Part II
External Analysis of Coach SWOT Analysis Market/World Impacts on Buying Decisions The Luxury Leather Goods Market in the US Coach Inc.’s Market Share Market Leaders & Top Cometitors Coach Inc. vs. Michael Kors Holdings Ltd.
SWOT Analysis
SWOT Analysis Strengths
Opportunities
Rebranding
Digital Commerce Growth
Heritage Brand
LLG Category Growth
Recognizable
Lifestyle Brand Trend
Quality Materials
Vintage Trend
Threats
Weaknesses
Decrease in Foreign Tourists
Low Department Store Traffic
Strong USD
Over Exposure
Government Tension
Heavy Markdowns
Competion’s Media Presence
Lack of Technology
Strengths Rebranding
Store closures Brand restructuring
Heritage Brand
75 years of operation Pioneers of accessible luxury
Recognizable
Iconic designs Unique logo & typeface
Quality Materials
Strict supplier selection guidelines
Opportunities Digital Commerce Growth
11% of LLG retailing is internet retailing Millennials track trends online
LLG Category Growth
Women’s Luxury Bags grow 2.7% 2016-2017
Lifestyle Brand Trend Product Assortment Social Media
Vintage Trend
Revival of retired handbag designs
Threats Decrease in Foreign Tourists
US is no longer shopping destination
Strong USD
Less spending by tourists
Government Tension
Uncertain spending due to election
Competition’s Media Presence
Social media holds heavy influence on consumers Top LLG brands have biggest presence
Weaknesses Threats
Low Department Store Traffic Decrease in Foreign Tourists Not as desirable of shopping format US is no longer shopping destination
Over Exposure Strong USD Too many products department stores Less spending by tourists Abundance of stores
Government Tension Heavy Markdowns Uncertain spending due to election
Department stores using half-off model
Competition’ s Media Presence Lack of Technology Social media holds heavy influence on consumers Smart luggage Top LLG brands have biggest presence In-store technology
Impacts on buying decisions
Impacts on Buying Decisions Consumers cut back on discretionary spending Economic uncertainty Luxury brand image reconstructions & focus on direct-to-customer retail networks Estimated 76% of US Population using Internet
Sustainability
“Coach is committed to full compliance with all environmental rules, regulations, and standards applicable to its operations. Coach will observe environmentally concious practices in all locations where the corporation exists.”
• 2015: half of the finished leather was tanned in Asia and half in Europe • Lean Manufacturing practices held by factory partners • Improves quality and output efficiency • Strong advocate for workers in factories they are partnered with • Commitment to conserve & reduce energy consmption, waste production, and overall environmental impact
U.S. Luxury Goods Market
U.S. Luxury Goods Market 2016 ($ Billions) Designer Apparel and Footwear.........................................$28.5 Luxury Leather Goods...............................................................$15.6 Luxury Jewellery.............................................................................$11.2 Super Premium Beauty.................................................................$9.7 Fine Wines/Champagnes and Spirits..................................$7.8 Luxury Eyewear................................................................................$6.4 Luxury Timepieces.........................................................................$4.3 Luxury Stationary........................................................................$0.08 Luxury Portable Consumer Electronics........................$0.02 Total...................................................$83.7
U.S. Luxury Leather Goods Market
U.S. Luxury Leather Goods Market Estimated $17 Bn
Estimated $16.3 Bn
$15.6 Bn $15.3 Bn
• Market expects growth • Coach consists of 3% of the U.S. LLG Market (2016) • Most LLG players are experiencing poor performance in department stores.
Market Share and Key Competitors
US Luxury Leather Goods: Market Shares & Key Competitors Michael Kors Holding Ltd.
LVMH
Coach Inc.
2014
22.8% $3.5 Billion
16.6% $2.5 Billion
17.5% $2.7 Billion
2015
23.9% $3.7 Billion
16.9% $2.6 Billion
14.8% $2.3 Billion
2016
23.9% $3.7 Billion
16.9% $2.6 Billion
14.8% $2.3 Billion
2017
Projected: 16.% $2.6 Billion (LLG) $235 Million (DAF) $2.8 Billion Total for 2017
Volume Drivers
Volume Drivers
The market tote in polished pebbled leather is the current bestseller priced at $295 An update on the original 1960s design invented by them.
The Rogue bag in glove tanned pebbled leather is inspired by the coach girl and is there second bestseller at $795 and is part of the 1941 collection.
The Chelsea crossbody in polished pebble leather is the third bestseller it’s a modern minimalist twist on a classic and is $225. The Classic Edie Shoulder bag 31 in polished pebbled leather is the their fourth bestseller priced at $350 and also happens to be one of their classic styles.
Coach vs. Michael Kors
Luxury leather handbags, accessories, and ready-to-wear
Coach
Michael Kors
New handbag designs
Holds a strong position in the market
Incorporation of menswear
Greater product assortment
Revival of vintage styles
Strong customer outreach
Brand reinvention
Strong social media presence
Stewart Weitzman
Store location scouting
Both brands suffered from overexposure in department stores, outlet stores, and constant markdowns
Product Price Comparisons
Coach: Dinky $595 Michael Kors: $328
Coach: Market Tote $295 Michael Kors: Haley $248
Coach: Turnlock Saddle $495 Michael Kors: James Medium Leather Saddlebag $348
Other External Impacts
Other External Impacts Growth in wearable technology. Influencers are on social media daily. Disposable income grew by 19% (2010-15) and steady growth is expected, but consumers are becoming slightly more frugal due to recent presidential election. Luxury goods consumers account for 7% of the US population and were earning $150,000+ annually for 2015. 9% of the population is expected to earn $150,000+ annually by 2020. Merging of phsyical and digital retail strategies; “phygital�.