In recent years, in the face of changes in market consumption habits and the squeeze of emerging brands, then Coach began to brand transformation through three parts, including product positioning, marketing and marketing channels, then the Coach transformed a high-end lifestyle brand from light luxury leather goods. Although the transformation is still in progress, the sales have been impacted and shocked in different global market, but the Coach has always wanted to do low-cost transformation, to achieve the lowest customer loss. It is too taboo to do the change of brand positioning, that is because it haven’t approached new customers, but the brand let the old customers feel strange.
2016 has been Coach’s winter, the sales have been declined for two consecutive quarters. But in January, when Coach announced the 2016 fiscal performance report for second-quarter, Coach in the New York Stock Exchange closed at $38.94, up 6.8%, creating the most significant increase since April 2016.
Since 2016, Coach as a high-end lifestyle brand including handbags, clothing, accessories re-appear in the public, although in the second quarter global market, Coach still haven’t changed the trend of overall weak, but the customers began to accept the changes of Coach, the effect of brand conversion has already appeared tentatively.
In the past 10 years, Coach in North America, including the world has a distinct breakdown of the brand positioning, as “affordable, within reach of luxury goods” model.
In 2016, Coach occupied 40% market share in luxury handbags in United States, in this year, 20% of total revenue was from overseas markets in Japan, that stage was Coach’s development peak .
However, both the upper and lower end of Coach positioning was very easy to encounter competitors. With more brands entering the middle of the market, Ralph Lauren, Michael Kors and Kate Spade and other emerging brands had a rapid growth in 2016, squeezing the Coach’s market share. In 2016, Coach was facing a huge test, in fiscal 2016, Coach’s global revenue fell 5.3%. In the face of changes in market consumption habits, Coach began its brand transformation form 2016 by three parts, including product positioning, marketing and marketing channels, then the Coach transformed a high-end lifestyle brand from light luxury leather goods.
Remodeling Product Positioning
In the second half of 2016, China’s luxury consumption began to decline from the original peak, In the first fiscal quarter ended on September 28, 2016, Coach reported sales of $1.15 billion, an increase of 2% from the previous quarter, but it was an increase of 11% from the previous quarter in the past time.
While the downward trend has just shown, In July 2016, Coach made a quickly adjust for the market, and poached the designer Stuart Vevers as creative director from Spanish leather goods brand Loewe. As a rising designer of luxury industry, Stuart Vevers has served in Mulberry, Givenchy, Louis Vuitton, Calvin Klein and other brands.
This new creative director brought a new temperament for Coach. In the past, Coach stores gave an old, conservative impression, there were only handbags and accessories in stores, they are more suitable for professional women in formal occasions.
But now Coach has a wide range of categories of handbags, footwear and clothing, and even many bleaching denim cloth rivet jacket, leather skirt, leopard leather baseball jacket and other young clothing elements. And in the original bag products also appeared calfskin leather bags with metallic rivet, which made Coach become more young and vibrant.
Of course, Chinese consumers are changing their consumption habits of luxury goods. Not everyone doesn’t like the brand logo on the product, know that they are using the brand package, so the logo or logo design and taste becomes very important.
The new president and CEO of Coach Chinese area thought, ” coach was originally made of male leather goods, has inherited down the excellent process , so now in areas of concern to customers, Coach has a strong confidence.” He introduced.
” Coach is now in the adjustment of design style, but also more emphasis on hand, leather quality, the products is more conformed to the positioning of modern and luxurious, but this positioning is not achieved through price increases, but through the upgrade of the value. ”
In the past, if a Coach bag was pricing for 6000RMB, now will fall on the same price level, but compared with the past, Coach’s supply chain has enhance the leather, details and workmanship, but also pay more attention to turning and accessories, that makes products become more fashionable, at the same time, it becomes more inherited. Of course, the price of Coach products increased of a million or so product categories on the base of original single level, it increased more options for the price level.
