Great thread Bruce, and some thought-provoking responses. Thanks!
There was a good article in business week a few years back that shed some light on this. Here are some excerpts...
Quote:
BW 50: Coach's Split Personality How the retailer manages to keep both fashionistas and outlet shoppers happy
Coach has expertly managed its brand to reinforce that upscale image. But fashionistas like Martin might be shocked to learn that the fastest-growing part of Coach's business these days is the factory store. That's where Coach sells off last season's accessories or irregular products at discounts of about a quarter off. Sales in those outlets grew 36% in the past quarter, vs. 14% in full-price stores. Overall, quarterly sales grew 30%, to $449 million, and earnings jumped 48%. Coach's torrid growth streak helped earn it the No. 17 spot on the BusinessWeek 50 list of top corporate performers...
(Coach has) developed a strategy that strictly separates fashion-forward Coach fans from the ones who love snapping up out-of-date gear on the cheap. The company's 85 factory outlets are normally located at least an hour's drive or 60 miles from its 199 full-price stores.
Because Coach never offers discounts in its regular stores or via the Web -- and doesn't allow department stores to mark down Coach goods either -- those who want bargain-priced products can get them only at outlets. And they won't get access to the latest products, which are rolled out each month in regular stores. Instead, they get discontinued models or older styles that are manufactured specifically for outlets. "It allows [Coach] to dispose of items that don't work, in a very different channel," says Kurt Barnard, president of Barnard Retail Consulting Group.
BW 50: Coach's Split Personality |
We were actually on the phone with a client just today and this very thing was brought up. He has a product that can be marketed to the biz-opp crowd and also to more wealthy prospects, but there has to be perceived separation between the two or the strategy will fail.
A lot of other good insights in the BW article and also in the comments from Coach loyalists.