In Toronto, I read a great article about Coach (purses, etc.)
Most luxury goods hold up well during a recession because recessions don't impact the highest earners to the same degree as everyone else.
Coach looks to be an exception to that. The article talked about how terrible their sales were this year. (Only Jim may be interested in this) Sales have been impacted to the point where they no longer report separate results for their main stores (expensive) and their discount outlets, they now lump those sales together. (Jim Cramer would say Sell, Sell, Sell).
I think what was missing from this article is what the company's performance says about those who actually buy their products.
If Coach can't hold up during a recession it means their target shopper isn't really the luxury segment, it was those aspiring to be or giving that appearance.
I think this is a great case study of how to ruin a brand by running a public company that has to report to the street.
I'm not into fashion, Coach may have been a luxury brand at one point. Somewhere they started using tricks from Trading Up to broaden their buyers from just affluent to those who are aspirational and willing to trade up beyond levels they could afford in other categories. Now they are impacted by a bad recession and respond by increasing sales at their outlet stores which will only dilute the value of the brand.
They claim to be responding this fall with a premium bag collection that has a lot of "bling" on it.
The only question is which Brand will replace Coach as the next luxury purse to have if you and your friends happen to be on The Hills?
5 comments:
the best line in this blog is where you accurately state that Coach's true clients are the want-to-be's, not the "are"s. I think that hit's it spot on.
Ironically, this is one reason (because i do feel this way personallY) that i don't buy a coach. Too expensive a purchase to portray the wrong image.
now, if i had Manolo Blahnik shoes that'd be a different story...
Dale - great insight, in that premium segment, if you are exposed like that where the aspirational famous people aren't necessarily using your product and just the regular joe's are, you are dead meat.
Sell Sell Sell
PS - who in their right minds would ever take a good company public? It also raises some questions about long term S&P500 holdings if people follow my advice
coach purses are sick.
Wow Tom confused me with his brother. I'll take that as a compliment. :)
I would never take my company public. One of my pet peeves is shooting for measures instead of goals, and when you're a public company, you're constantly shooting for measures.
I think i was confused since I had just commented on Dale's blog, dave good post!
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