On Monday, the news broke that Coach bought Kate Spade for $2.4 billion. According to the New York Times, they executed the purchase to aim at the “weak middle” of the fashion market, since most consumers either buy more expensive brands (like Louis Vuitton) or less expensive fast-fashion brands like H&M. We were curious about what Coach gains both in assortment and pricing from its purchase, so we dug into the Indix Cloud Catalog for some answers.
We have 25,410 Coach-branded products and 15,982 Kate Spade-branded products in our Cloud Catalog. The Coach product mix comprises mainly Handbags (33.6%), Shoes (23.9%), and Clothing & Accessories (20%), where the Kate Spade mix is strongest in Jewelry (30.9%), and then also Handbags (25.1%) and Clothing & Accessories (23.0%).
COACH PRODUCT MIX
KATE SPADE PRODUCT MIX
From an assortment perspective, Coach gains a stronger jewelry presence while augmenting its other strong categories. According to the New York Times article, Coach handbags retail for $285-$3,000, and Kate Spade’s for $100-$500. When we looked at the mean and median prices for both brands across categories, we found something slightly different:
Median Sale Price: $74
Mean Sale Price: $123
Max Sale Price: $3,000
Median Sale Price: $88
Mean Sale Price: $121
Max Sale Price: $999
MEDIAN SALE PRICE
MEAN SALE PRICE
The mean and median prices of Kate Spade handbags are higher than those of Coach in our catalog. Because many of the retailers in our dataset were discount stores (like Overstock or Nordstrom Rack) or marketplaces (like Amazon Marketplace), this may indicate that these off-price sellers have the opportunity to sell more Coach handbags than Kate Spade.
Finally, we looked at the stores mix. We wondered whether this brand acquisition gives Coach access to more retailers. Out of the 2,000+ sites that Indix crawls, 61 carry Coach products and 70 carry Kate Spade. There’s an overlap in 39 stores, giving Coach access to nearly 50% more sites with this acquisition.
Note that we didn’t look at Jack Spade in our initial analysis, which would have added 5,598 products to the Kate Spade brand.
Overall, this acquisition strengthens Coach’s position in the mid-market segment just as the Times said. It augments their primary categories of Handbags and Clothing & Accessories, while significantly strengthening their Jewelry assortment. Price points are similar enough to support the strengthening theory. Finally, this acquisition increases their access to retailers, which may be one of the primary reasons that the Coach CFO called out many synergies in the merger.
Also published on Medium.