COACH'S Self Salvation: From "Aunt Pack" To IT Bag

According to the world clothing shoes and hats net, at 10 a.m. on May 24, 2017, iAPM, located in the middle part of Huaihailu Road, Shanghai, opened its doors as usual.

This is the core commercial street in Shanghai. Besides the white-collar workers in nearby office buildings and local residents in Shanghai, there are also many foreign and foreign tourists.

From this day on, it is easy to notice the large pparent glass doors passing through the flagship store of apple.

The opposite side of the atrium is decorated with neon lights decorated with bright colors, planets and rocket shaped COACH stores.

This is particularly conspicuous in the environment of simple, bright and white shopping malls.

In the past two months, it was surrounded by huge enclosure.

But for those who are familiar with the trend of fashion, neon lights are not strange at all.

This device with strong 50s colors and rock tunes has fallen from the peak of fashion to the vulgar bottom, and now climbs the fashionable wave.

But in addition to sticking closely

Elements, COACH, is designed to make it easier for consumers to notice changes, stop and shop.

It usually takes two to three months to renovate a store, and it costs a lot in core business and shopping malls.

But COACH thinks this kind of input is very necessary, because even in the era of extremely smooth information and online shopping becoming more and more mainstream, the store is still the most direct and effective way to display the brand image and product accurately.

"Many people may have heard of COACH, but not everyone knows us.

Gene and product quality, social media platform does make us better establish contacts with consumers, but stores are still our primary opportunity to enable customers to touch the cortex of their products with their own hands.

Yang Baoyan, President and chief executive officer of COACH Greater China, said: "I really hope you can come in and see our changes". (Yann Bozec)

COACH president and chief executive officer of Greater China, Yang Baoyan

Customers who are good at observing store managers and shopping guides soon perceive the effect brought about by the renovation of stores.

They would occasionally ask the guests who came in, what attracted them to come in, and the answers were mostly "curious, come in and see".

From the final data performance, the iAPM store refurbished passenger flow than the renovation of the double digit growth.

The importance of new stores is also the result of COACH's brand remodeling in the past three years.

In June 2014, COACH officially announced a comprehensive brand pformation plan. It plans to promote the implementation of the strategy in three areas, including products, stores and marketing, so as to enhance the correlation between brand image and fashion.

Specific practices include: the new CEO Victor Luis and the new creative director Stuart Vevers; the bag design is fully de Logo; find younger stars as spokesmen; try more social media marketing methods; redesign advertising blockbusters with well-known photographers Steven Meisel and stylist Karl Karl Templer; participate in the New York fashion week and show the ready-made clothing series; reduce promotional activities, close discount stores and so on.

Before this great change began, COACH was in the most dangerous period of development.

In early 2014, its performance has been declining for 4 consecutive quarters, and it is estimated that total revenue in the 2015 fiscal year will be reduced by 11% to 13%, much lower than previously expected.

Although COACH will also face a chain reaction of nearly two years of decline in performance, this time node will be particularly vulnerable to it. Similarly, the MICHAEL KORS at the time of the "luxury" ranks is in the limelight and constantly refreshes its market value, which makes COACH even have no way to blame the environment.

The shock that COACH feels is not just about the two figures of performance and market value, but the complete defeat of brand attractiveness.

"Aunt's shopping bag" is probably the most brutal evaluation of the young fashion industry.

Moreover, with the acceleration of the circulation of Internet information and the frequent consumption of Chinese people abroad, the brand image quickly came to an agreement from the base camp to the emerging market China.

In a sense, the experience of COACH is very similar to the history of neon lights, and the change of ice and fire happened in just a few years.

Victor Luis can be said to be at risk.

He had been in charge of the Japanese market for ten years, and in his capacity, COACH's market share in Japan has risen 7 times.

In 2010, he was recalled to the United States by the then chairman and chief executive, Lew Frankfort. He served as president of the international retail business and global COO, and was promoted to global CEO in early 2014.

