LONDON — First the Continent and now the U.K. — Coach Inc. is sharpening its plans for the British market after making successful inroads into the rest of Europe.
The $3.61 billion brand plans to lay down retail roots here starting in early spring with the opening of a 3,000-square-foot shop at the Westfield White City mall in West London. Over the summer, Coach will unveil a 5,100-square-foot flagship — its first in Europe — on New Bond Street.
Those stores, which will stock men’s and women’s collections, will be the first of 10 to 15 Coach locations in the U.K. within the next three years. Coach is expanding in the U.K., Ireland, Spain and Portugal via a 50-50 venture with the British men’s wear brand Hackett.
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Chairman and chief executive officer Lew Frankfort said Coach was prepared to take on the U.K. despite the British government’s planned austerity measures, a slow-moving economy and much-anticipated belt-tightening on the part of local consumers.
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“Naturally, we prefer markets to be strong and resilient, but as a democratized luxury brand, I think we particularly appeal to consumers who are adapting to a tighter spend,” said Frankfort during an exclusive interview at the Mandarin Oriental hotel in Knightsbridge.
He said he hopes Coach’s wide-ranging, quality offer at accessible price points will appeal to customers. Bags in the U.K. will range from 175 pounds, or $277, to 550 pounds, or $869 at current exchange. “We’re striving to be a single-stop shop for all women’s accessories needs — regardless of their age or attitude,” he said.
Although Frankfort declined to give any first-year projections for the U.K. or European businesses, he confirmed Coach is aiming for a $250 million European business in five years time.
In continental Europe, the brand is off to a solid start: Frankfort said Coach’s first boutique at El Corte Inglés in Madrid generated 9,000 euros, or $12,420, in sales on its first day last week, outstripping the brand’s target of 2,000 euros, or $2,760, at current exchange.
On Thursday, Coach will host a party for 400 guests in a Paris loft space to celebrate its retail partnership with the French department store Printemps. Samantha Ronson and the Paris-based Benjamin Cassan have been hired to DJ the event, which is called “Fall in Love With New York.”
Coach has so far opened three boutiques with Printemps, including a 1,700-square-foot space at the Boulevard Haussmann store. Five additional Printemps locations are set to open by June. Frankfort said the French sites were performing well. “We’re very pleased with the initial success, and the brand is attracting both the local consumer and the global tourist,” he said.
No specific figures were available as Printemps is in a blackout period before the release of its financial results.
There is still work to be done in the U.K. market, where brand awareness is still “relatively low,” according to Frankfort, who has been with the company since 1979.
Lack of brand awareness was one of the reasons Coach pulled out of the British market in the Nineties. Coach’s first U.K. foray, which included a freestanding store on Sloane Street, fell at a number of hurdles, including an unfavorable dollar-pound exchange rate — which made price points skyrocket — and a limited product assortment.
But Frankfort said the game has changed for Coach in the U.K. “Back in the Nineties, it was the old Coach — with the unlined, classic leather bags — and the brand did not have the breadth of personality or the product assortment it has today,” he said. “We didn’t have a local partner — we tried to run the business remotely from New York, which is why we’re thrilled to be working with Hackett. Today, we also have a very substantial following in Asia and the Middle East, which will help support local awareness here. We know that tourists like to purchase Coach when they are abroad.”
Frankfort said Coach chose Hackett, the sporty, collegiate British men’s brand owned by Pepe Jeans SL, because “they are passionate specialty retailers who truly understand the importance of the four-wall experience: The store environment, the merchandising and the customer.”
By June, Coach and Hackett expect to open five more shop-in-shops at El Corte Ingles, four of them in Spain and one in Portugal.
Vicente Castellano, Hackett’s managing director, told WWD the company teamed with Coach because the potential in Europe is immense.
“Although some years ago we decided not to take other peoples’ brands, we understood this was a unique opportunity and decided to go for it. We really understand the product-price combination for Coach and feel it is perfect for the European market,” he said, adding that he sees the current market conditions in Europe as a “big opportunity, not a threat.”
Coach also has plans for wholesale distribution in the European markets, although Frankfort declined to give any details. He also said there was “potential” for freestanding men’s wear units in the U.K., much like the one that has opened on Bleecker Street in Manhattan.
Although Coach’s marketing plan for the U.K. is still being hammered out, Frankfort said he plans to reach customers through a wide range of media, including social networking, blogs and the brand’s new informational site for the local market, uk.coach.com.
There is no lack of competition for Coach in Europe, ranging from megabrands such as Burberry, Gucci and Louis Vuitton to smaller labels such as Mulberry, Anya Hindmarch, Longchamp and Furla.
Luca Solca, senior research analyst at Bernstein in London, said he’s upbeat about Coach’s prospects in Europe and stressed the brand’s biggest competitors will be those megabrands with “aspirational” price points.
“Coach clearly offers an interesting proposition and a sweet spot in the marketplace. And it will benefit from being the ‘new kid on the block’ in Europe. They’ve had good success in China and Japan with their accessible luxury proposition, but they will need to put enough marketing investment behind the brand here if they want it to succeed,” he said.
Frankfort added that Coach by no means views Europe as a generic retail zone, but rather as a clutch of highly individual countries. “And we are tailoring our entry and marketing strategies to the local requirements,” he said.
“British consumers tend to be more straightforward and measured — less emotional than consumers in Spain. The British want longer-lasting products. They are more classic, while the French and the Spanish want products that are more stylish,” he added.