Coach is an American brand, which came in existence in 1941. It’s been often associated, and in rivalry with, Michael Kors, Kate Space and Tory Burch. However what many people miss to mention is that Coach comes with a long history of hand crafting and mastering leather. But let’s start from the beginning, shall we?
It was 1941 when the company came in existence as a family-owned small shop. It was initially called Manhattan Leather Bags, had 6 workers and was focused in making wallets and billfolds by hand. In 1946, Miles Cahn and his wife Lillian have joined the company and by 1961 have officially bought it, making them the sole owners.
Miles and his wife Lillian also hired Bonnie Cashin, a sports wear pioneer, to design handbags. She worked at Coach until 1974 and had many design imputes that revolutionized the way Coach bags looked like. It was her design that introduced side pockets to the bags and made them in brighter, more fun colours. Also, she created coin purses and other gimmicks that drawn the customer more towards the brand.
With the arrival of Richard Rose in the company in 1965, Coach saw further growth but also recognition. He placed Coach across department stores all over United States. This not only gave Coach status, but made it a household name.
The Sale to Sara Lee
Fast forward to 1985, Miles and Lillian Cahn decided to take a step back and sold the company to Sara Lee, for a reported $30 million.
From that point, Lew Frankfort was named president and took many steps into expanding the customer reach of Coach. In an interview held by Lunch Break’s Tanya Rivero, hosting Wall Street Journal’s Suzanne Kapner, the later had a very interesting point I would like share. She mentioned Lew Frankfort identified a niche price-point where the demand was far greater than the supply. It was then his idea to sell high quality goods, but with price-points that the average consumer would afford. And I believe that’s how many of us came to know and love Coach even today right? At least that’s how I did! Searching for a good quality bag, on a budget that will not decimate my savings :))!
Under Sara Lee’s Hanes Group umbrella, Coach has opened many stores in different locations. They also focused on having boutiques in many department stores. By 1986 the company had 12 stores and almost 50 boutiques in department stores across the country.
In 1996 Lew Frankfort was named CEO of the company and Reed Krakoff lead designer. On June 1st, 2000, the company was officially named Coach, Inc, from previously Coach Leatherware.
2000s to 2013
I chose to describe this as a time frame in its’ own, as it was a very important part of Coach as a brand and its’ future. In these years the company has faced an identity struggle, juggling between retail sales and discount shops. Also, in this period the customer perception of the brand has dramatically decreased and Coach no longer stood for high quality, glam and aspirational.
Two big things have changed the way Coach was perceived.
One was the introduction of the C print on canvas, by Reed Krakoff. In itself it is not a bad thing, as it gave the brand an easier recognition. However it also became a favorite for knock-offs and soon the market became flooded with them.
Second, in their thirst of opening more and more stores, at times Coach undermined the power of location. Their aim for increasing sales came at the cost of exclusivity. Hear me out here. When a brand is present everywhere, there is a heavy stress on the supply chain to produce enough quantities of the goods to cover all locations. Whenever the over-supply did not sell, Coach was launching more and more sale campaigns, which in time decreased the brand value.
Lastly, the brand lost its aspirational status due to the above reasons and one more. You see, opening up in many locations can be good, as long as these are the right locations. Coach did not assess this very well and mid 2000s they were located in places like Safety Malls as well as outlets. With everything already on sale, the bags became suddenly affordable to everyone and soon were seen on every suburban mum’s shoulder as a day-to-day bag. As Molly Mulshine explained in her article on Observer (which I recommend you give a read here), the bags were no longer something to save up for! They were just another bag, that everyone already had.
The Quality Impact
Let’s look a bit back in time and remind each other the core idea from which Coach came to life. As Lew Frankfort once said, he wanted Coach to be somewhat affordable, but the quality was the key quality for the company. They started from handmade leather goods! Quality was their main concern, but with the sale of the company and with shareholders to please, Coach has seen itself drifting away from this in an attempt of increasing sales.
And yes, sales were still there. The quantity of the bags sold has increased, but with the heavy discounting, the revenue per bag has decreased. With less price paid per bag, the quality couldn’t have stayed the same and in turn suffered from this shift of the business model. At the end of the day, shareholders had to have a profit and this was the only way. At least on the short term…
2013 and beyond
Around this time, Coach started having a lot of competition, which as many say, the company was not ready for. Brands like Michael Kors, Kate Spade and Tory Burch were taking the market share from Coach and it was not going unnoticed.
Changes happened at Coach as well, as Stuart Vevers joined the team in the fall of 2013. There were hight hopes for his tenure, as he was previously with Loewe, Mullbery and Calvin Klein. At the time of his joining, the media was flooded with news about Coach loosing shares value and how their handbag sales have dropped significantly. The only positive news was the increase by 35% in sales from China and the opening of few more stores in the country (Forbes, 2013)
Between 2013 and 2020, sales have continued to drop for Coach, in spite of the company’s efforts to diversify the portfolio. They launched a shoes line as well as other accessories, like watched and scarves.
In an attempt of catching up with their competitors that had clothing lines as well (ie Michael Kors, Kate Spade etc), Coach launched its own high-end line called 1941. The launch happened in early 2016 and it featured expensive clothing, with tags from $2000 and above. They knew the Coach consumer did not have the budget for it, but they were targeting a different group of clients all-together. This new client was supposed to make Coach aspirational again and make consumers want to save up for a Coach bag once again.
Did it work you might wonder? Well dear reader, unfortunately not so well.
See below graph from Statista, with the Net Sales of Coach worldwide, by product category, between 2013 to 2020:
Here we can see that sales for women’s handbags have continuously dropped in-spite of the company’s efforts otherwise. We see however a growth in Men’s category as well as Women’s accessories which I mentioned earlier was a newer addition for Coach. Basically every other product category had seen a growth, except the handbags!
Moving forward in 2021
In 2021, Coach and the parent company Tapestry saw finally an increase in sales. Not only that, but the forecasts for the rest of the year seem very positive. In an article written by Phil Wahba on fortune.com, we learn that the average price consumers paid per bag rose by 25%. This helped the overall Tapestry parent company with making a profit in-spite of less bags sold due to the pandemic.
The changes in the company are many, but the shift away from discount sales has paid off. Coach has returned to the original quality for its’ products and we can see this in the trendy new designs they launch. In an earlier article I mentioned the Tabby and Pillow Tabby shoulder handbags which have been very raved about. More so, with the new design, they captured the demographic that has more disposable income to spend on more than one handbag. Hey, I’m not saying the suburban mum is not a good customer! Don’t get me wrong, it is. But priority of a suburban mum will always be household spending and not so much on a bag. Let alone more than one!
The appointing of J.Lo as the new face of the brand in late 2019 has also been one good thing for the brand. Sure, the results have been seen a bit slowly with the world being busy surviving the damn pandemic and all, but 2021 is showing the light at the end of the tunnel.
Who knows what the future holds for Coach, but we do know they are on the right track again. With the new handbag designs and the return to the previous quality standards, we can say Coach is on the path of rising again!
What do you think Friday Scoopers? Is Coach a brand that you aspire wearing? Are you willing to save up for a Pillow Tabby Handbag? Let me know down in the comment section!