COACH group CEO Victor Luis

Yang Baoyan officially became president and CEO of COACH Greater China in July 2014. His main task is to implement COACH's brand reinventing strategy in China's largest emerging market.

Yang Baoyan and Victor Luis have known each other for 9 years, and two have been the "comrades in arms" of the Japanese market.

"Victor always tells me that it's okay to make mistakes, and the key is what lessons and lessons we can learn from mistakes."

Yang Baoyan recalled the days he spent with Victor Luis in Japan, and their erroneous experience built a strong sense of trust between them.

But this time, they hope they will not make any mistakes.

Three years later, in the words of Victor Luis, "we basically completed the goal set at that time".

From the 2016 fiscal year, COACH's sales began to show positive growth, ending a continuous decline of more than 10 quarters.

Among them, in mainland China, it has achieved continuous double digit growth for several quarters.

"Many people don't know about our changes, and many people don't even know about COACH," Yang Baoyan said. So the new store image is the first impression for these people. "In the past 3 years, one of our most important jobs is to refurbish the store."

As of the third quarter of fiscal year 2017 (i.e. by April 1, 2017), COACH has 197 stores in Greater China (including the mainland, Hongkong and Macao), and has opened 176 stores in 68 cities in mainland China. More than 90 stores (over 50%) have completed renovation work, such as Beijing SKP store and Beijing Oriental Plaza store, Shanghai Hongkong Plaza store and Shanghai IFC gold center store.

By the end of 2016, there were more than 700 stores in the COACH world.

Tea rose Dinky handbag

{page_break}

Neon lights, tea roses, Mitch and Dinosaurs

In fact, this showy, slightly exaggerated display of windows is the first time in the 75 year history of COACH.

The brand that started with men's leather products was originally a manual workshop in New York. The real growth is due to the veteran COACH 35 veteran and the last CEO Lew Frankfort.

Under his leadership, COACH positioned itself as a "luxury goods" and created a new market space for light luxury, eventually becoming a fashion giant with billions of dollars in sales.

However, no matter what period, COACH is very cautious about "young and lively". It wants to give people a sense of fashion, but elegant and steady, in line with the core target consumer groups - 30 to 40 years old mature career self positioning.

For example, after the US economic crisis in 2008, COACH launched a series of "Poppy" for girls under the age of 25 to boost sales. This series of colors is bright and has abandoned the high quality leather that COACH has been using for a long time, and the average price of the products has been reduced to $260, which is lower than the average price of 300 yuan of the original products.

This series has been a great success in the final sales figures, but it is still regarded as a departure from the brand gene of COACH.

Since then, COACH has not had such a big attempt to become younger in many years.

But in this process of brand remoulding, COACH's determination to become younger is very thorough.

In addition to the neon lights in the windows, entering the shop, from products to furnishings, the elements of youth are everywhere.

For example, a dinosaur called "Rexy".

It appears on handbags, purses, and sweaters, and is also used separately as keychains and handbags.

In the large flagship store, there are Rexy furnishings furnished with hundreds of handbags.

It is no exaggeration to say that after removing the "double C" LOGO, the dinosaur has become a new symbol of COACH in a short time. In the younger generation, the symbol of Rexy is even bigger than that of COACH, which has been used for decades.

COACH creative director Stuart Vevers is known as "the father of Rexy". He once served as the creative director of Loewe and Mulberry, and the fashion circle believed that he had the ability to turn corruption into magic.

Embracing the "millennial generation" and playing with young people is the first prescription he gave to COACH.

"I find that some practices that have been used for many years in the luxury industry are being dispelled, which is gradually losing significance for the next generation of luxury consumers.

Luxury doesn't have to be a very formal feeling. It doesn't even have to be "a small number of people can have it," because it also means a lot of exclusiveness.

Stuart Vevers said.

But there is no change at all. That is the influence of stars on the fashion industry.