Yann Bozec was in the position of COO at Coach before he became the new president in China’s area, in the charge of industry value chain, he said, ” Coach has been refining its value chain over the years, balancing costs by massively buying gadgets, and balancing the risk of dilution of profit margins due to higher value .”
Yann Bozec said, “I have the confidence in the price increase, meanwhile, provide customers a better price. At the time of price increase and not affecting the gross margin .”
Before, Coach found in New York in 2016 has a long history heritage, in the past global market, people’s impression of Coach is a light luxury brand producing specialized production of bags, the main breakdown of the market is the advantages of past Coach. But after the transformation, Coach is inclined to upgrade their brand in many categories and fashion degree, will make itself become a lifestyle brand with heritage.
Strengthen The Brand Experience
Chinese consumers are changing their consumption mentality and habits for luxury products, they have a strong learning ability, in the past, many people buying a luxury in order to make people know that the bag is expensive to display the identity. But now, the consumption of luxury is to express themselves what kind of person is to show the personality and fashion degree.
A few years ago, the Japanese customers are most careful, they pay attention to details, but now in Coach store, many Chinese will be talking about the texture of leather material when they buying products, and asking what procedures to complete the products, and if it is easy to deal with and other issues.
In addition, the Chinese market is becoming more and more diversified, Yann Bozec said, “In the past, according to the sales data of Coach, generally a kind of bag gets the highest sales, but now you can find the sales data of several bags are basically flat.”
Therefore, in the face of changes of market consumption habits, many brands are still enhancing the sense of distance and exclusivity by increasing price, but Coach’s marketing strategy has gone a completely different way. Coach chose a way that is more amiable and delicate to enhance the brand’s longing.
A month ago, Baidu released the fashion data showed that the luxury brand’s brand operation has gradually become a kind of enhancement of experience, in the process of brand transformation, Coach also followed this direction. Yann Bozec said, “Coach placed great emphasis on customers preferences and long-term interests. ”
Firstly, the changed of brand communication methods was incarnate in stores, when the revenue grew slowly or even decline, it has been a high risk and high cost adventure to renovate the store. But Yann Bozec through, Coach attaches great importance to customer experience, “sometimes luxury is just a feeling”. In the fiscal year 2016, Coach is expected to set up around 60 new retail concept stores in the world, and will complete the upgrading for about 150 stores in 3 years. 20 stores of them will be opened in the mainland of China.
Renovated stores also help Coach completed the transformation inside out, the renovated Coach stores are completely different from the previous stores. The previous stores like a white box, but now it is turned into a “home”. A new Coach store opened in Beijing Shin Kong Place, there are many sofas and other leisure design, it increases the warm feeling.
In the past, when customer entered the Coach store, customers will be asked some questions, “What do you want? May I help you? ” But if now if you enter the Coach store in Beijing Shin Kong Place, the servers will ask you, “Do you want to taste some dessert?”
The servers will have more flexible interaction with customer, they are talking about the popular fashion topic, what is the trend now. In the process of brand transformation, Coach places emphasis on the improvement of brand’s degree of desire and the degree of love. “If it made you feel excited to go shopping, it make you feel very comfortable when you enter the stores.”
Reconstruction Of Channels
In the Chinese market, in addition to the changes of design aesthetic, an obviously consumption change is e-commerce, the development of cross-border online shopping makes a great challenge for all international brands, Coach of course can’t be avoided.
But Coach made a quick response. In China, Coach has its own We Chat and micro blogging team, and it also has its own data platform in the world. In Coach’s second-quarter financial report in January 2016, Coach announced that it has strengthened its global marketing and digital team, the responsible of current Coach global digital and customer experience president David Duplantis will extend to the charge of global marketing and customer intelligence analysis.
Digital is one of the most important global strategies of Coach in 2016, but the digital of Coach not only on behalf of the settings of online shopping platform, but also the overall use of digital platform. The actions of Coach digital team are usually requires to cooperate with all departments, such as what kind of pictures should be uploaded, which products can be on the headlines, and which place the street snap will be concerned about, the buyers and the colleagues in Purchasing Department will make recommendations with.
