Have you noticed how few brands are moving away from being mass-y and trying to elevate their statuses?MK
Michael Kors is one such brand, currently on a rocky road to reach a top-tier luxury brand status.
Michael Kors’ plans to elevate its perceived status among fashion shoppers. Here, we break down its strategy for effectively changing its reputation so consumers will be willing to splurge a little more. It’s quite interesting how they are playing at the psyche of consumers. Michael Kors clearly understands that, in order to be regarded as a luxury brand, you’ve got to behave like one. Historically, premier fashion houses including Chanel and Louis Vuitton have not offered public discounts or been present at mass-retail store. Michael Kors has started pulling out of Macy’s and Neiman Marcus, while also not allowing discounts.
Joseph B. Parsons, Michael Kors’ CFO and executive vice president, and John Idol, its chairman and CEO, have highlighted that they are sticking to their current route despite quarterly sales dropping.
“We’re really focused on reducing the amount of promotional activity that we are going to be involved with as a brand,” Idol said in November 2017. “We think that’s the right thing to do for the health of the business.”
Kors is not alone. Kate Spade and Coach are overhauling and completely changing their image and approach towards consumers. With Coach signing Selena Gomez as their newest face, they are hoping to tap into millennials with the highest spending power. With efforts to move away from being a ‘poor woman’s luxury,’ they hope to become more aspirational. Coach India launched it’s first store in Mumbai with glitz and glam to ensure they set the right mood for India from the get-go.
We all know that discounts can have a cheapening effect on the brand image. According to Gloss, Richard Church, a retail analyst at the data analytics firm Discern, approves of the tactic. “Discounting a product and expecting to maintain a premium image are contradictions,” he said. “When your product is increasingly in the off-price channel and is being discounted in department stores, your brand image suffers.” It’s the math of optimizing sales volume relative to the unit price of a brand that ultimately drives profitability, Church said: “When a brand [attempts to] drive more sales volume with more promotion, the customer begins to wait for the discounts. Ultimately, the brand will likely never regain a full price margin and the equity in the brand suffers.”
Jumping back to our Economics 101 class, we all are aware that reducing supply creates more demand. According to Paula Rosenblum, co-founder and managing partner of RSR Research, it’s about time. “The Michael Kors brand is almost crazily over-exposed. When you get too much availability of any ‘luxury,’ it becomes a commodity.” And the brand is not alone. In August, Coach made the decision to completely move out of department stores in the name of boosting perceived value, and Ralph Lauren pointed to “pulling back inventory” in its earnings statement released this week.
Despite the fact that it’s experiencing obstacles, it made no mention of reverting to its old retail ways. Though Michael Kors does not expect to change its image overnight, the brand is charging ahead with the want to be perceived as ‘premier’ or ‘luxury.’”
—by the B*