Coach background

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Part
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Coach Background - Demographics

Although there are no public and current sources to completely answer your question, we have compiled information from several articles and reports from 2013 to 2016 to arrive at the following conclusions: Coach’s target demographic, much like Tory Burch, is men and women age 20-40 in the “affordable luxuries” market. Michael Kors and Louis Vuitton, on the other hand, are targeting roughly the same age range, but in the somewhat more affluent HENRY category (“High Earners Not Rich Yet”), i.e., younger customers earning between $100,000 and $250,000.
Below you will find a deep dive of our methodology and an overview of the useful findings.

METHODOLOGY

We conducted a thorough search of public sources on the luxury handbag industry for references to the four companies in question. As per Wonder's standard procedure, we attempted to restrict ourselves to sources published within the last 24 months to provide the most up-to-date information available. However, while this led us to two recent reports on the luxury handbag market, one from 2017 and one published this year, these reports are proprietary and only available at considerable expense. Other industry sources posted within the past two years, such as white papers, newsletters, and articles written by experts and insiders, did not fully address the question.
We, therefore, expanded our search to older sources and found several articles from 2013-2015 which directly answer the question. While we would normally eschew such dated material, we find them to be both the most recent sources available and were unable to uncover any indication at all that there had been a major demographic shift in the last two years which would make these sources obsolete. Since it is most probable that a major shift in a company’s target demographics would excite comment in the industry, we have high confidence that the sources referenced below, though older, still provide an accurate picture of each company’s customers. However, if the absolute most current data is required for your purposes, we advise considering one of the two reports referenced above.

COACH

A Prezi article from 2015 provides an interesting comparison of the target demographics for both Coach and Louis Vuitton. The latter is addressed below, but the original article may prove useful on its own. With its products priced in the $100-$500 range, Coach is considered a pioneer in the affordable luxury industry. Coach targets men and women age 20-40 with mid to high levels of disposable income. As noted in a Sontag Solutions client report, “These people often have the financial means with which they can buy a wide variety of products depending upon the consumer’s particular tastes.” Coach believes that its primary appeal to its customers “lies in its original American attitude and design and rich heritage of fine leather goods.” Coach was 13th in capturing the much-desired market of age 18-34 “luxury” customers in 2016.

TORY BURCH

In a 2014 presentation, Tory Burch notes that their original target market was 30-45 year-old women. However, this has changed in recent years due to their observation that girls as young as 14 years old were coming in with their mothers and grandmothers to make purchases, especially the Reva Ballet flat. As a result, while Tory Burch continues to focus on women, it no longer limits itself to those of high income, preferring to present its products as within the reach of all incomes. Nevertheless, they still find that most of their customers have at least a Bachelor’s degree, and while they target both single and married women they have a particular interest in mothers for the aforementioned reasons. The actual purchaser, regardless of the age of the possessor of the handbag, usually falls in the 21-40 year-old range (another source states 21-35 years old), with a household income of $60,000 or higher. In other words, they prefer “sophisticated and self-driven women” who live primarily in urban and suburban areas. There is no indication that ethnicity is a factor in Tory Burch’s target demographic, nor indeed in any of the four companies presented here.

MICHAEL KORS

According to a 2013 report, Michael Kors target demographic is age 25 to 54, with an annual income of over $50,000. However, they’ve noticed that their accessories and footwear, which generate most of their sales, appeal to a wider demographic, and they have since begun “targeting a younger, affluent demographic, often overlooked by luxury brands.” As of 2016, they had also realigned themselves to target what they call the HENRY customers (“High Earners Not Rich Yet”), younger customers earning between $100,000 and $250,000, a market segment with 22.3 million households worldwide. As noted by Annex Cloud, “This segment is increasing steadily not just in the USA, but all across the globe. Even after admitting the fact that HENRYs individually have a far lower spending threshold than ultra-affluents, there are 13 HENRY households for every ultra-affluent.” Michael Kors was 10th in capturing the age 18-34 “luxury” customers in 2016.

LOUIS VUITTON

As noted earlier, a Prezi article from 2015 provides an interesting comparison of the target demographics for both Coach and Louis Vuitton. Louis Vuitton targets both men and women of age 22-65 (another source says age 25-50) with an income of $50,000 to $200,000. While originating in Paris, one of Louis Vuitton’s most important markets is Asia; “it is said that the mainland Chinese were Louis Vuitton's third-largest customer segment in the world in 2015.” (See below for more detail on the Asian segment.) Louis Vuitton classifies 46% of its market as “self-indulgers,” 33% as “quality seekers,” and 21% as “status seekers.” Interesting, Louis Vuitton sells only in its own exclusive store (i.e., does not allow its product to be sold in department stores), “in order to make consumers feel that Louis Vuitton is an exclusive brand that is only available in few locations.”

