Category: Outlet

Bloomberg explains that Michael Kors has so far spread “aggressively” and has often been criticized for it: now that the brand is expanded and popular across America it may be difficult to get the perception of that exclusivity back.

Also for Bloomberg , frequent discounts on products have been damaging to the image and perception of quality : not only have prices been lowered by authorized dealers who sometimes sell the brand together with others in the departments of some department stores, but Michael Kors’ stores themselves have tried to lower prices to compete with each other in sales.

The risk is that it will happen what happened to Coach who extended his chain of outlets (stores where he sold older collections at discounted prices) until it came to represent about 70 percent of his sales and then chose to resize it. Instead, Kors hopes to keep sales through its outlets at around a quarter of the total.

Commenting on the economic data for the second quarter of 2015, Michael Kors, who is the creative director and founder of the brand, explained in a conference call with analysts that at the moment the company and its collaborators are cutting prices to get rid of the arrears of old collections. and that in the second half of the year Kors will try to improve the online sector to increase sales. At the moment Michael Kors sells from his website only in America, while in Europe he relies on stores like Zalando or Yoox, and has always preferred to invest in physical stores rather than on the internet.

In any case, thanks to the opening of stores also in other continents and not only in North America, where the risk of saturating the market is high, in the second quarter of 2015 Michael Kors’ revenues grew by 6.9 percent, up to at $ 1.13 billion: better than analysts’ forecast of $ 1.08 billion, although the company said costs related to online trading and opening new stores weighed on internal forecasts, which were even more optimistic.

Bloomberg has said that Michael Kors, the American brand best known for its handbags and accessories for women, has placed a significant demand in the fashion business: it is worth more to open more stores? And they said no. After planning the opening of hundreds of stores in North America, Michael Kors has chosen to stop in order not to damage the image of exclusivity that a luxury brand must maintain for its regulars and potential customers.

Bloomberg writes that when the company went public in 2011, it began a widespread distribution of its stores in North America: four years and 200 stores later it decided to stop. John Idol, the managing director, said the company will still open a few stores on the continent and then the presence will be deemed sufficient.

The initial plan was to open 400 stores in America to compete with rival brand Coach (also an American manufacturer of bags and accessories for women), but an analysis of the commercial strategy has changed the company’s mind. the more you sell”: it is an approach that works in the case of fast food or low-priced chain stores, but Michael Kors does not fit into these categories.

Industry experts have always referred to the brand as an example of “affordable luxury”: it is less expensive than luxury brands, but more expensive than the brands that can be found in shopping centers, and for this type of company the perception of prestige is essential (in Italy the prices of a Michael Kors bag range from around € 125 to € 425). Having too many stores would make the brand too accessible, and that would be counterproductive: to get customers to spend that money on their products, Michael Kors and similar brands have to rely on their reputation and a less accessible image.