Women prefer Coach Inc.’s leather handbags to those of its major rivals, but they are less impressed by their lofty price, according to a recent market research piece by J.P.Morgan. According to a survey conducted by J.P. Morgan of 500 women between the ages of 22 and 55 who have purchased a handbag in the past year, Coach was selected
most as “brand of choice,” but customers displayed low awareness of changes made to the product line to boost growth. In terms of styling and quality, 72 percent said that Coach’s product was “unchanged.”
However, among the women who purchased a bag in the 300 to 500 dollars price range, 72 percent said Coach bags are overpriced.
In this vein, J.P.Morgan experts point out that the brand was likely hurt by the shift by consumers to Factory stores during the recent downturn in search of discounts, and the company may now struggle to persuade them to pay full price, said J.P. Morgan analysts.
“The greatest price push back (is) Middle America (about 80 percent at the 75,000 to 150,000 dollars income level), confirming qualitative field checks that promotion is needed to spur demand,” they wrote in a note.
Michael Kors also fails to price its handbags to avoid them perceived as “overpriced”
But Coach was not the only handbag brand to be viewed negatively by the J.P.Morgan polled women, as Michael Kors came in below Coach with only 12 percent saying it was their brand of choice, compared with 21 percent for Coach.
A full 77 percent said Michael Kors’ handbags were overpriced.
Meanwhile, just 10 percent of those surveyed said Kate Spade was their favourite handbag brand. And rounding out the survey, 6 percent said Louis Vuitton was their favourite, while 3 percent said it was Tory Burch. Nearly half --47 percent-- listed “other” as their favourite.
“The onus still remains on the bulls to disprove the structural industry bear case, despite the stocks at multiyear lows today,” said the J.P. Morgan note, reports ‘MarketWatch’.