OTHER FINDINGS

Although only specifically noted by our sources, in the case of Louis Vuitton, the burgeoning Chinese market has grown so much in recent years that it is likely to be a factor for all four companies in 2018. As noted by Martin Roll, “the rising Chinese middle-class, consisting of households with incomes between USD 9,000 and USD 34,000, have become the fast-rising consumer segment in China they have become the subject of much attention from global brands.” We were unable to substantiate from recent sources that this has become a major factor in the target demographics of all four companies requested, but given the tidal shift in the luxury brand market, we believe that we would be remiss in not mentioning it.
The online market is also an important factor. Michael Kors and Coach, along with Ralph Lauren are dominating the online market share, taking 63.5% of that market between them.

CONCLUSION

While in some respects, all four companies have similar demographics (particularly in their target age range), there are still some important distinctions. Coach and Tory Burch are targeting the same “affordable luxury” market, with incomes in the mid-five-figure range, while Michael Kors and Louis Vuitton are targeting slightly higher income levels, and Louis Vuitton is extending its reach into Asia. On the other hand, Michael Kors and Coach have heavy footprints in the online market.

Part
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Part
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Coach Background - Brand Comparison

Coach uses direct digital branding activities like advertising in national as well as international media, particularly during high-volume selling seasons such as Thanksgiving and Christmas.

Coach is one of the first luxury product manufacturers to use the internet to generate sales, but it isn't the only one to use social media sites such as Facebook, Twitter, Instagram, Pinterest, and Sina Weibo, among many others, to reach out to a larger customer demographic. Tory Burch, Michael Kors and Louis Vuitton all use social media as part of their digital branding strategy. However, these competitors have unique digital branding strategies that Coach does not. We will provide a comparison of the digital branding strategies of Coach and its three competitors, and show where Coach can differentiate itself.

Coach

Coach employs its own market research to keep track of its customer trends and preferences. In 2014, it spent $130 million on marketing activities. The web traffic at its e-commerce sites rose from 50 million to 76 million in seven years.

Coach employs several direct marketing strategies such as advertising in national and international media, especially during high-volume selling seasons such as Thanksgiving and Christmas. Using its extensive database of households (24 million in North America and 10 million in Asia) Coach targets customers for specific products to accrue sales across multiple channels. Coach also has flash sales — reducing prices for a select time on both its websites and stores. In countries where Coach has no retail presence, it hosts informational websites.

Coach’s primary target market is men and women aged between 20 and 40, with medium to high levels of disposable income who are looking for unique, affordable luxury products that are expertly made and provide excellent value. Coach uses social media sites such as Facebook, Twitter, Instagram, Pinterest, and Sina Weibo, among others, to drive forward its brand and reach larger customer demographics.

Coach has 4.7 million fans on its Facebook page, almost 500 thousand Twitter followers and a very active Pinterest account with 51 boards. Coach’s posts on Facebook reach an average of 5 thousand ‘likes’ but less than a hundred comments. There are exceptions occasionally, where a product gallery or a photo can gather as much as 15 thousand interactions.

When compared to its primary competitors, Tory Burch, Michael Kors and Louis Vuitton, Coach's digital branding strategies could be strengthened.

Tory Burch

Tory Burch has a thriving e-commerce business, as well as many company-owned stores in markets with business potential, such as Hong Kong, Dubai, and Singapore. Tory Burch has e-commerce sites in the United Kingdom, Germany, Italy, France, Austria, and Japan. Also, the retailer ships online orders to over 30 more countries. Tory Burch has a "presence in 14 countries", including Brazil, China, Philippines and United Arab Emirates, among others.

Tory Burch uses social media to engage with her fans via Facebook, Twitter, Pinterest, Instagram, among other social platforms. The brand's Twitter and Instagram pages are managed by Tory Burch herself.
An innovative digital branding strategy of Tory Burch is the creation of "unique content" for each social media platform. As an example, there is the Client Book. It is a program which gathers all the data the brand has about a particular customer, it could be their purchase history, as well as their channel of purchase. The purpose of this is to build a relationship between the customer and their local store staff. Client Book can notify store staff to a customer's birthday, enabling them to "reach out with a handwritten note." This strategy seems to be successful as the average order value for Client Book customers is 62 percent higher than Tory Burch's typical customer.

Tory Burch launched its own app, Tory Daily after seeing that 44 percent of its website traffic came from mobile devices. Almost 30 percent of the company's sales come via mobile.

Michael Kors

The target customers for Michael Kors are ranging from 16 to 60 years old, but the digital and social marketing seems to attract predominantly a younger audience.