The key to embracing the millennial generation is to first catch a group of young "star fans", such as Selena Gomez and Chloe Grace Moretz.

They are not only the future stars of Hollywood, but also dare to express themselves and make good use of social media to create brand for themselves.

In the second quarter of fiscal year 2015 (January 28, 2015) performance of the telephone conference, COACH first disclosed the brand pformation strategy after the start of the quarter brand survey results, the millennial respondents to COACH brand preference increased.

According to the Cowen analyst's report, the survey data of 1300 female consumers in November 2015 showed that the popularity of the millennial generation increased to Coach. 27% of the respondents aged 18 to 34 indicated that they would prefer to receive Coach handbags as a gift (Thanksgiving and Christmas this quarter), which is significantly higher than the 22% in September.

Piper Jaffray & Co. analyst Erinn E. Murphy released a report in December 22, 2016, showing that Coach's catalog of fans in Instagram increased by 53% over the same period, the highest growth rate among peers. The number of fans communicating with fans was 7%, the highest among peers.

These achievements are closely related to the cooperation between COACH and Selena Gomez.

Stuart Vevers and Selena Gomez

In China, COACH has done similar work with Tang Yan, Dou Xiao, Wu Chun, He Sui, Angela Baby and other stars, such as live interviews on micro-blog.

One of the Angela Baby's jumper sweaters with a Rexy pattern on the chest soon became a burst.

Youthful is also fully embodied in products, such as boldly launching cross-border series, and playing tricks on some classic packages of COACH, so that they can be accepted and loved by a wider age group.

In June 2016, on the 75 th birthday of COACH, Disney released a limited collection series, incorporating Mickey elements into handbags, T-Shirts, motorcycle leather, sports shoes, shoulder bags and other products.

This makes COACH a big topic among many young consumers.

Mickey Mouse is the direct reason for her renewed attention to COACH for Cathy, who works at iAPM office building. "As a flagship product is displayed, passing will definitely notice that the product is very contrasting with the previous product".

After tasting the sweetness, COACH launched the space series products jointly with NASA this year.

In Swagger, Rogue, Dinky these long-standing main handbag styles, constantly changing elements are the magic weapon for continuous sales, such as Mitch, tea roses, rivets and so on, and the latest ones are NASA's space planets and rockets.

Unlike the fashion industry's usual practice, Coach does not launch new products on a quarterly basis, but it updates every month, and about 20% of its stores are new products.

NASA cooperative ROGUE handbag

From "light luxury" to "modern luxury"

This new store is defined as "modern luxury" by COACH.

Unlike simple luxury goods, the "modern luxury" is a bit hard to understand.

Stuart Vevers's interpretation of this positioning is that it means effortless, New York and style.

"At the beginning of brand pformation, Stuart Vevers has set a very clear direction for product design and creativity, that is, returning to the root of our brand, paying great attention to the quality of the process and the details of the workmanship. It has a very strong fashion relevance and is constantly evolving."

Yang Baoyan said that COACH is being pformed from a famous brand of Lady handbags to brand names of men and women.

In September 2015, COACH held its first fashion show in New York fashion week, and released the Coach 1941 series designed by Stuart Vevers. Besides bags, there are a large number of ready-made clothes, shoes and accessories.

This huge change has aroused great repercussions in the fashion industry.

"I think a great part of my work is to look forward and be bold and try to change people's inherent understanding of COACH."

Stuart Vevers said.

From the operator's point of view, Victor Luis also believes that such a change is necessary, but his reasons are more practical. Richer product lines mean greater market space, and the same clothing price series with handbags can help to raise the brand level of COACH.

For example, COACH has high hopes for the men's market.

In the global market, handbag sales still occupy a dominant position, about 60%, but men's products account for 17%.

"Now the scale of the market has reached 700 million dollars, and we hope to achieve the scale of US $1 billion in the future.

The proportion of the Chinese market will be even higher.