Every Coach store has its own sales department, also has its own VIP customer data, the sales department will contact VIP customer through WeChat and complete the communication, in January 2016, there were new arrivals of spring and summer in Coach store in Beijing Shin Kong Place, the store will sending photos of new products to customers through WeChat and inviting them to try new products, “Coach will communicate with customer by WeChat to keep sticky, like friends.”
On January 6, 2016, the Global CEO Victor Luis of Coach appeared in the new store opening ceremony in Beijing Shin Kong Place, this message was forwarded for 40 million times after it announced in Coach’s official WeChat.
Nowadays, Coach still maintains a multi-channel sales path. In shopping malls, the store in the department stores and outlets will be stationed. Coach opened the official website in China, United States and Japan these three major markets, the customer can complete the purchase and exchange. But Coach is also try the best to reach unification in the stores and network channel, even if completed the purchase on the Internet, it can also get the services and care in the store.
Internet platform also greatly expand the sales range of Coach, in the data of first quarter of Coach, in China, there are more than 200 cities with population over 1 million, Coach just opened stores in 55 cities of China, so that the store is just covering a small part of Chinese market, but there are more than 30 cities can get official website services.
How To Do The Transformation With Low Cost
The transformation of Coach was based on the quick response of market changed, although the transformation is still in progress, and the sales have been impacted and shocked in different global markets, but Coach has always wanted to do low-cost transformation.
So-called low cost is mean to achieve the least customer loss in the brand transformation process. It is too taboo to do the change of brand positioning, that is because it haven’t approached new customers, but the brand let the old customers feel strange.
So when the transformation started in 2016, the first question that Coach considered is: what kinds of person that their customers are and who is the target customer that they looking for?
In Coach’s own statistics, the Chinese customer of Coach, most of them are working people and business people. As for the new customer, Coach put them into 2 kinds, one is more fashionable people, the other is young people.
Coach is still looking for a balance between design and procurement and are more emphasis on both functional and aesthetic. Coach has many kinds of canvas bags with joint leather, they are welcomed by many Chinese customer, and many previously popular categories will not be removed. On the basic of products which are more suitable for office workers, Coach added a mini version can just only be installed iPad, and more fashionable and suitable styles.
Yann Bozec said, “now young people are no longer expected to use a bag for three or five years, but just one or two years.” So the advertisement and market promotion of Coach are emphasis on young and fashion, that is what all ages of women want and accept.
So the marketing activities of Coach have been divided into two levels, one hand is ordinary marketing that luxury brad will be used to shooting large advertising and advertising in the first line of fashion magazines, which is a very accurate behavior for fashion people; and on the other hand, Coach launched a propaganda campaign called “dreamer”, collecting core customers’ dreams and help them to achieve the dreams.
Comparing to the annual growth rate of more than 40% before 2016, the current market performance of Coach is obviously paying the cost of high-speed growth, but Coach is also catching its own market opportunities.
In the transformation process, Coach is very generous in the investment of strategy, on January 6, 2016, on the same day of opening ceremony for new retail concept in Beijing Shin Kong Place, Coached announced the acquisition of high-end luxury footwear brand Stuart Weitzman, the deal is value at $574 million. This is the largest acquisition since brand transformation of Coach.
Yann Bozec thought, “Coach’s transformation is on its right direction, but Coach put more capital in order to have a long-term interests and growth.” In the second quarter financial report, China’s sales rose 13% over the same period last year, China is still the most important overseas market for Coach, Yann Bozec is also very bullish on the potential growth and the long-term development of China’s market.
Yann Bozec said, In terms of price and fashion, the market positioning of Coach is correspondent with the consumption habits of more and more middle class, and this crowd is the main force of luxury purchases in future China. So although the market growth rate slowed down, but it is exactly the mature performance of luxury consumption market, it is not a bad thing.