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Another summer day, another issue of the Wall Street Journal, another dismal headline:
“Vacancies Rise at Retail Centers”.
The ICSC is predicting that 6500 stores will close this year, with vacancies going up to 6.3% for the second quarter. I have to admit that after years of hearing how “over-stored” the country was, perhaps we will lose some of the sameness that has made mall shopping about as exciting as a baseball game these days (even though our Rays are currently in first place!). Frankly, there are a lot of retailers who shouldn’t be around anymore since they provide no real reason for being and--more importantly—no reason for anyone to shop their stores. Just as a forest fire cleans out the woods so that new growth comes back healthier and fuller than before, perhaps our retail scene will cleanse itself of many stores who just take up space in the shopping centers and on downtown streets.
However, despite all the recent depressing news, there are some stores who continue to excel and grow successfully. One chain that continues to break the mold is Coach. I’ve been using them as an excellent example of retail branding at its best for a number of years now, and they continue to differentiate themselves from the other department and specialty retailers in the marketplace. The reason, I believe, is that Coach—with CEO Lew Frankfort leading the way—has maintained its own distinct personality. Let’s face it, there isn’t much news in another leather bag. But Coach somehow keeps its customers—old and new—excited about buying this important accessory even when there is less cash to actually put into the purse or wallet. Having had consistent growth on average of 51% the past five years, Coach has seen its trends slow down to about 11% in net income. A dramatic slowdown, but still impressive when compared to the other stores in our retail world. Despite this, the company continues with aggressive expansion internationally (especially in China) and in its product lines and assortment.
In a time when everyone seems to think that only the discounters are doing well, Coach breaks the mold. Their merchandise is expensive, but they appeal to customers at a number of economic levels with a brand that means quality and prestige, but isn’t out of reach. As Frankfort says, there are many markets, many shopping centers with customers who have never experienced Coach and their goal is to go after these markets with strong branding and new lines that maintain the panache and heritage of the brand.
In short, Coach has maintained its distinctive personality and continues to stress innovation during a time when many stores just try to keep their heads above the waters of recession.
Sure there are others, like Costco, Walmart (yes, Walmart) and Saks who also are maintaining their distinct personality while they continue to grow their brand through effective marketing. I can hear the 50’s singer, Lloyd Price, crooning now the virtues of
“You’ve got Personality—walk, talk, smile with Personality.” It’s all about branding and creating your distinctive place for customers to shop no matter how bad the economy may be.
