Caoch SWOT Analysis

SWOT Analysis base on Coach, Inc.
Contents
I Organization History
II Strengths and Weaknesses

Strength 1 .Quality, Design & Product Diversification Strength 2 . Effective Consumer Channel Distribution Strategies Weakness 1 . Getting Customers to Keep Buying Season after Season Weakness 2 .One Global Distribution Center for 90% of the Business
III
Opportunities and Threats

Opportunity 1. Capitalizing on Domestic Market Trends
Opportunity 2 . International Growth Threat 1.Global Cost Increases Threat 2 . Current State of Japan
IV Summary
I .Organization History
Coach, Inc began in 1941 as a small leather goods workshop in Manhattan. Family members handcrafted the goods from skills handed down from many generations and consumers quickly looked to Coach for the unique nature and quality of their goods. It s Headquarters is still located in Manhattan in their former factory lofts. From here they have succeeded over the years by expanding into various product categories while maintaining the classic American style that Coach has become famous for. Coach is available in over 900 department stores in the US, 182 international department stores, retail store and duty free shop locations in over 20 countries, 161 department store shop-in-shops and retail and factory store locations operated by Coach Japan, Inc. Their vision remains the same; to be the leading brand of quality lifestyle accessories offering classic, modern American styling.
II . Strengths and Weaknesses

Strength 1 . Quality, Design & Product Diversification
Coach has earned the distinct reputation of being the portrait of American styling when it comes to high quality, luxury goods. Outstanding design, quality and product diversification has kept this brand on the cutting edge of their industry. Expanding upon their reputation, Coach has launched a sister brand under the label of Reed Krakoff. Just recently, in fact, Reed Krakoff was nominated for best accessories designer in the American Fashion Awards for his work. There is no other American luxury brand that focuses on fine leather accessories so Coachs product strategy is a distinctive competence among its domestic competitors. This is not to say that this strength cannot set Coach apart from global competition, the same for fashion is all about
perception and Coachs mission of offering American styling ,this give them a distinct competence that their foreign competitors cannot achieve.
Strength 2 . Effective Consumer Channel Distribution Strategies

As mentioned above, Coach has a grand brand of retail stores in North American and abroad. In addition to its signature full-priced retail stores, Coach has diversified and given each potential consumer access to purchasing Coach products through its online store, and factory outlets. The success in this area has potential to help offset the decrease in the wholesale distribution channel. Their multi-channel distribution model is diversified and includes substantial international and factory businesses. I believe this is considered a strength because it shows that Coach is dynamic. Their executive team is constantly getting creative and it seems to be working since it is noted to be one of the fastest growing retailers with compound annual sales growth over 20%. With this kind of momentum it will keep them ahead of their competitors.
Weakness 1 . Getting Customers to Keep Buying Season after Season

Coachs business is only based on the vitality of the luxury consumer goods market. Therefore the company is completely dependent upon the consumers want and willingness to spend money on Coach products. While Coach is a strong public company with over $3 billion in annual sales, keeping that number when consumer purchasing declines can be quite difficult. That needs foresight in the idea ,it isnt the product that is going to secure brand loyalt y and get the customers to buy.The demand has to come from the added value a brand can offer and company executives look toward outstanding customer service and effective distribution strategies to keep Coach product off the shelf and in the consumers hands. One way Coach can minimize the effect that stagnant markets may have on overall sales is to be realistic about their sales goals and buy and release inventory accordingly. Creating demand by closely managing distribution is a strategy that many luxury brands, such as Swiss watch maker Hublot, currently employ.
Weakness 2 . One Global Distribution Center for 90% of the Business

Coachs headquarters are still located in the Manhattan lofts which once were a production factory for their signature handbags.But Coachs distribution center opened in 1995 in Jacksonville, Florida,for the cold NY winters could hinder distribution. It is the center for all consumer channels; retail, direct to consumer and both domestic and international wholesale. 90% of all Coach distribution is done out of Jacksonville, with the other 10% done out of Coach Japan in Tokyo. Choosing Jacksonville was a strategic move for the brand, at the time, as the cost of doing business is low compared to other popular target. However, with increased international growth, especially in the Asia region, and with most of their products now being manufactured in China, it seems apparent that the having just one global distribution facility on the East Coast of the US may cost the brand more as they increase sales in the Asia region. Geographically and logistically it may be a good idea to look for new strategies in global distribution.
III Opportunities and Threats

