Not long ago, Coach was the name to have on your handbag. Plenty of celebrities were walking around with them. Gwyneth Paltrow, Eva Longoria, and Jennifer Garner all had one, as did many other American women, whether the real thing or at least a knockoff.
Things changed fast. Now Coach is feeling pressure from competitors like Michael Kors, Ralph Lauren, and Tory Burch. It announced that sales dropped in the 2012’s final quarter despite the busy holiday shopping season and an overall 10 percent growth in the handbag market, marking the first time since it went public in 2000 that “North American sales grew more slowly than the broader market for women's handbags and accessories,” according to The Wall Street Journal. And North America accounts for two-thirds of the company’s sales.
So Coach says it's branching out, attempting to turn itself into a lifestyle brand — and turn itself around in the process. It will grow its footwear line this year before focusing on women's apparel, jewelry and watches, British Vogue reports. And its stores will also get a new look, Women's Wear Daily reports.
Since Coach doesn’t have a brand name at the top of its executive tower like growing competitors Kors, Burch, Lauren, or Fifth & Pacific’s Kate Spade, it's going to need to do a serious push on branding. The hope is that moving into lifestyle-brand territory will allow it to sell to sell more lower-cost women’s clothing after having lost ground to competitors, Bloomberg reports.
"Kors seems to have more floor space in the department store, and people were gravitating toward the brand this holiday season," Brian Sozzi, chief equities analyst for NBG Inc., an independent research firm in New York, told the Journal.
There's certainly reason to believe the expansion beyond handbags is necessary. In fall, Coach introduced a new line of handbags called the Legacy line, which are supposed to recall its own classic bag design. But not even that helped boost sales.
All this reinvesting will take some money, of course, and getting into other markets means dealing with other competitors – or trying to make inroads on categories where brands like Kors and Burch already already have a major head start.