Spread­ing the word

Lux­ury brand Coach looks to have made a come­back with its re­brand­ing ef­forts, and part of its suc­cess in China has been down to us­ing so­cial me­dia

China Daily (Canada) - - SHANGHAI - By XU JUNQIAN in Shang­hai

xu­jun­qian@chi­nadaily.com.cn

Of all the lux­ury brands in China, Coach cur­rently has the most num­ber of fol­low­ers on WeChat, the most pop­u­lar mo­bile mes­sag­ing ap­pli­ca­tion in the coun­try.

But apart from demon­strat­ing how the so­cial me­dia team at Coach has got their strat­egy right, it also in­di­cates how the Amer­i­can lux­ury com­pany has seem­ingly bounced back from the tough times in June 2014 when its stock plum­meted by about 40 per­cent on the New York Stock Ex­change.

Yann Bozec, CEO of Coach Great China, said that one of the keys to the brand’s re­vival is un­der­stand­ing the de­mands of today’s young In­ter­net-savvy peo­ple, and that their keen fo­cus on so­cial me­dia has worked hand-in-hand with pro­mot­ing the brand’s new im­age which was birthed in 2014.

The num­ber of WeChat users hit 650 mil­lion in March this year and China’s on­line pop­u­la­tion is es­ti­mated at some 668 mil­lion peo­ple, out of which 594 mil­lion reg­u­larly use their mo­bile de­vices to go on­line.

“When we talk about e-com­merce, we don’t think about it only from a sales per­spec­tive. For me, it is also a part of dig­i­tal and so­cial me­dia strat­egy. Dig­i­tal and so­cial power is in­cred­i­ble ev­ery­where, and even more so in China,” Bozec told China Daily USA.

Founded in 1941 as a small work­shop in Man­hat­tan, Coach is cel­e­brat­ing its 75th an­niver­sary this year. But while it is seen as a renowned lux­ury brand back home in North Amer­ica, Bozec con­ceded that Coach is still a rel­a­tively young one in China that is at­tempt­ing to reach its first gen­er­a­tion of cus­tomers.

Al­though Coach was among the first lux­ury brands to sell its leather bags and ac­ces­sories in China in 1998, it was not un­til 2009 that the com­pany took back its busi­ness from dis­trib­u­tors and started to in­tro­duce its flag­ship stores to the coun­try.

In 2013, amid a stag­nant econ­omy and stiff com­pe­ti­tion from sim­i­larly-po­si­tioned brands like Michael Kors and Kate Spade, Coach’s earn­ings fell sig­nif­i­cantly. To ar­rest its de­cline, the com­pany kicked off a three-year, multi-di­men­sional and global brand trans­for­ma­tion in 2014 with aims of up­grad­ing Coach from “an ac­ces­si­ble lux­ury brand” to “a mod­ern lux­ury one”.

This goal is ex­pected to be re­al­ized via three fac­tors — prod­ucts, store en­vi­ron­ment and mar­ket­ing — and the brand promptly en­listed the help of ac­claimed de­signer Stu­art Vev­ers, for­merly from Span­ish lux­ury brand Loewe, to give their prod­ucts a more youth­ful and mod­ern touch. An­other move the com­pany made to ex­pand its of­fer­ings was to ac­quire women’s footwear maker Stu­art Weitz­man in 2015 for $574 mil­lion.

Hav­ing been ap­pointed to over­see Coach’s Great China op­er­a­tions in 2014, Bozec has since been spear­head­ing the re­vamp ef­forts for their stores, en­sur­ing that the new in­te­ri­ors com­ple­ment the mod­ern de­signs by Vev­ers and com­mu­ni­cate clearly to con­sumers the brand’s new iden­tity.

By Dec 2015, more than 30 out of Coach’s 161 stores on the Chi­nese main­land had been ren­o­vated and they now fea­ture tuned-down light­ing and dark wood fur­nish­ings that help cre­ate a more so­phis­ti­cated am­bi­ence. Bozec said that the brand’s com­pet­i­tive pric­ing has also lured more cus­tomers to their new swanky bou­tiques.

“We have kept our price po­si­tion­ing to be­ing 40 to 60 per­cent of tra­di­tional Euro­pean brands. Mean­while, we have a 75-year her­itage and pro­vide in­cred­i­ble qual­ity, ar­guably bet­ter qual­ity than a lot of Euro­pean brands,” said Bozec.

De­spite China’s lux­ury in­dus­try suf­fer­ing from neg­a­tive growth for the sec­ond con­sec­u­tive year in 2015, with the sales of leather prod­ucts con­tract­ing by 5 per­cent, Coach’s re­brand­ing ef­forts look to have paid off.

The com­pany’s lat­est fi­nan­cial re­port re­vealed that by the sec­ond quar­ter of the 2016 fis­cal year, the Chi­nese main­land mar­ket con­tin­ued to en­joy dou­ble-digit growth while the growth rate for its global mar­ket re­mained at 9 per­cent. Same­store sales have been pos­i­tive as well, and they have helped mit­i­gate slug­gish growth in the Hong Kong and Ma­cau mar­kets.

Bozec is now tar­get­ing to hit rev­enues of $610 mil­lion for this year, an in­crease of 5 per­cent from 2015, and he is count­ing on Coach’s rel­a­tively young clien­tele — most are aged be­tween 25 and 35 years old, slightly younger than their peers in other mar­kets — to help the com­pany do so.

“We are very lucky to be un­der­go­ing this trans­for­ma­tion at the same time when Chi­nese cus­tomers are trans­form­ing them­selves to be­come more self­aware, dis­cern­ing and ea­ger to pur­chase some­thing authen­tic. This couldn’t be a bet­ter time for us,” said Bozec.

“Chi­nese cus­tomers are quickly evolv­ing from be­ing driven by ‘sta­tus’ and ‘peer pres­sure’ to ‘what’s needed for me’. It took about 10 years be­fore this shift took place in Ja­pan but it has only taken about five in China.”

PRO­VIDED TO CHINA DAILY

CEO of Coach Great China, Yann Bozec, is tar­get­ing $610 mil­lion in rev­enue this year and he be­lieves China's dis­cern­ing lux­ury cus­tomers can help the com­pany achieve this goal.

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