Coach (NYSE:COH) offers a wide selection of women's designer handbags, wallets, shoes and jewelry. The company mainly sells directly to consumers and indirectly through retailers. In 2012, Coach was the number 1 searched handbag brand in the world.
Kate Spade is a designer, marketer, wholesaler and retailer of fashion accessories for women. Retail holding company Fifth and Pacific (FNP) owns Kate Spade, which it acquired from Neiman Marcus in late 2006.
Management at Kate Spade has successfully turned the brand into a full lifestyle brand. For example, the flagship SoHo store in NYC shows everything from sundresses to sunglasses to stationary. The brand's strategic execution has paid handsomely. The Kate Spade brand has grown over 400 percent in the last five years. According to Deborah Lloyd, Chief Creative Officer of Kate Spade, its handbags have become the go-to accessories to its ready-to wear collections, an enviable victory that Coach has failed to accomplish.
For fiscal 2012, Coach had sales per square foot of about $1,871. By contrast, in fiscal 2012, sales per square foot at Kate Spade amounted to about $1,019. This is definitely a metric to keep an eye on as Kate Spade continues to enjoy phenomenal growth. In fiscal 2012, sales at Coach and Kate Spade increased 14.5 and 63 percent, respectively.
The Kate Spade brand has a clear digital presence in terms of marketing, CRM, and e-commerce. The brand's blog is entertaining, educational, and an excellent channel to communicate with fans. Currently, Coach's e-commerce platform lacks the presence of a blog.
Brand Personality is King
Undeniably, both brands offer products with good quality, appealing design, and excellent customer service. However, the biggest difference between both brands is management's ability to clearly identify and execute a compelling brand personality that will resonate with their target consumer and ultimately translate into sales.
Coach seems too broad and somewhat unclear about its consumer. For instance, its advertising campaigns range from the portrayal of a young woman who is trendy and very fashion forward, while other times she's portrayed as a romantic bohemian. Evidently Coach is still struggling to find the perfect image that inspires purpose, meaning, connection, and loyalty. On the other hand, Lloyd at Kate Spade has clearly identified the brand's consumer as "quick, curious, playful, and strong" and its advertising campaigns and e-commerce editorials clearly paint that image. In addition, based on extensive consumer research, it was revealed the Kate Spade consumer loves showing off her waist, thus the brand makes the products to satisfy that demand.
Once inside a Kate Spade boutique, it is inevitable to be drawn into the youthful, convivial, and vibrant energy the brand exudes. The brand literally feels alive. For Coach, this is where the weakness lies: They lack a strong brand personality. Not only does the marketing lack a cohesive and clear identity of who its target consumer is, but also the retail stores lack the convivial, optimistic, and fun environment that appeals to young consumers.
Thus far, Coach has been unsuccessful in becoming a lifestyle brand. In my opinion, I suspect Kate Spade will continue capturing market share, unless management at Coach is able to bring some magic to the brand the same way Deborah Lloyd brought it to Kate Spade. With the debut of Kate Spade Saturday -- a more casual, affordable fashion merchandise extension that should appeal to a younger consumer - in Japan earlier this year, the brand is well positioned for international growth.