A Forbes piece on Coach nailed down the perfect definition for the brand: “The Coach brand is an affordable mid range designer handbag brand. It offers luxury products at price points where the European luxury players cannot compete effectively.” The New York-based company on reported a 21% drop in sales at North American stores in Q4 2014, its fourth straight decline.The deep decline in its sales and brand image of the coach brand may have become noticeable in 2014, but it has actually started over two years ago. In 2012, Coach overestimated how much its consumers would spend, and started pricing its items too high. According to Pam Danziger- an expert in luxury retail- the brand once the brand priced its items too high, the customers stopped buying their stuff, so Coach had to overcompensate by offering heavy discounts. From here, Coach found resolution in Outlet stores. According to Forbes “Factory sales compromise 70% of Coach’s total retail business”
Though the brand company is undertaking severe managerial changes, creating new strategies to reclaim its “luxury” identity, it seems to be fighting itself. The brand has announced that it will be opening fifteen new factory stores in North America, which is considered a doubtful move by luxury experts for one dangerous reason: with the internet giving costumers
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“ Much of this share has been grabbed by competitors such as Michael Kors, Kate Spade and Tory Burch. In regular sales strategy for luxury brands, it is acceptable to have a couple of outlet stores to sell aged inventories at a higher margin, but Coach abused this trick. To gain the customers that wouldn’t buy a regular priced bag, Coach kept opening factory stores till their number outnumbered the regular retail stores in North America. There are now 205 Coach outlet stores in North America versus 338 full-price