The brand is planning to open more stores around the globe especially in Asia and Europe to increase the global brand awareness, even though it is believed to shut under-performing stores to achieve more profits. Since in recent times, online shopping has become more popular, having a strong e-commerce presence is a target for the brand.
Michael Kors uses social media to advertise his brand through the use of promotional videos, and even exhibition of his upcoming lines. At his Shanghai Expo-I-Pavilion, he used a live-stream to invite Chinese fans and online consumers to interact with his event through the popular Chinese app YiZhiBo.

The brand plans to invest in technology so that customers can be offered personalized shopping experiences, new mobile technologies, and new customer loyalty programs. Their Instagram advertisement campaign resulted in 2 million people being drawn to Michael Kors's website in just 30 days. He reported a 20 percent uplift in sales in North America and 73 percent across its e-commerce site at the end of 2015 with strong growth in Japan and the UK up to 72 percent for the quarter.

Louis Vuitton

With a brand value of $27.3 billion, Louis Vuitton is "one of the leading luxury fashion brands with a strong digital presence."
Their social media presence is strong; with 7.16 million Twitter followers and an Instagram fan base of 21 million. According to Insightpool, they rank as the second most "influential" fashion brand on social media. Instagram gave Louis Vuitton third place in their Most Buzzed-About Designers of 2017 list.

Louis Vuitton also boasts state of the art mobile apps that allow their loyal followers to access their latest collections on all social networking sites. Their website is beautifully designed and easy to navigate.

How can coach differentiate itself?

When compared to other luxury brands, Coach's social media presence isn't as impressive. They could post more "frequent updates" on Facebook as their timeline is not as full as it potentially could be. To date, Coach has posted a few photos and galleries each month so if they post more of their products, it could lead to more customer engagement and brand awareness.

Coach is commended for dealing with negative comments on Twitter but they do not respond or retweet any of their positive comments, which leads to the assumption that they don't have any. If Coach were to interact with positive messages about their brand, it can build customer affinity and advertise their brand to others in a positive way.

Coach has in the past hosted a chat on Twitter with a well-known fashion blogger. To entice customers, Coach entered those who asked a question into a prize draw to win a Madison iPad Crossbody. It was an effective strategy, as the prize was relevant to the Coach brand and it built a relationship with its followers.

Coach has also run Pinterest competitions that will not only allow the brand to collect some valuable customer data but it could also increase the number of Pinterest followers.

Very few brands maintain an active Google+ account and Coach hasn't set one up at all. Google+ accounts can offer many benefits for multichannel retailers.

Conclusion

Coach has many digital branding strategies at the current time but its primary competitors, Tory Burch, Michael Kors and Loius Vuitton, are using social media in new, unique and innovative ways contrary to Coach.

By implementing new strategies, such as frequent posting on Facebook, retweeting positive messages they receive on Twitter, running campaigns that build relationships between them and their followers, setting up a Google+ account, and running competitions on Pinterest, Coach can differentiate itself from its competitors.

Part
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of three
Part
03

Rebecca Minkoff Digital Strategy

Excluding the smart bag, we were able to find three main aspects to Rebecca Minkoff’s digital strategy and the digital store experience: the "connected wall", the "smart changing room", and mobile shopping enhanced via Instagram. These elements separate Rebecca Minkoff from competitors, as every other aspect of Minkoff's stores, including clothing racks, stockroom, sales associates, remains standard. Below, I will briefly explain the connected wall, smart changing rooms, and mobile shopping strategy. I will then overview the smart bag, data collection, the New York City flagship store, and performance data. While details on data collection and exact revenue figures were unavailable, we were able to make some inferences based on trends in the tech industry and 2014 revenue figures from Inc and Business of Fashion. According to these sources, revenue in 2014 was between $90-100 million, and revenue has skyrocketed 200% per year since the implementation of the technologies discussed here.

1. CONNECTED WALL

The connected wall is composed of a large mirror, and through an embedded touchscreen computer, the customer is able to browse social media content, watch videos of runway shows, order beverages, or simply swipe through the store's stock. The wall functions to immerse the shopper in the brand, and enhance their shopping experience. Those who choose to enter their phone number and email will receive notifications when their selected items have been sent to the dressing room. However, this serves a secondary function: to collect contact information from potential customers, enable future contact, and collect data on consumers.

2. SMART CHANGING ROOMS

The smart changing rooms incorporate a smart mirror similar to the connected wall. With Radio Frequency Identification (RFID) technology, items brought into the room are scanned and listed on the mirror. The mirror is used to enhance customer service and shopper convenience by giving shoppers different customized style suggestions they can browse through, allowing them to contact sales associates, and change dressing room lighting to simulate differences between night/day. Shoppers are also given the option of creating a personal profile and linking their activity to this profile. Linking their activity allows sales associates to contact shoppers when products the shopper may potentially be interested in are released.

