A Coach purse “kind of feels like your mom’s bag,” proclaimed a Bloomberg analyst last January when discussing the American leather-goods (and now lifestyle) brand’s “lacking personality” as a cause of a less-than-stellar quarterly earnings report. Its new numbers released this week were once again disappointing — but not in China, where the label’s tech-heavy and youthful branding strategy has provided it with a new image that moves it into a self-proclaimed “hot mom” category.
The disparity between Coach’s overall and China-specific growth was stark, to say the least. The company’s fourth-quarter income ending June 29, 2013 fell 12 percent from the year prior, due mainly to “weakness in women’s handbags and accessories in North America.” According to Quartz, “Competition from growing brands likes Michael Kors, Tory Burch and Kate Spade have some estimating that Coach may lose its almost 30% market share of the North American handbags and accessories market.”
Meanwhile, China, the company’s fastest growing market, significantly buoyed the report’s numbers, with sales up 35 percent in the fourth quarter and 40 percent for the entire year. The brand has rapidly expanded its store presence to 47 cities, building 30 new locations in the past fiscal year for a total of 126 stores in China, 108 of which are on the mainland.
Coach has tailored its branding messages specifically for the China market with an aesthetic that is decidedly younger than that of other countries. The company focuses heavily on e-commerce and social media marketing strategies in order to position itself as much more fashion-forward and trendy than its more “traditional” associations in the United States.
“We are seeing at consumer that is a little bit more youthful, younger than the traditional consumer,” said Coach CEO Lew Frankfort about the China market in an investor conference call on Tuesday. In addition, he highlighted the importance of the company’s e-commerce site, stating that the brand is “even seeing categories such as jewelry doing better online that we have not seen in our stores.”
Named by L2 as the fourth most digitally competent brand in China, Coach’s November 2012 e-commerce launch was accompanied by a new account on WeChat, on which it has been highly active. The brand demonstrated its awareness of the main concerns among Chinese shoppers with regard to e-commerce by including “10 reasons” to use the brand’s online shop, including cash-on-delivery payment, guaranteed authenticity, and easy refunds.
The brand’s social media strategy has especially played into its “youthful” image, featuring regular marketing initiatives including its “Hot Moms” campaign on Weibo for Mother’s Day, various wallpaper offerings on WeChat, a “New Yorker’s Look” campaign which featured its own separate mini-site touting the company’s New York heritage, and a “What’s In Your Coach Bag?” campaign where users submitted photos of the contents of their purses.
According to Frankfort, the company has “consistently been the number one international fashion brand” on Weibo with close to 720,000 fans, “which is a very strong point of engagements between ourselves and our consumers.”
The brand’s aesthetics have also reflected its desire to court a trendier clientele in China. In January, it teamed up with Jennifer Yan, a contestant on China’s Project Runway-like fashion reality show competition Creative Sky (创意星空) to create a special “China-only” handbag. Coach, like Louis Vuitton, has also adjusted its aesthetics to accommodate for the fact that logos are quickly heading out of style. The vast majority of its bags available online at the moment are not emblazoned with the company’s typical “C”, a strategy that closely resembles that of Louis Vuitton with its new line of “LV”-absent designs.
Through all of these efforts, Coach may still be considered a “mom” brand in the United States, but has transformed into a fresher, more youthful version of itself in China. In addition, the brand has not forgotten about the male or international Chinese markets: it has enlisted Taiwanese pop star Wang Leehom to market its line of men’s bags, which are very popular with Asia’s train-commuting male urbanites. In addition, Frankfort stated that “the most recent trends point of course to the continued very strong growth of the Chinese tourists, which is a very major part of our business outside of mainland China.”