Opportunity 1. Capitalizing on Domestic Market Trends
In this down economy,the luxury retail industry is showing signs of growth around the world. With domestic sales of luxury fashion on the rise Coach can position the brand to take advantage of positive luxury goods growth. According a report, the sales of luxury goods were up 10-12% last year while retail sales across the board rose just 6%. This is a direct result of the economic environment as the USA starts to gain confidence in spending on consumer goods. It reports that consumers are shopping high and low but not in-between, meaning Coach and Target benefit while middle level brands like The Gap and Nine West are stagnant. To capitalize on the current domestic market trends is a tremendous opportunity for Coach to drive sales hard and increase overall sales on their home.
Opportunity 2 . International Growth

Many businesses are seeing the value in expanding their global reach into the depths of China. The astonishing growth rate of Chinas economy is not just for the third world segments ,but in fact, the wealthier Chinese have much to contribute to increasing the opportunities for the worlds luxury brands. There is also the geographical size of the market where there are 125 cities in china with a population of more than a million. The potential for a company like Coach to open retails stores is also tremendous. I believe this opportunity comes not only from the economic environment but also the sociocultural environment as the Chinese become inherently more consumer goods driven.
Threat 1 . Global Cost Increases

All over the world consumer prices are increasing and Coach is not be affected by it. The rise in costs for materials, labor and transportation may force the company to increase prices at the cash wrap. This threat comes directly from the economic dimension as Coach cannot control costs of global resources. They have already moved all of their manufacturing to China. Now with increased oil prices, increased labor prices and the increase of material costs, Coach is having to take a hard look at their price structure. Whether they will cut their margin or increase retail prices is a question.
Threat 2 .Current State of Japan

While Japan recovers from their devastating natural disaster many field of business are stoped, and a significant portion of Coachs global business may be affected in the short and long term. This threat comes from the economic environment as the recent earthquake and tsunami that hit Japan has caused many economic markets to drop. In more general terms, however, the logistics of recovering from the devastation are sure to affect the economy of the Japanese household. This not only affects Coachs business in the short term, as retail sales locations were physically affected and the country is in a state of emergency, but also the long term strategic goals of Coach will be affected and timelines may have to be pushed out. Additionally, the Coach travel product category is made largely for the Japanese market so contingency plans will have to made to handle the effect this situation will have on current inventory levels and planned future business.
IV Summary
Coach has a wonderful opportunity to capitalize on increased domestic luxury spending and
overall international growth. The company must put emphasis on increasing sales incentives and value added services, such as free shipping on internet orders, to keep hold of the trend momentum. International growth in China can be achieved through well-thought out, long-term strategic planning. Giving some concerted attention to the logistics of wholesale distribution in Asia would also be of value to their tactical goals to increase business in that region. The threat of cost increases is something that every business is facing in todays economy. In a CNBC TV interview in January of this year, Lew Frankfort, CEO of Coach, Inc., said that while they may see low single digit price increases their focus is on countersourcing and reducing raw material costs by diversifying their manufacturing. Overall, cost increases are a huge threat and must be treated very proactively in order to achieve an organizations financial goals. The crisis in Japan, on the other hand, is not something anyone could have anticipated. Coach must be very attune to its international market to seek out potential sales opportunities that can offset the negative affects they are sure to encounter while Japan rebuilds. It may be beneficial, for example, to speed up the timeline on European expansion while Japans business stalls.

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SWOT Analysis base on Coach, Inc.

II Strengths and Weaknesses

Opportunities and Threats

II . Strengths and Weaknesses

Strength 2 . Effective Consumer Channel Distribution Strategies

Weakness 1 . Getting Customers to Keep Buying Season after Season

Weakness 2 . One Global Distribution Center for 90% of the Business

III Opportunities and Threats

Opportunity 2 . International Growth

Threat 1 . Global Cost Increases

Threat 2 .Current State of Japan

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