifestyle brands providing various merchandise characterised by authenticity and distinctiveness that define its consumers' way of life.

In 1941, the company started with just six leather workers who produced small leather goods like wallets and billfolds. Five years later, Miles Cahn, a New Yorker and his wife joined the company. He saw that the leather used in baseball gloves became soft and supple with wear and abrasion. So he devised a way of processing the leather, which made it wear-and-tear resistant and long-lasting. At the same time, his wife started producing women's handbags with such innovative techniques that marked the brand's entry into manufacturing, designing and marketing of leather goods.

From its inception, Coach adopted a business strategy of producing timeless and elegant pieces which would not be affected by the vagaries of fashion. As a result, its goods were identified with artistic craftsmanship and sophisticated designs rather than being fashionable. Despite staying away from fashion fads, what built the brand reputation and set it apart from its competitors was that it offered sturdy and functional handbags of supreme quality that could last for an average of 15 years. 

In addition, Coach provided lifetime repairs and replacement services for its products without any additional costs. This helped in its unique positioning in the luxury market as an 'accessible luxury brand'. Coach's products were known for their exquisite quality but were priced lower than other designer products. It attracted people from both the higher and middle end of the wealth spectrum by adopting a mid-premium pricing strategy. This strategy allowed the brand to maintain its exclusivity and, at the same time, kept its door open for further sales. 

Things were going well for the brand until the 1990's. Then, it encountered a bottleneck in development that restricted it from building a unique brand image when every brand was adopting aggressive advertising and promotional policies. This was also the era of ushering in new competitor brands like Michael Kors and Kate Spade, which completely transformed the market scene. Michael Kors had a similar brand position as Coach, but it found that affordable luxury was a rage in China. As a result, Kors diversified its product line and customised its products to suit the Chinese demand.

Kate Spade targeted millennials by designing chic and contemporary accessories. However, Coach was not ready to handle such cut-throat competition, due to which it lost almost 30% of its market share. So Coach introduced its first non-leather product, silk scarves, to soften the blow to its earnings. However, this proved disastrous since the equestrian designs on the scarves looked like a cheaper version of the Hermes scarves. This left the company more miserable than ever.

Due to plummeting sales, Coach had launched discount stores and factory outlet stores, which boosted its performance quickly, but did not address the real product issues that eventually diluted the brand image. This was at the beginning of 2008. 

Coach's 'affordable luxury' position, which elevated the brand from niche to powerhouse, was no longer influential because of the negative influence of the competitors and customers on the market environment. According to a survey taken in 2009, only 30% of the customers had a positive feeling for Coach. Consumers felt that it was no longer fashionable and that there were better alternatives available.

Furthermore, the brand had lagged behind its competitors in the 'trendiness' dimension because it targeted older women who prioritise quality over fashion. As a result, the brand became regarded as a brand for the masses attracted to gaudy handbags. Coach was also responsible for the rising phenomenon of 'the death of the designer bags'. Since it kept its prices lower to attract a larger audience, nearly every rich woman had one of its bags which tarnished its exclusive image. For a luxury brand, if a product is not precious and scarce enough, there is no meaning in associating with the brand. 

The company carried on its operations in losses for a few years till it could continue no further. 

In 2014, Victor Luis took the reins as CEO and hired the new creative head Stuart Vevers. They carried out a series of successful revolutions to revive the company and rejuvenate its image to rebuild a high-end brand and win customers' favour. He repositioned the brand as a smaller, healthier retailer, putting the onus on quality and not on mass-market quantity and rebranded Coach to be 'Modern Luxury' which meant that the brand was inclusive and more approachable. 

Luis allocated a significant chunk of the brand's budget on opening up new plush flagship stores in various fashion capitals and spruced up their store milieu to provide a better shopping experience. Stuart brought fresh blood to the organisation and revamped the brand's image by infusing traditional designs with his innovative ones which helped attract millennials. In addition, Coach diversified the product lines and started making ready-to-wear collections. Although clothing was a small part of Coach's revenue, its influence on the brand went far beyond the dollar terms, for it helped to develop the 'halo effect', that is, it helped to reshape the brand's aura, which gave a whole new lease of life to the entire product line. 

By 2015, the US had started evolving as a fan economy, and social media had gained tremendous popularity. The new generation of consumers loved to use social media to catch up with trends and follow the celebrities they loved. A survey in 2015 found that 33% of the consumers were lured by social media promotions to splurge on big brands. 

So Coach decided to resuscitate its online presence and hired Selena Gomez, the US pop singer, to represent the brand from 2016. She was the highest-paid celebrity on Instagram, and Coach took advantage of her social media power to appeal to the millennials. For example, when Coach announced the launch of a new handbag in collaboration with Selena, it sold out within a month. In 2017, Coach acquired Kate Spade to tap into a broader millennial-driven customer base and develop into a luxury lifestyle brand. 

This acquisition pushed Coach in a better position to compete with Michael Kors. After four years of efforts, Coach has finally rebranded as a modern luxury brand thanks to the series of radical initiatives launched by Victor Luis and several incomparable products rebuilt by Stuart Vevers. By this time, Coach became the biggest story in the retail sector riding the handbag fascination. It helped propel sales into billions.  

Today, Coach represents a unique combination of magic and logic, representing rich cultural heritage and a truly aspirational and distinctive American style. The brand maintains the highest standard for materials and artistry. Its labour is committed to carefully upholding the principles of quality and integrity that defines the company. The strategy of moving beyond tangible products to own a larger share of customers' minds has proved to be an excellent defence against the volatile market and consumers' changing needs. The brand seeks to establish long-term relationships with customers based on loyalty and satisfaction, which also helps in the automatic adoption of new products upon release. 

The products are made from genuine leather and undergo strict research checking before being launched in the consumer market. Coach has a strong distribution network and has adopted both direct and indirect channels to distribute products. The company shares fashion runway videos via streaming platforms like YouTube to create a positive buzz. 

The brand believes in celebrity endorsements and advertises its products using Bohemian imagery in magazines and billboards. 

Coach has also adopted a promotional pricing strategy wherein it offers incentives, and on the arrival of new stock, the company puts the older stock for a clearance sale. It has an official website that handles sales and caters to customers' queries in more than 20 countries. However, their website does not have visualisation apps and suitable size guides. They need to keep it updated and try to list all their products on their online shop. Besides this, Coach actively engages in corporate social responsibility by supporting organisations that provide women's education. 

Coach should now focus on expansion, especially in emerging prosperous economies like Latin America, Japan and India. It needs to ship to more countries, especially those that do not levy consumer taxes on foreign online shopping. It has become a famous brand among men who are willing to spend liberal amounts on fashion products. 

It needs to live up to their expectations and meet their demands. It should also improve the technological content of its products to prevent counterfeiting of its products. Apart from this, the brand should invest more in eye-catching and stimulating commercials and print advertisements. Coach needs to reinvigorate its brand image and keep up with new trends without losing the original touch.


Abhinav Gupta

Abhinav Gupta is a first year Bachelor of Commerce (Honours) student in Shaheed Bhagat Singh College, Delhi University. Inquisitive by nature, he loves to explore and learn new things.

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