Coach Inc.: From Staid to Stylish

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Case Details:

Case Code: BSTR235
Case Length: 24 Pages
Period: 1941-2006
Organization: Coach Inc.
Pub Date: 2006
Teaching Note: Available
Countries: USA
Themes: Corporate Strategy and Differentiation
Industry: Textile, Apparel, and Accessories

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts Contd...

Production

Coach had maintained high standards of manufacturing right from its inception. Even as a small leather goods company back in the early 1940s, Coach selected only the top 10 percent quality of leather for its products (the company maintained this policy even in the early 2000s). Not only did Coach use the best quality leather, but it also paid special attention to how the leather was treated and processed. The company's manufacturing process was designed to give the 'glove tanned' look, feel, and quality to its products.

The leather was slow cured by rotating it in large drums for several days, after which it was treated using extracts from plants and aniline dyes to produce a softening effect and to bring out the individual grains in each piece of leather...

Coach's Expansion Strategy

In the early 1990s, Sara Lee sold Coach products mainly through Coach retail stores, the catalog, and through Sara Lee-owned retail outlets. As of 1996, Coach products were sold through 141 company-owned retail stores in the US and 147 stores located outside the country. By 1999, this number had increased to 165 retail outlets in the US and 150 stores outside the US (mainly in Europe and Asia).

In the late 1990s, Frankfort embarked on a massive expansion spree.

Coach followed a 'multi-channel international distribution model' to reach a larger number of customers. Frankfort believed that increasing Coach's distribution was one of the primary growth drivers for the company. Under Frankfort's management, Coach increased its presence nationally and internationally by opening new stores in new as well as existing markets, and expanding the company's most productive stores...

Outlook

As of early 2006, the US contributed around 70 percent of the total sales of Coach, while Japan contributed around 22 percent of the sales (the US and Japan together accounted for close to 70 percent of worldwide spending on luxury handbags). Therefore, Frankfort decided to increase the company's retail presence in these two markets. However, he also believed that Coach could have better opportunities by creating (or targeting the existing) demand for its products in emerging markets...

Exhibits

Exhibit I: Brief Profiles of Some of the Popular Fashion Labels in the US
Exhibit II: Consolidated Statement of Income of Coach Inc., from 1999 to 2005
Exhibit III: Coach: Share Prices from 2001 to 2006
Exhibit IV: A Coach Travel Bag
Exhibit V: The Coach Signature Collection Handbag
Exhibit VI: The Prints of LVMH, CHANEL and Coach's Signature Collection
Exhibit VII: Coach's Product Portfolio in 2005
Exhibit VIII: Coach's Product Mix as of August 2006
Exhibit IX: Ways to Identify Authentic Coach Products
Exhibit X: The Coach Logo