Coach’s Todd Kahn on Reinventing a Heritage Brand – WWD
Todd Kahn masters the art of juggling. As CEO and President of the Coach brand, he oversees a heritage business that dates back more than eight decades. But in order to keep the company fresh – and its bottom line profitable – he had to find ways to make it both modern and relevant to a younger consumer as well.
And he achieved those goals.
Since fiscal 2019, Coach has added $600 million in sales and increased operating profit by 300 basis points. Overall, in fiscal 2022, Coach sales reached $4.9 billion, up 16% from the prior year and 15% from the pre-pandemic period .
Kahn, who has just returned to the United States after a nine-day trip to Tokyo, Japan; Seoul, South Korea and Singapore said: “Despite what you might hear, consumers are alive, they’re excited, they’re here – and the brands are winning. I came back so enthusiastic.
Over the past 81 years, Coach has built a strong reputation growing from humble beginnings as a family-run leather goods workshop to a powerful international company that also produces apparel, footwear, eyewear, fragrances and accessories. other products in addition to its signature handbags and small leather goods.
Kahn said that within days of taking over the brand in March 2020, he had to close all of the company’s North American stores due to the pandemic. But rather than take it as a negative, he sought out the silver lining.
“We really didn’t know what was going to happen, but we also recognized that there was a unique opportunity to reset customer expectations.”
He said that when he started to explore how customers were greeted when they arrived at a store, especially an outlet, he said they were greeted with a $20 off coupon. %.
“So our dialogue with the consumer was focused on discounts rather than the quality of our product,” he said – the perfect opportunity to reset.
So, with the blessing of the company’s parent company, Tapestry Inc., Coach changed “almost everything about our business,” he said, a strategy that led to increased sales.
The reset involved doubling down on what he called “customer centricity.”
“One of the things that Coach has always been proud of is that we balance magic and logic. But too often the magic has come from the business side. And you want a little more balance.
Coach therefore focused on understanding its customers’ needs, which enabled the brand to increase its average selling prices and update its product offering.
The second step was to focus on innovation. In fashion, Kahn said, designers and marketers start working on the product a year or more before it hits stores. So by the time it hits the sales floor, “they’re fed up,” he said. “In my 15 years at Coach, I’ve seen the same bag called four different things. Sure, there were tweaks, but we force our designers and merchants to constantly change when it was still fresh for the consumer.
Instead, Coach focused on expanding the franchise of its existing products rather than simply replicating what was already available “and calling it something else”.
The company also identified growth opportunities such as men’s products and other products that expanded the brand’s comprehensive lifestyle offering.
The third arm of the reset centered on digital. In fiscal 2019, digital accounted for 6% of global sales, he said, but that figure has risen to 30%. “That’s where the consumer wanted to go. We all know that today’s consumer is an omni-consumer — they start their journey, they end it in different places. And you have to present yourself very well in all these places.
But the focus on digital shouldn’t detract from the physical store experience. Coach operates some 1,000 stores and Kahn said they remain “the best expression of your brand. This is where you can have the most customer interactions. It is therefore extremely important to find ways to make these two channels work together.
Internationally, Coach is enjoying success in Asia as well as in European countries like the UK and Germany, its two biggest markets, but the growth is not coming from opening High Street stores. “It’s not modern,” he said. Instead, much of the growth is coming from digital and wholesale channels. “As I said in my tenure at Coach, stores are not marketing vehicles, stores need to have four-wall profitability.”
The luxury and high-end market as a whole represents some $195 billion in sales, he said, so there is a wealth of opportunity for Coach. “But if you target everyone, you target no one. If you focus on every element of your business, you won’t be successful.
So Coach chose his path and that was the Millennial/Gen Z customer. Seventy percent of purchases by FY2025 will come from this younger demographic, he said, “and if you don’t don’t grow up with them, you won’t succeed”.
Once that was established, Coach identified the segment of that consumer group it wanted to target — and that was the “timeless part,” he said. “That doesn’t mean it’s our only consumer. That means it’s where we can earn the most.
Coach conducted thousands of hours of research into their buying habits and thought processes and identified a common denominator: as you transition from adolescence to adulthood, you really want to focus on your trust. Their choice of clothing and accessories is intended to instil confidence, so Coach has targeted its marketing to this group.
But it is not that simple. Kahn said that everyone has three ages: our chronological age, the age we look like, and we grow old. “So while our marketing and storytelling will be focused on this younger generation, we know there is a halo aspect to it.”
So, in addition to Jennifer Lopez, who Kahn says is timeless, Coach tapped into a “constellation of celebrities to really tell the story across all age groups.”
Kahn said he views Coach as a multi-faceted company. The first is an immigrant couple in a loft in New York City who used leather from baseball gloves to make a mark. The second chapter was the Bonnie Cashin era. The company’s first design director took everyday objects and made them luxurious. The third was what Kahn called “the modern era where we first went public, and Coach coined the term accessible luxury. It was the idea that you didn’t have to spend an extraordinary amount of money to buy a high quality bag.
This messaging worked well for a decade, but then the field got crowded. But after Stuart Vevers joined as the company’s second creative director as a public company in 2013, “we are part of the fashion dialogue”.
But the brand was not growing. So last month, at the company’s Investor Day, the company launched a new idea: expressive luxury.
“What we love about this idea is that for the modern consumer, it’s about personal identity, individualism, authenticity, courage. The courage to be true. Our product is a real product. It lasts several lifetimes. And this idea of being brave isn’t just a marketing ploy. In fact, the company first used the idea as an internal call to action. “The idea was to be brave in design, marketing and have real honest conversations about whether we were authentic to the brand.”
And being authentic is key, Kahn said. “To just say you’re targeting Gen Z, just say you’re sustainable, just say you believe in inclusivity, if it’s just a veneer, it’s not going to work. It has to be absolutely real.
Last month, Coach took this new mantra and introduced it to customers through its Courage to Be Real campaign and the introduction of a new brand ambassador, Lil Nas X.
“We have 40 different brand faces, we’re a global brand, we transact in 50 different countries, we have millions of customers,” so an ambassador can never connect with everyone, he said. he stated, but “Lil Nas was brave. He was one of the first rappers to show he was fluid in his sexuality, in his approach to masculine and feminine ideas in his music, and his ability to crossover from rap to country. to R&B,” Kahn said.
Coach used it in his first Courage to Be Real campaign and also dressed him and his dancers for his 20-city tour with over 1,000 different pieces of clothing. “So the cool factor is awesome. But his audience was black, it was white, it was straight, it was gay. And as a big brand like Coach that really needs to speak to a large audience, he really was the next perfect brand representative and ambassador.
And while this new association may eventually translate to increased sales, the initial engagement numbers are strong. As a result, Coach will continue to leverage this campaign in the future, he said, and hopefully it will “here in the next exciting period for us and lead us into Coach’s next golden age”.