How Coach came back from the dead

Against the backdrop of a slowdown in the global luxury market, how did Coach, once considered a model of “accessible luxury”, turn things around? This article will analyze Coach’s strategies in product innovation, social media and other areas, and reveal how it reshaped its brand value in just a few years and attracted the favor of young consumers.

As the global luxury goods market slows down, Coach is an outlier.

In the second quarter of fiscal year 2025, Coach's parent company Tapestry's revenue increased by 5% year-on-year to US$2.2 billion, setting a record for the group's highest growth since 2021.

The growth was mainly contributed by Coach. Coach's revenue increased by 11% in the quarter, while the group's other two brands, Kate Spade and Stuart Weitzman, both experienced double-digit declines. The group also said that it gained 2.7 million new customers in North America in the second quarter, more than half of whom were millennials and Generation Z brought by Coach.

Standing in the "light luxury" track that has been abandoned by consumers and with the popular entry "Is it shameful to carry Coach?", Coach can be said to have stacked up all the buffs. How did it make a comeback against the wind?

01 Product innovation + social media combination

Last year, Bella Hadid, a super fashion icon of Generation Z, was photographed many times on the street carrying a Coach Brooklyn handbag, which attracted consumers' attention to Brooklyn.

When it comes to Coach, most people think of the Signature series with the big "double C" monogram logo, which exudes a strong business style. But Signature is the brand's first hit in the 21st century, making Coach the "originator of light luxury". However, with the changes in consumer aesthetics and the change of consumer groups, the hit has become "auntie's grocery bag" in the eyes of the new generation of young consumers and is no longer attractive.

Brooklyn is an innovative product that caters to the trend of luxury. It has a minimalist style and changes the traditional product image. Fashion-sensitive bloggers immediately associate it with intellectual style and clean fit. Under the Coach Brooklyn notes on Xiaohongshu, there are often related topics such as #Dagongrendecommuterbag. Many bloggers on TikTok compare it with The Row shoulder bags and LV low key. Brooklyn, which can be bought for only US$295 (about RMB 2,150) during the discount, seems to be particularly cost-effective.

Coach official Instagram posted

Bella carrying Brooklyn's photo

In the past, affordable luxury brands had a loyal audience. But when the economic environment changed, consumers either chose top luxury brands or turned to affordable fashion, and the market space for affordable luxury brands that were neither good nor bad was squeezed. Coach also faced a growth crisis due to the decline of the affordable luxury concept, the aging of its brand image, and the dilution of its scarcity. In fiscal 2020, Coach's revenue was only US$3.53 billion, a historic low.

However, as the core handbags of top luxury brands have been adjusted in large numbers, the “cost-effectiveness” of affordable luxury brands has become apparent. But the aura of affordable luxury seems to only be shrouded by Coach.

Kate Spade, which is also in the same group and positioned as light luxury, saw its revenue decline by 10% in the second quarter of fiscal year 2025. Michael Kors, which is almost a family member of Coach, saw its revenue decline by 15.9% in the second quarter of fiscal year 2025 (ending September 28, 2024). Senior fashion editor J'Nae Phillips believes that Kate Spade tends to have whimsical and colorful designs, Michael Kors emphasizes a fashionable and upper-class lifestyle, and Coach provides consumers with a unique feeling without high prices.

After Brooklyn, Coach continued to follow the trend and created the Empire Carryall, which is also a luxury bag. Some TikTok bloggers compared the exterior design, bag texture and lapel decoration of the Empire Carryall with the Hermès Birkin bag, so the Empire Carryall was given the title of "the Birkin bag for young people".

In the past, Coach's sales focus was almost entirely on the Signature series, which eventually led to an overabundance of Signature products, which had to flow into outlets in large quantities, which not only lowered operating profits but also damaged the brand image. Many customers once developed purchase shame.

Today, Coach has multiple key product lines while maintaining a high degree of focus. Coach CEO Todd Kahn once told the fashion business media Business of Fashion that in addition to launching new products at fixed times, the proportion of past popular handbags in the new season has gradually increased. Coach has created a classic style and a continuous image by updating colors and appearances.

For example, when the Y2K trend came, Coach drastically modified the Tabby launched in the 1970s, releasing more than 50 different styles, including the Tabby Cargo with a motorcycle style that conforms to modern aesthetics, the Quilted Tabby with dopamine colors, and the Time Square Tabby that downplays the "old flower aesthetic."

Tabby Cargo (left), Time Square Tabby (right)

The Tapestry Group's China team told Interface News that no single product line of Coach accounts for more than 10% of sales. Handbags such as Tabby and Brooklyn are attracting more and more young consumers, and this trend runs through the entire price range.

Coach’s appeal to young consumers is inseparable from the spread of celebrities and social media. Coach videos on TikTok, from Bella Hadid carrying a Brooklyn shoulder bag to Coach salesperson Brandon Nguyen (358,200 TikTok followers) showing off the Empire Carryall bag, to Coach’s proactive creation of topics such as #CoachNY and #couragetobereal, and guiding players to post outfit photos, all hint to consumers that it’s time to own a Coach bag.

The brand encourages store sales to create personal accounts on social media such as TikTok and Instagram, allowing these people who are most familiar with the product to introduce it. At the same time, these videos do not have a unified style, so they appear more authentic and interesting.

Kiana Bonollo, a 25-year-old consumer, told the fashion magazine InStyle that compared with luxury bags, Coach's leather is of high quality, exquisite craftsmanship and reasonable price. This impression comes from her frequent videos of Coach employee Brandon Nguyen on TikTok, which continuously show the workmanship details of Coach handbags and their strong daily matching.

Inspired by Brandon Nguyen's video, Kiana Bonollo not only bought a regular Coach bag, but also a palm-sized Coach bag accessory.

