How Coach Lost Its Luxury Cachet

The 73-year-old company's sales have been steadily declining. Can a brand transformation ensure its comeback?

This week, the 73-year-old bag maker Coach announced its profits had beat estimates. It was a rare piece of good news in the midst of the company’s recent struggles to stay afloat.

As Bloomberg reports, Coach’s sales have fallen for four quarters in a row, and shares have fallen a total of 39% this year. Analysts say the declines are the result of opening outlet stores all over the U.S. and filling them with cheaper, CC logo-plastered bags—a move that diminished the brand’s luxury cachet and pricing power. Essentially, now that the brand has become more accessible to the masses, wealthier customers aren’t as interested in Coach’s higher-end, more expensive bags, which sell for upward of $1,200 apiece. These once-loyal consumers are defecting to competitor luxury handbag brands, like Tory Burch and Michael Kors, which has seen consecutive quarters of double-digit sales growth, according to Bloomberg.

Coach may seem like a casualty of fashion's classic "out with the old, in with the new" pattern, but it's a monolith in the handbag industry, still commanding 23% of the $12 billion U.S. handbag market. To maintain its market share, Coach's resuscitation plan is centered around trying to gain back prestige as a fashion-focused "modern luxury" company as opposed to an "accessible luxury" company, as Bloomberg reports. It's in the midst of a dramatic corporate transformation, overseen by a recently hired creative director, Stuart Vevers, who has done stints at Mulberry and Loewe, and a new CEO, Victor Luis. The company is cutting 150 jobs, offering fewer discounts, and shuttering 70 stores—a fifth of those in North America—while opening or remodeling full-price stores in the 12 biggest markets, offering more expensive products in capsule collections.

Photo: Flickr user B.o.N.E

As a second part of their revival strategy, which began in September 2013, Coach has been trying to evolve into a full-fledged lifestyle brand, offering not just handbags but shoes and outerwear. The brand has updated its packaging, store look, and logo. Formerly an image of a horse and carriage and a wordmark that read "Coach 1941," the logo now simply reads "Coach New York" in small metallic letters.

[H/T Bloomberg]

[Photo: Flickr user Eric Rosendahl]

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6 Comments

  • mesonto

    No one even knows of Coach outside the US label hounds. It was never on the same level as the European companies anyway.

  • Rick Carlton

    Last Christmas, I went to buy a really nice leather good for my Mom - and at Bloomingdales, and in the area where really nice leather goods are sold.

    The Coach product looked good, but for $800 I didn't want a product that was made in China.

    Ten feet away, I was able to buy an extremely well-done, similar function, Italian-made good from the Gucci store-within-a-store for the same $800. More exclusive, better product.

  • I would be careful about purchasing Gucci as well. Many of the once luxury brands that have since been purchased by conglomerates, like LVMH, have moved a majority of production to China with only the very final assembly performed in Italy so they can slap a "Made in Italy" tag.

    I'd look at Chanel or Hermes if you want a truly luxury brand still...

  • nutritionnk

    Well this happened to Mulberry too.. They are now raising the prices back and are slowly getting the old customers back. These were exclusive brands.. bringing out the desire to own something not everyone on your street can easily afford to. Now they are just another brand trying to appeal to those standing with cash in hand in the long line of cloned bag owners like M-kors, Guess etc

  • This isn't that surprising. I was shocked when I headed over to ebay and saw that most authentic Coach bags were selling there for under $100.00. Yet a few years ago you'd never see that.

  • Geraldine Daphne Koh

    It's interesting how Coach expanded so quickly in the last few years, and it's taken itself off the cliff. Coach is definitely associated with being affordable and cheap now, and too ubiquitous that people would rather shell out the cash for something more popular, less expected at the same price range or higher.