Standing out from the Affordable Luxury Brands: Can Coach be the next LVMH?

Background Research PurposevFounded in 1941, Coach, Inc. is an American lifestyle fashion

company which has operated approximately 1,000 directly operated locations globally.Ø Well-known for providing accessories, footwear, fragrance,

outwear, and ready-to-wearØ Acquired shoemaker Stuart Weitzman in 2015 and Kate

Spade in 2017Ø Changed its name to Tapestry, Inc. on October 30, 2017

vThe target customers for Coach, Inc. brands are consumers who prefer American lifestyle and belong to the middle class & upper class.

vNewly established luxury brands are expanding globally by collaborating with well-known fashion conglomerate.

vLVMH Moët Hennessy Louis Vuitton SE (LVMH) is a French multinational goods conglomerate which controls 60 subsidiaries. Ø Subsidiaries are often managed independently

References:• Bain, M. (2016). After a multi-year slump, Coach is finally cool again. Retrieved from

https://qz.com/670551/after-a-multi-year-slump-coach-is-finally-cool-again/• Friedman, V., & Paton, E. (2017). The luxury arms race: Michael Kors and Coach target

takeovers. Retrieved from https://www.nytimes.com/2017/07/26/business/coach-luxury-michael-kors.html

• Jin, B., & Cedrola, E. (2016). Overview of fashion brand internationalization: Theories and trends. Fashion Brand Internationalization (pp. 1-30): Springer.

• Macchion, L., Danese, P., & Vinelli, A. (2015). Redefining supply network strategies to face changing environments: A study from the fashion and luxury industry. Operations Management Research, 8(1-2), 15-31.

• Okonkwo, U. (2016). Luxury fashion branding: trends, tactics, techniques: Springer.• Pantano, E. (2016). Engaging consumer through the storefront: Evidences from integrating

interactive technologies. Journal of Retailing and Consumer Services, 28, 149-154. • Paton, E. (2017). Luxury goods market will return to growth in 2017, Bain Report says.

Retrieved from https://www.nytimes.com/2017/05/29/fashion/luxury-goodsoutlook.html

vTo study the improvement procedure for Coach, Inc. and provide justification of why and how Coach, Inc. could improve its competitiveness.

vTo provide insight for other fashion brands during the stage of transition, as well as suggest guideline for newly established designer brands for further development (to prestigious brands).

vThe acquisitions of Kate Spade and Stuart Weitzman enable the company to target consumers of various needs and purchasing power. The collaborations are crucial to realize new collections, with compressed lead time and improved quality content.

vChanged the company name to Tapestry, Inc. and aimed at expanding the company further beyond its flagship Coach brand to become a multi-branded American luxury fashion company.

vRecent executive changes and movements (such as hired a new creative director, opened its Coach House, and closed some outlet stores) helped Coach, Inc. to reinstate its “luxury” brand image and value (Bain, 2016).

vCompetitors such as PVH, which tend to identify as apparel rather than fashion, are not in acquisition mode (Friedman & Paton, 2017). This environment enables Coach, Inc. for further development.

Results & Conclusions

Dr. Yuli Liang, Dr. Seung-Hee LeeFashion Design & Merchandising

School of Architecture, SIU

vQualitative study with second-hand dataØ A comprehensive review of publications, case studies, and

reports was conducted to explore the company’s earnings reports and the trend report so as to analyze the development direction for Coach, Inc. and the expectation of current market.

vWith its continuing interest of acquiring other fashion brands, what strategies can Coach, Inc. adopt in order to become a multinational conglomerate company in the United States?

Literature ReviewvThe global fashion luxury market is growing rapidly. It is

estimated that the global personal luxury goods will increase 2-4 percent to $284 billion-$289 billion in 2017 (Paton, 2017).

vThe competitors for Coach, Inc. are PVH, which owns Tommy Hilfiger and Calvin Klein; Nine West Holdings (formerly The Jones Group and Jones Apparel Group); Tory Burch LLC; and Michael Kors Holdings Limited (Okonkwo, 2016).

vConsumers can purchase the products of Coach, Kate Spade, and Stuart Weitzman both online (through official websites and department stores) and offline (in exclusive stores, flagship stores, and factory outlet stores), which increased the brand prominence (Pantano, 2016).

vConsumers have high requirements of the products’ innovativeness, which encouraged the closer partnerships and collaborations among companies within the entire value chain. Affordable luxury brands may improve competitiveness through these collaborations (Macchion, Danese, & Vinelli, 2015).

vBoth Coach, Inc. and LVMH have high brand prominence, especially in Asia and North America (Jin & Cedrola, 2016).

Research Question

Method

DiscussionsvThe study results provide insight for Coach, Inc. and other fashion

companies during the stage of transition.vSome strategies which could be used:Ø Price strategy: gradually close factory outlet stores and avoid

discounting all products.Ø Product strategy: continuously invest in R&D and encourage the

collaborations between brands for new product innovation; continue its acquisition mode to extend its business to cosmetics, watches & jewelry, and wines & spirits.

Ø Promotion strategy: increase publicity and interactive marketing.Ø Place strategy: expand the market worldwide and increase online

presence.

* Picture obtained from https://seekingalpha.com/article/2525615-map-of-brands-in-luxury-fashion-lvmh