Coach eyes the ‘new normal’
21st October 2009 19:30

A new report published earlier this week on the luxury market made the point that sales of bags and footwear this year are holding firm since they offer a more affordable way for shoppers to stay loyal to their favourite luxury brands.

Looking ahead over the next decade, the study by Bain & Company also noted that younger consumers and competitive products will have a key role to play in keeping the sector afloat.

All of which will come as good news to handbag and accessory maker Coach Inc, where one word seemed to be on the lips of executives yesterday as they revealed the firm’s first quarter results: “Poppy.”

Launched in July, this lower priced line certainly seems to have hit the spot, for not only has it helped slow the decline of same-store sales in North America, but has also brought younger shoppers into Coach’s stores.

While the line is by no means cheap, with an average handbag costing around $240, it hits what Coach chairman and CEO Lew Frankfort calls the pricing “sweet spot” of between $200 and $300.

Such has been its success that the company has increased the proportion of handbags priced below $300 from about 30% of its assortment last year to 50% this year.

“This rebalancing gives the consumer more choices at prices she is willing to pay or is able to afford,” Mike Tucci, president North American Retail, told analysts yesterday.

Or, as Frankfort succinctly put it: “We have adapted our pricing and product strategies to be successful in what will become the 'new normal’.”

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