Ten years ago a Coach handbag was the "it" accessory to have. Back then, there weren't any high-end bags for normal women: No one had a Chanel and there weren't any high end "boutique" bags, like Celine, yet.
Then the Coach handbag came along and changed the game
Soon every high school girl, soccer mom, or woman executive had to have one. It was priced higher than the "nice" handbag that a woman would buy once a year at Macy's, but not as exclusive as a Louis or Chanel. It was "doable" for the average woman.
I remember after college, my sister got a part time job at the Coach store in downtown Chicago. The store epitomized the high end lifestyle brand that Coach was at the time: A beautifully designed store on Michigan Ave with a young, hip staff and high priced merchandise with a limited supply and no discounts.
Now, no woman, with any fashion sense, would be caught dead carrying a Coach handbag.
What the hell happened?!
They got greedy.
Every publically traded company has quarterly numbers to hit and can never, ever miss your targets. You'd better show incremental growth every quarter if you want to keep your stock price high.
It reminds me of that famous scene from Goodfellas:
Business is bad? Fuck you! Pay me
Oh, you had a fire? Fuck you! Pay me.
Place got hit by lightening, huh? Fuck you! Pay me.
That's how it works on Wall Street. For a company like Coach, that means opening more stores, getting their product in more national chains, and selling more handbags.
The problem is that by keeping Wall Street happy, Coach slowly killed their brand. It didn’t happen overnight, though….It was a slow death.
For a couple of years I'm sure the CEO looked like a hero: they were hitting their revenue numbers, killing their growth targets, etc.
But then one day, they looked up and saw their product in every outlet mall in America.
If you’re running an exclusive lifestyle brand, you can't run it like a typical quarterly business. If you're making tires, of course you're going to want to have incremental growth and grow your sales as quickly as possible.
But if you're making designer handbags and Macy's wants to carry them, it's not an easy decision to make… It's very tempting to take the money now, even though it might hurt your brand in the long run, so you can hit your numbers.
If you are ever caught in that situation, think about Studio 54, the legendary 70's disco; The more people they turned away, the more people wanted to get in.
It's ok to say "no" to new business and if you are an exclusive, lifestyle brand you'd better say "no" a lot!
Christian Louboutin is a company that says "no" a lot!
I wanted to buy my wife a pair of nude Louboutin Pigalles for Christmas last year, and I started looking in October because of the limited supply. I looked everywhere: Barneys, Nordstrom, the Louboutin website, etc. for months and no one had a single pair.
By December, they were still out of stock, so I had to settle on a black pair.
I have no idea if Louboutin hit their revenue targets last quarter, and it doesn't matter because it's all about image. They have been saying "no" for the past ten years and you know what? We want them even more!
You want nude Pigalle heels? Fuck you! Take black.
Thank you Louboutin for allowing me to purchase the black ones for $600, I'll take them but do you think I'd be worthy for the nude ones next year? Pretty please?
What are some other brands that have lost their way? What brands maintain their exclusive status year after year?