3. MOBILE SHOPPING

A less prominent but noteworthy aspect of Rebecca Minkoff's digital strategy is the mobile-first website, which makes the brand's Instagram feed shoppable through a direct link. As a social media platform, Instagram is popularly used for sharing fashion trends and delivering large amounts of visual data to consumers very quickly. The ease with which consumers can browse through Instagram feeds and profiles, combined with a shoppable link, vastly increases convenience for shoppers.

OVERVIEW OF REBECCA MINKOFF'S SMART BAG

Smart bags are new, innovative tech equipped with QR codes. These codes are purported to improve shoppers' in-store experiences, and increase day to day convenience. Purchase of the bag is incentivized through Minkoff's loyalty program, which gives members access to private styling sessions, VIP events. Those who purchase a limited edition bag may also receive invitations to a Rebecca Minkoff runway show. According to Forbes, each bag is given a digital identity via cloud. When accessed, the bag unlocks exclusive offers, and even e-commerce services.

The smart bag encourages shoppers to carry it everywhere in order to receive perks from the brand. To use the smart bag, shoppers scan the QR codes using a smartphone app, allowing them to use the bag in conjunction with other in-store technology. If the bag is used at one of Minkoff's partner locations, the shopper will be awarded with perks and discounts. The smart bag aims to improve connectivity and convenience, but also promotes a kind of reliance on the Rebecca Minkoff brand through such a high level of integration.

DATA COLLECTION

Through its highly integrative AI tech, Rebecca Minkoff is able to collect massive amounts of metadata about shoppers, including preferred beverages, viewed and bookmarked products. However, the precise extent of data collection is not publicly available. Nevertheless, based on other tech companies such as Google and Facebook, we may infer that the extent of data collection is quite vast, and may include location, frequent visits, purchasing habits, browsing habits, and other demographic information.

By collecting data on a shopper's activity, Minkoff can personalize shopping suggestions and uncover insights that may help the brand make future business decisions. Through data collection via digital shopping, the smart mirror can provide a catalogue of personalized options to shoppers. The emphasis on personalization is key in both the purpose behind data collection and in marketing a particular kind of shopping experience.

As mentioned earlier, collecting contact information such as cell phone numbers and email addresses is vital, as it not only gives the company a way to facilitate contact, but may provide the company with further means of collecting data on consumers. Furthermore, the RFID technology in the smart change rooms also tracks shoppers' preferences and fashion tastes by listing scanned items brought into the room.

NEW YORK CITY FLAGSHIP STORE

Rebecca Minkoff's flagship store in New York City employs the strategies and features discussed above. It is currently the only store that allows self-checkout. The store features a digital wall to help customers find products, request employee help, and order drinks. The flagship store also boasts interactive mirrors fashioned into the dressing rooms. These mirrors adjust lighting based on where the shopper may primarily wear the clothing they are trying on, as previously discussed. The mirrors also allow customers to conveniently order different sizes and colors of the same item without the assistance of a store employee. The flagship store also employs connected fitting rooms; shoppers are able to reserve items, change colors, sizing, and find other customizations just as they are able to with the interactive mirrors.

While none of these digital strategies are entirely unique or as advanced as those of Amazon's Go grocery stores, they are relatively new within the fashion industry and sets Rebecca Minkoff's brand apart from others. Clothes shopping can be a highly inconveniencing process with over-reliance on shop employees to help find the right items. Many shoppers may grow frustrated that they are unable to find what they are looking for, and browsing may result in items being misplaced. By incorporating these technologies into change rooms and throughout the store, Rebecca Minkoff is able to not only improve the shopping experience by increasing convenience, but her stores are also more likely to maintain a neat, orderly look, which benefits both staff and shoppers.

PERFORMANCE DATA

Exact details and revenue breakdown are not publicly available. According to Business of Fashion, gross sales in 2014 were "reported to be upward of $100 million", and Inc reports 2014 revenue to have been $91.4 million. Furthermore, CNBC writes that sales have increased by 200% each year since the aforementioned technology's implementation.

CONCLUSION

Rebecca Minkoff has successfully implemented a variety of tech solutions to help improve the shopping experience. Through smart bag technology, which includes personalized IDs, smart change rooms, and connected walls, and improved mobile shopping, the brand has elevated itself as an innovative leader in the fashion retail industry. Personalization enabled through the use of these technologies and data collection allows customers a level of convenience they could not typically enjoy in traditional brick and mortar retailers. The use of these technologies, such as the smart bag, is also incentivized through loyalty and reward programs. While exact figures on data collection and revenue are unknown, sources indicate that this technology has significantly improved revenue.
Sources
Sources