Jordan Zimmerly
Mrs.Straub
Insight Econ
29 February 2016
Michael Kors is Making a Comeback
It’s no secret that the retail industry is fragile. Companies strive to keep consumers interested and ensure annual profits. This is particularly hard because designer apparel is not exactly a necessity, it would be considered a luxury or an inelastic good. Michael Kors, a trendy fashion company, has changed its image to focus more on creating a “lifestyle brand”(Wahba).
In 2015 Micheal Kors’ profits were decreasing and the company's stock was falling drastically. The brand was considered basic and the quality of the purses began to die. Michael Kors thought like any business owner would, and asked himself, “what’s missing?” He discovered that the best way to increase profits was to come out with new products that would appeal to a larger target market. A whole new line of watches and sunglasses were created and they are also expanding their shoe line.
One of the best ways to get a product to sell is through exposure. Recently, Michael Kors took on the New York Fashion Show and wow’d the crowd, especially well known celebrities such as Blake Lively and fashion icon Anna Wintour (Long). By marketing his products through celebrities the consumer spending is expected to increase because who wouldn’t want to dress like a celebrity? Personally I find a product more attractive and trendy if I see a respected fashion icon representing it.
While other stores in the retail industry have been shutting down, in the recent years Michael Kors has opened 114 new stores (Long). The company has been reaching out internationally to expand its global presence by placing stores in strategic destinations. For instance, the company has been growing wildly in China and Europe, increasing their amount exports which is increasing their overall GDP. They are also working on developing their website to increase online sales. According to CNNMoney, “ Kors is up a whopping 43% at a time when most stock are in the the dumps.” This drastic change in stock will lead more people to invest in this growing company. Michael Kors has come out of its trough and has made its way to a peak becoming number one in womens handbag sales in the US (Long). Kors main competitors, Kate Spade and Coach, stocks have also been increasing but not quite as much as Kors. Overall, Michael Kors has found the perfect niche to demonstrate that his brand is in fact an affordable luxury that shows potential for growth in the future.
Work Cited
Alessandro, Don. "Blake+lively+new+york+fashion+week+michael+kors - Google Search." Blake+lively+new+york+fashion+week+michael+kors - Google Search. Celebmafia, 2016. Web. 29 Feb. 2016.
Long, Heather, and On Wall Street. "Michael Kors: Top Stock of 2016."CNNMoney. Cable News Network, 22 Feb. 2016. Web. 29 Feb. 2016
Wahba, Phil. ""The Brand Stands for Nothing for Anybody – Everywhere." Analyst on Michael Kors' Growing Problems." Fortune Michael Kors Weak Sales Suggest Its Falling out of Fashion Comments. Fortune, 27 May 2015. Web. 29 Feb. 2016.
I do own many Michael Kors products and have been noticing that their quality has been declining. With that being said, I have started saving money and purchasing some substitutes. It was interesting to see how this situation related to the business cycle and I thought overall it was a good fit. One question I had was what is their niche specifically? Overall great job!
ReplyDeleteI agree that creating a larger line of items to purchase through Michael Kors' line has definitely increased the demand from consumers because there are more products to choose from instead of just handbags. In all honesty, I hadn't heard of this company until this year, but due to its wide expansion in products I was made aware of it. It's interesting to think that these items may not be popular in the years to come, but as of now their items seem to be practically flying off the shelves. If this continues like it is today, the Michael Kors company will remain well above the break even point and will continue to make profits while people continue to buy their products. If for some reason this does not happen, Michael Kors may need to expand his company even more by providing more apparel and designs.
ReplyDeleteYou mentioned that the increase in exports of Michael Kors products is increasing the GDP; however, are Michael Kors manufactured in the United States? If not, then the exports to other countries don't have an affect on the GDP but rather the revenue of the company. Michael Kors is a brand that I have always held in high remarks, so I find it interesting that they were in a trough for the past few years (with the value of their stock decreasing). But the reasoning behind the downturn does make sense. It is extremely hard to market a luxury good because there are many other luxury substitute, as you have mentioned. Clearly though, Michael Kors is continuing to recover from the company's devaluing so they must be doing something right. This was an interesting post to read, especially because I love Michael Kors! I am curious about the production of the products though.
