Land of Opportunity: Coach Aims to Bag Chinese Luxury Market

With a newly affluent class that has accumulated an immense amount of wealth and an emerging middle class that wants a piece of the luxury pie. With rather disappointing sales increases in North America (only 1 percent last year), Coach has started to expand its outreach towards the East.

CoachJust in this past year alone Coach has seen an increase of 40 percent in sales and holds 6 percent of the luxury market in China. Coach provides middle class consumers with “affordable luxury” while at the same time catering to the upper-class market. The best of both worlds, Coach makes luxury goods with price points as low as 38 dollars (USD) and as high as 10,000 dollars (USD) for their “Legacy Crocodile Tote”.  With increased demand from women with newfound purchasing power, younger consumers who aspire to be a part of the luxury world, and men which make up 55 percent of the luxury market in China (compared to 40 percent worldwide), Coach now has over 100 stores in mainland China! But how do they do it?

 

Like many luxury brands, Coach recognizes the increased purchasing power of consumers in China and sees a great opportunity for growth.  The company is incredibly active in creating an ideal product and shopping experience for their customers. Their most recent venture has been the launch of an e-commerce site dedicated exclusively to its Chinese consumers. The site offers exclusive online promotions, new designs every month, and special deals for customers who register an account with the site. 

Coach in China Social MediaCoach has also been incredibly successful in social media, which has become a crucial aspect of brand marketing in recent years. Almost half of the country’s population is online and almost all of them have at least one social media account (Quartz). And according to L2 Think Tank, Coach is “The Most Digitally Competent American Fashion Brand in China”. Coach is constantly engaged directly with its over 600,000 followers on China’s most popular social media site, Weibo through running campaigns that rely on involvement from the users as well as commenting on and reblogging posts from Weibo’s most high profile users.

Some of their most recent campaigns have included a New York Style contest where users vote on their favorite street styles worn by Chinese bloggers to be entered for a chance to win Coach merchandise and another called “What’s in Your Coach Bag?” where users can enter their own photos of what’s in their current Coach Bag.

 

Coach

Another factor that makes coach so desirable in the Chinese market is that the brand makes a conscious effort to connect with the customers on both a personal and cultural level. Chinese celebrity Leehom Wang has worked with the brand on an ad campaign designed to reach the men’s market and last year they collaborated with graffiti artist Zhang Lan to create a limited edition line called “The Dragon Collection” for the year of the dragon in China.

 

 

Though the company has made some remarkable breakthroughs into the market. It cannot slow down its efforts. It seems that China’s consumer are always looking for the next best thing: bigger, better, and more extravagant. Coach will continuously have to change up its product line in order to hold the new markets attention. If they don’t demand will drop drastically.

 

 

What’s Next?

 

With such amazing opportunities on the horizon Coach is looking to expand their Asia market beyond China. This year the company acquired 26 domestic retail Coach businesses in Taiwan, bought back 6 locations in Singapore is planning a buy back of its South Korean distribution to allow the brand to regain control of one of the fastest growing luxury markets in Asia. According to Forbes, South Korea holds 5 percent of the premium handbag and accessories market with Coach having 120 million dollars (USD) in sales for that region.

 

Coach ChinaCoach’s greatest prospect lies in the fact that it still not as widely recognized as other luxury brands dominating the market so it is not in direct competition with them. Coach is also looking at further expansion into the European market, but for now it looks like Asia is the golden ticket to reestablishing Coach as desirable product.

 


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