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Coach Is Moving Aggressively to Prosper after the Recession, but New Research Points to Weakness among their Core Consumer Segment -- More Mature, Affluent Shoppers
Affluent shoppers purchased Coach fashion accessories at the lowest rate since the beginning of 2007
Stevens, PA July 31, 2009 -- As a leader in the luxury market, Coach is taking aggressive steps to see its way through the current recession and to position itself for continued growth after it ends. The company's new colorful and youth-skewing Poppy line aims to return the company's average price per handbag back to an under $300 price point, after the company's average price crept up during the luxury boom.
The company has slowed its investment in new Coach full-priced boutiques, even closing a handful of under-performing stores, while growing its factory outlet stores at a faster pace. And the company has just announced plans to expand its apparel offering with a new line called Krakoff, in honor of the company's design director, that will "define new American luxury, which has a distinctive aesthetic at an attractive price point," according to Lew Frankfort, chief executive.
Affluent shoppers' purchase of Coach brand drops to historic low in second quarter 2009
But evidence in Unity Marketing's most recent Luxury Tracking survey with fashion accessories buyers finds that the Coach brand is not connecting like it used to with its target customers. Commenting on the findings, Pam Danziger, president of Unity Marketing, said, "Coach has remained the number one fashion accessory brand among affluent luxury shoppers in the six year history of Unity's tracking study of luxury consumer purchases and spending. But in the last quarter, the purchase incidence of Coach dropped sharply, down to its lowest level ever. This suggests that the company may be losing traction with its traditional more affluent and mature shopper."
To give more in-depth perspective on the Coach brand and its prospects for the future, Danziger has just published a white paper entitled The Coach Brand -- How Coach Transformed Their Brand from "Old" to "New" Luxury. It studies how the brand transformed from a well-respected, but predictable, leather goods company to a fashion leader in the fashion accessories market. It also looks at the history of luxury shopper purchase incidence from 2007 through 2Q09. The free white paper can be downloaded by clicking here.
Luxury marketers need research to get ready for business after the recession
"Like Coach, all luxury marketers need to get out in front of the changes that this recession brings for the affluent consumer market. Affluent consumers are redefining, reassessing and reevaluating their lives and their lifestyles. This is happening across the culture, not just among a small segment of the affluent market and it will mean major shifts in the way luxury brands can market their goods in the new economy," Danziger says.
To find a new direction, companies must invest in understanding the mindset of their target affluent customers. Unity Marketing offers a new study based upon both qualitative and quantitative survey research that will provide both invaluable data and perspective to guide marketers in the 'new normal' luxury economy after the recession.
New research investigation examines how luxury consumers are responding to the changes in their lifestyles -- and what it will happen once the recession is over
The affluent -- those 20 percent of people living at the top of the income pyramid -- have been profoundly affected by the recession. In a new study of how the recession is changing the buying and spending behavior of luxury consumers, Unity Marketing found that nearly two-thirds of those surveyed said their personal financial situation has declined as a result of the current recession. This has caused affluents to change their shopping habits and cut back on discretionary spending, especially for luxuries that are hard to justify when times are tough.
The new study entitled The Luxury Market AFTER the Recession is based upon as series of research focus groups conducted in Beverly Hills, California among highly affluent and highly engaged luxury shoppers. Beverly Hills was chosen for this study because it is 'ground zero' for the conspicuous consumption lifestyle. The focus groups were followed by a quantitative survey among 1,041 luxury consumers (i.e. affluents with average income $204,900 who bought one or more luxuries in the study period).
The survey found that the majority of affluent consumers have experienced not just a decline in personal wealth as measured in their investment portfolios and home values, but significant changes in their incomes. Most notably one-third of those affluents who feel the pain have experienced a drop in bonuses and commissions. This cut in bonuses and commissions has had a proportionately greater impact on luxury marketers and retailers, since much luxury spending is stimulated by 'found money' that bonuses represent.
As luxury brands and retailers have felt the effects of a cut back, they have responded by chopping prices to stimulate sales. Which leaves a nagging question for all brands involved in the discounting of previously undiscounted luxury brands: Is offering a luxury brand at a discount a good way to breathe life into sales figures, or a nail in the coffin of that brand's reputation?
Unity Marketing, a firm dedicated to delving deeply into the mindset of the affluent shopper and giving its clients reliable facts and figures, not just anecdotes and opinions, conducted the research to answer these critical questions about the future of the luxury market:
- What does luxury mean today among affluent consumers? Has it changed as a result of the recession and will it be different after the recession ends?
- How much of the cut back in luxury spending is driven simply by 'recession chic' and the desire not to be too conspicuous and how much by a fundamental shift in affluents' value system?
- Since luxury consumers have gotten off the consumption 'tread mill' and have had time to ponder what they need versus what they desire, they are going to make different decisions about their discretionary spending once the recession is over. Luxury marketers can get out in front of these changes to attract these reformed affluents who have given up the conspicuous consumption habit.
- How can a luxury brand connect with the new psychology of the affluent shopper who has been hammered in this recession?
- Learn where the true value of luxury lies. The report explains how can brands maintain their perceived value in order to command higher prices without being perceived of as out-of-touch or living in the past.
- What does the future hold after the recession? How will affluent consumers express their desire for a luxury lifestyle in the new economy? What will be the 'new normal' in the luxury market after the recession?
- A cultural shift is occurring that is a shift toward traditional values along with more responsible, less extravagant consumption. Find out what this will mean for luxury brands and how they must adapt for the future.
Luxury marketers need to get ready for the big changes that are coming after the recession
"Luxury marketers need to get out in front of the changes that this recession brings for the affluent consumer market. That is why Unity Marketing conducted this important research investigation into the new psychology of affluent consumers who are dealing with changes in their financial status," explains Danziger.
"This report will be an invaluable tool for luxury brands and marketers to get ahead of the shift so that they can plan for the 'new normal' that is inevitable. Once the recession is over, the luxury consumer market is not going to go back to its spend-thrift ways. Change is coming and for many marketers change is here already."
For media: Danziger available for interviews. Charts, tables and graphs detailing major findings in the report also available.
May 2009 (About 100 pages)
Published Price Report (Chapter 1 & 2 of the 1Q2009 Luxury Tracking Report): $750
(Please Note: With the purchase of a report, subscribers may apply the subscription fee for 1Q2009 report to annual Luxury Tracking subscription or to Luxury Report 2009) |
