Coach CEO Banking On China Growth In 2010

Lew Frankfort Sees Great Potential In China Market, Reflected In Low Brand Recognition And High Repurchase Intent Although Coach reported better-than-expected sales figures in its top two markets (North America and Japan) in its latest fiscal statement, the company has made clear that it is strongly committed to building more market share in the increasingly lucrative Chinese market. Over the last year, Coach has invested heavily both in the mainland and Hong Kong markets, announcing last spring that the company intends to add nearly 50 retail outlets to the 37 it currently operates in mainland China, Hong Kong and Macau, appointing luxury veteran Andre Cohen as China Region President, and launching a large-scale Chinese-language online promotional campaign. Part of the reason that Coach's China offensive has been so pronounced over the past year is the brand's relatively low recognition in the Louis Vuitton-mad Chinese market. Coach's less flashy designs make it less of an immediate status symbol, and as such the brand appears to be positioning itself within the mainland and Hong Kong markets as a more attainable luxury -- lower-priced than the most popular luxury brands but still of superior quality -- and is using its association with popular American television shows like "Gossip Girl" to its advantage. As an article today in GEmag (Chinese) points out, Coach's China strategy does not consist of "dumping" inventory into the market and plastering advertisements arbitrarily around major cities, but rather is the result of intensive market research on everything from the materials preferred by Chinese handbag buyers to the size, style and function (translation by Jing Daily team): After extensive market research, which involved choosing from a range of samples, Coach decided on the right size and style of handbag for the Chinese market. According to the company's research, Coach found, for example, that the "Madison" line is the right size and has the right functionality f0r Chinese consumers, and as a result has set about sending more handbags of this style to the Chinese market. Coach's promotional brochure also incorporated American television dramas like "Gossip Girl" that are very influential among Chinese white collar women. In a conference call today, Coach's CEO Lew Frankfort mentioned his company's low "unaided" recognition -- which is to say, brand recognition not driven by marketing campaigns -- as a cause for optimism. According to Frankfort, [Coach] is clearly taking hold with consumers, both domestically in mainland China, and with millions of Chinese who were traveling, notably to Hong Kong and globally. Coach's potential in the China market is reflected in our very low unaided awareness of 8 percent, compared with 72 percent in the U.S. and 63 percent in Japan among target consumers. (The Chinese consumer) loves Coach. She rates us highly on all of the attributes she values, such as fashion, sophistication, quality and value. Among existing Coach China consumers, repurchase intent is surprisingly high at 94 percent, a higher level than we've experienced in the U.S. or Japan. In the year ahead, Coach is planning to further ramp up its China expansion efforts, announcing today that they plan to open 15 new China locations over the course of 2010, including a new flagship store. In addition to these new openings, Coach plans to employ a "multi-channel" strategy that combines discount factory stores as well as in-store boutiques, according to Marketwatch.

Coach CEO Banking On China Growth In 2010

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Published January 20, 2010

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Coach CEO Banking On China Growth In 2010