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COACH TO BOOST JAPANESE PRESENCE IN ’05

BY BRANNON BOSWELL

Despite Japan’s stagnant economy, or perhaps because of it, Coach has found a loyal local following there. The New York City-based brand’s “accessible” luxury handbags and accessories, which retail at significantly lower price points than competitors Gucci, Louis Vuitton and Prada, are a hit with consumers, and Coach has grown its market share to 8 percent in recent years, the company says. Now, the chain sees an opportunity to double its Japanese sales to $740 million and expand its market share to 15 percent within the next four years. During that time, Coach says it will open at least 10 new stores per year in the country.

“Our business has grown rapidly, yet we do not believe we’re even at the halfway mark,” said Coach Japan’s President and CEO Ian Bickley, in a press release. Coach plans to have 130 retail stores in Japan by 2009, including at least 15 flagship stores. The chain currently has 90 small stores and seven flagships in Japan.

Last month, it hired Japanese executives from such companies as Starbucks Japan to guide the expansion.

“We have the right team in place to drive this growth and capitalize on the overwhelming consumer response to our accessible luxury division,” said Coach Chairman and CEO Lew Frankfurt, in a press release.

Who is buying Coach products? A demographic group dubbed “parasite singles” by research firm Boston Consulting Group, which has become a major force in Japan’s consumer economy. These 5 million young single working women still live with their parents and spend about 10 percent of their annual income on fashion goods from such retailers as Louis Vuitton and Coach.

Chanel is also doing well in Japan. It opened a $250 million, 14,000-square-foot store in Tokyo’s glitzy Ginza district in November. The Japanese market makes up about 50 percent of the French retailer’s total revenue, Chanel says.

As Coach tries to make more inroads in the market, it is sure to face a tough competitor in French luxury conglomerate LVMH, whose Louis Vuitton brand currently makes up 30 percent of Japan’s luxury market, sources say.

In March Coach filed a complaint with the Japanese government accusing LVMH of putting pressure on Japanese department stores to shun Coach products.