Some fashion industry insiders believe that "accessories of accessories" such as handbag pendants and scarves are becoming a trend. Coach accurately grasps the consumer demand for personalization and decoration and has launched a variety of handbag pendants. The minimalist handbags that were originally very different have become unique fashion items after being decorated with pendants by different people. In the ranking of popular items in the fourth quarter of last year by the global fashion search engine Lyst, Coach cherry handbag pendants ranked fourth.

Empire Carryall decorated with ornaments

02 From “Light Luxury” to “New Luxury”

As the global luxury consumer group is getting younger, Coach needs to embrace Generation Z more urgently. There are more and more affordable luxury players created by itself. The former core users may upgrade to consumers of luxury brands as they age, or be attracted by other affordable luxury brands. Coach must tap into new users.

In 2021, Coach announced a branding strategy aimed at attracting Generation Z consumers; a year later, it upgraded its positioning from "Accessible Luxury" to "Expressive Luxury", aiming to eliminate consumers' past stereotypes about the brand and become a luxury brand that better helps young people express their own attitudes.

Andrew Lam, a trend forecaster and co-founder of TouchLDN, told Jing Daily, a luxury consumer media outlet, that Coach has observed that the younger generation of luxury consumers often seek to express themselves through fashion rather than investing in a piece of clothing that can be worn for a lifetime.

In addition to using products to interact with Generation Z to renew its brand image, Coach has also recruited a group of celebrities or artists who can resonate with Generation Z. In October 2022, Coach launched its first brand promotional film "Courage to be Real" under its new positioning, inviting 23-year-old young artist Lil Nas to star in the short film as a brand ambassador.

In the Chinese market, which has made important contributions, Coach's youth transformation strategy is reflected in a series of collaborations with local artists and local brands, while opening offline sales channels for its younger sub-brand Coachtopia. Last year, Coach announced popular star Guli Nazha as its brand spokesperson, which was the first time it announced a Chinese spokesperson in several years.

Xiaohongshu and Douyin are important bridges for Coach to communicate with young Chinese people. The brand follows the same approach as on TikTok, attracting young consumers by posting topics to create UGC content and encouraging store employees to create personal accounts. In addition, in 2021, Coach took the lead in entering the Douyin App, hoping to become the first luxury item purchased by young people.

However, whether the above factors can help Coach establish a new image in the minds of young Chinese consumers is still a question mark. For example, the Brooklyn handbag, which represents Coach's new image, has only been played 201,000 times on Douyin. On Xiaohongshu, the total number of views of #Coach pendants was 162,100, with a total of 128 participants, and the number of notes on #Coach which one should I give my mother as a gift exceeded 520,000.

This difference is directly reflected in sales. According to Chanmama data, the top five Coach products sold on the Douyin platform in the past year are still classic models with old flower patterns.

Coach's image in the Chinese market is difficult to change, not only because of aging products and marketing. Around 2014, the brand's large-scale expansion in China led to high operating costs and product inventory, forcing it to sell at a discount. Too frequent discounts led Coach to be labeled as an "outlet exclusive", resulting in the product not matching the price; coupled with the flooding of real and fake Coach products in the market, the brand image has further depreciated.

After deciding to transform, Coach intends to increase product prices and create a sense of luxury for its brand. In July 2022, Coach adjusted the prices of its global products, with an average increase of 7%-8%, and some women's handbags increased by 10%. As of now, Coach's official website mall shows that the unit price of its bag products is as high as 15,000 yuan, and the main price range is 3,000-5,000 yuan.

At the same time, Coach began to control discounts. The Coach China outlet website shows that product discounts are divided into 1,000 yuan, 2,000 yuan and 3,000 yuan, with the most products below 3,000 yuan. In addition, some products are exclusively available online to reduce offline exposure and maintain the brand image. For example, the new Brooklyn and Empire Carryall series do not appear on the brand outlet website.

The brand's online outlet mainly sells classic presbyopia

In terms of offline, Coach China's official website shows that there are currently 249 stores, including 178 retail boutiques and 71 outlet stores. In August 2023, Coach retail boutiques and outlet stores were 166 and 67, respectively. In other words, in a year and a half, Coach has focused on net store additions on retail boutiques rather than outlet stores.

In an interview with the media in November last year, Li Lian, President of Coach China, said that the differences between Coach outlet stores and other stores in terms of product layout, store experience and service will become smaller and smaller. For regular-priced stores, Coach has updated store design to enhance consumer experience. In January this year, Coach China's first three-story flagship store opened in SKP.K Avenue in Wuhan. Zhang He, Vice President of China and General Manager of Omni-channel, said that there will be more and more similar stores, and the goal of 100 stores planned by Coach three years ago will be fully completed by the end of this year.

Coach sees potential for opening stores in China's emerging cities and sinking markets. The team has publicly expressed optimism about Wuxi and Dongguan. In addition, in 2022, Coach will also open a new store in Baoji, Shaanxi Province. At that time, Yann Bozec, President of Tapestry Group Asia Pacific, said in an interview with the media that the brand plans to add more stores in third-tier and fourth-tier cities in the future.

Low-tier cities are still markets that many luxury brands have not touched in their expansion plans. However, in the past year, the sales growth of some luxury brands in the Chinese market has slowed down, especially in some second- and third-tier cities, which has caused some luxury brands to re-evaluate their retail strategies in China.

Coach also faces challenges in the Chinese market, such as Yamashita Arimatsu and Guliang Jiji, which are also local brands that are priced in the 1,000 yuan range and have a certain degree of recognition among Coach's target audience. These brands have no historical baggage and are more flexible.

Author | Cong Wenlei (Shanghai) Producer | Zhang Ya (Beijing)