With recent news regarding Coach’s $2.4 Billion takeover of Kate Spade, it made me think about the difficulties retailers are facing today. Already in the past year we’ve had Nasty Gal filing for bankruptcy and American Apparel being sold to Gildan. More retailers are switching to e-commerce as a way to drive sales rather than brick and mortar stores, Wet Seal being another recent example. Today I’m taking a look at some areas that could have lead to Kate Spade’s auction.
Kate Spade’s Branding
Don’t get me wrong, I love Kate Spade as much as the next person. But I think the brand became convoluted with their products as they were trying to sell lifestyle products as well as their well renowned handbags. As a result, their branding has altered and prices have been slashed, thanks to various outlet stores. They were gaining more ‘B and C targets’ as opposed to their main ‘A target’ audience as an effect.
Aiming for Youth
Even though the company have gone through rebranding, approximately 60 percent of Kate Spade’s customers are millennials.
After becoming Kate Spade & Company in 2014, you can see that they have tried to reach a younger market for accessories – however by changing their demographic whilst trying to keep their other audience satisfied, they were simply trying too much and went away from their niche that made them successful in the first place.
Why did Coach buy out Kate Spade?
In simple terms, they see potential overseas and into a larger international market. Another large question mark for Coach is over the branding. Do they revert back to luxury handbags that their original fans love and adore? Or aim for more millennials that make up over half of the profits?
Whatever direction Coach decides to choose, I think that they can now push for a large change in the face of Kate Spade, as opposed to trying to reach out to a lot of different demographics. I’m excited to see where the company goes with certain products. Where do you see the brand heading?