ReplyDeleteIncreasing the product line has definitely helped Michael Kors. As recently becoming an owner of my own Michael Kors, I understand the hype, even though they went out of style for a bit, They are definitely at a high point. If Michael Kors continues to create new products and other items, They will be way above the break even mark. Another way Michael Kors improved their sales was appealing to a new audience, I see way more teens with Michael Kors purses than anyone else, and that definitely helped their revenue.
ReplyDeleteI feel that the reason that brands such as Michael Kors have these times of trouble is because of the similarities in each of their products. I personally have never seen the need to get more than one brand name item such as this because after you get one most of the other ones are almost the exact same, so it’s good that the company is beginning to expand the type of products they produce and appeal to a new audience. Have more name brand companies realized this as well? You mentioned that they are increasing stock but in what specifically? If Michael Kors is the only brand that is expanding its product type than it could very well overpower the rest of the industry! Depending on what other companies realize this it could definitely increase the competition among the companies and in turn give consumers a better price or better quality product!
ReplyDeleteI also don't understand why someone would want more than one name brand item. However I also own my own Michael Kors so I do know the feeling of being "in" with the latest trend. And when he comes out with more items it's more that I want and I feel like I need to buy it because I want the new trend. I am sure other people are just like me and will have the money to buy the new trends each couple months. Which means his sales are just going to keep increasing!
ReplyDeleteIt’s impressive that Michael Kors was doing so poorly and was able to make such a comeback. Putting stores in specific places around the world was really smart of them, and it obviously helped them significantly. It would be interesting to see if their competitors like Kate Spade and Coach catch onto this idea and also put stores in strategic locations.
ReplyDeleteIt's interesting that you wrote about this subject because I've realized over the past years that Michael Kors has become a more prominent brand in today's markets. This blog post is also very inspiring because Michael could have given up on his brand, but instead, he persevered through the hard times and became a successful brand once again. Making an important decision to appeal more to the average buyer was a bold move, but over time it has paid off. Lastly, I do agree that increasing the product line gave the consumers more models to choose from and it can appeal to more buyers.
ReplyDeleteIt's great to read about a luxury company that has found a way to create a comeback, especially in a time where lots of expensive brands are having to close stores due to their lack of business. I agree with your stance that broadening their product line gave consumers more goods to choose from, which in turn appeals to more buyers. I am curious as to how the Michael Kors store in Mayfair is doing, though, because it never seems to be very busy. Great blog post!
ReplyDeletePersonally I am a big Michael Kors fan, but I also understand why the products weren't thriving before. A bunch of their stuff was just like everyone else's (Kate Spade, Coach, Marc Jacobs). Basically you were just paying for a name on the outside of the purse before and I get why people were tired of it. By expanding their range of products and even quality a bit they increased their demand for goods as it became more affordable. But as the product becomes more affordable, more average people wll be able to afford it (which is good for me) but then maybe the wealthy and famous will not find it as appealing which may cause a problem for the future.
ReplyDelete-Carson Cotterell
This is a great topic to relate to especially for girls. I like how you explained how if they export more items that increases the countries GDP. Also it was refreshing to see information about inelastic goods. Michael Kors is a very well known brand so it was surprising that they were not doing too well in the market. I guess it depends on how much money consumers have and their marginal propensity to consume.
ReplyDeleteIn an era in which consumers are looking for knock-offs or for cheaper items, it's great to see that luxury companies can still do well. I would definitely agree that the addition of more items brings in a greater number of customers who would be looking for a greater variety in one spot. Customers like areas where they can purchase many of their wants and needs in one spot.
ReplyDelete