Yang Baoyan said that in China, men's high-end accessories (bags) market accounted for more than 30% of the total market share, compared to the global market, the contribution of men is less than 20%.

{page_break}

New product lines such as garments, shoes and so on also have practical effects on expanding customer groups, especially high-end customers.

In the process of patrolling the shop, Yang Baoyan met a typical European line bag lover, and bought several garments products after the introduction of the shop assistant.

"I can't help asking her in the past. Have you bought COACH before? She said she never said that she would never consider buying COACH's handbag.

If we don't go into other products, we may not be able to catch such customers. "

Another important change in the COACH1941 series is reflected in the price.

Compared with the average price of about 4000 yuan, the 1941 series has passed ten thousand from handbags to ready-made garments.

From the data point of view, COACH's high-end handbag market share is increasing.

In the 2017 quarter of fiscal year third quarter results of the conference call, COACH revealed that high-end handbags accounted for 55% of the handbag sales in the North American market. This figure was 40%, 30% and 23% in 2016, 2015 and 2014 in fiscal year Q3, respectively, and the changes before and after brand pformation were very significant.

In a report released in June this year, Michael Binetti, a UBS analyst, has similar findings. If the price of products increases with 10-20%, 61% millennial consumers are willing to continue buying COACH.

But COACH does not want to admit that it is closing to a second tier European brand.

"The positioning of modern luxury is not to imitate European luxury brands, but to compare luxury brands. We offer more cost-effective products."

Yang Baoyan said that COACH hopes to reflect the value of products through the design and service of leather.

For example, they will emphasize the cortex and crafts of "glove tanning leather" -- the earliest product story of COACH comes from baseball glove.

In some flagship stores around the world, COACH leather service center has been set up to provide leather care services and customized services for consumers.

In fact, MICHAEL KORS, the old enemy of COACH, has adopted a similar strategy, focusing on the high-end series of ten thousand yuan stalls, such as holding member days in flagship stores in Shanghai, like many luxury brands, offering champagne and desserts to guests in the store, launching new fashion shows for core customers.

This may be related to the essential flaw of the "light luxury" business model.

The prediction of Bernard Arnault of president of LV M H group seems to have been fulfilled.

Arnault once said that light luxury brands are not exclusive, and can easily expand rapidly in a certain period and then decline rapidly.

It has its specific market, but it is hard for a brand to last.

It can be said that COACH and MICHAEL KORS are the victims of this fateful circle. From the brand to the extreme, they must eventually deal with inventory through various discount channels.

The new positioning of "modern luxury" can be seen as COACH trying to get rid of the mark of "light luxury" and rebuild consumer's thirst for brand.

To do this, it must first say goodbye to the crazy discount.

Now entering the COACH store in China, the shopping guide will be skilled in making suggestions for customers to do the whole body collocation, but they will not disclose the discount information voluntarily. Unless the customer asks, they will open the locker and take out the discount products.

"Luckily, China doesn't have many discount stores like North America.

Stores in North American department stores are operated by our wholesalers. Our stores in China are self operated, so the control is higher.

Generally speaking, the discount will be tightened and will not be relaxed. "

Yang Baoyan said.

Through the previous downturn, COACH has also become more vigilant. With the vigorous promotion of Victor Luis, the risk of fashion industry will be resisted by multi brand operation.

In early 2015, COACH announced the acquisition of high-end shoe brand Stuart Weitzman, and announced the completion of the acquisition of Kate Spade in July 11th.

Victor Luis became CEO of COACH group after several acquisitions.

"Maybe we have the right opportunity to make more acquisitions in the future."

Yang Baoyan said.

The task before him is to let COACH infiltrate into China's three or four line cities as soon as possible.

"In the next 5 years, the number of middle class people in China will reach 200 million. Most of these people will come from three tier cities.

China will also become the world's largest retail market in 2025.

I think the Chinese market will one day be the largest COACH market in the world.

More interesting reports, please pay attention to the world clothing shoes and hats net.