Coach coffee shops build on success with Gen Z
With its new coffee shop, Coach wants to drive more frequent trips to its stores and solidify its gains with Gen Z shoppers. One of its menu items is a Tabby Cake, a cake pop-inspired dessert that’s in the shape of Coach’s Tabby purse.
Courtesy: Coach
At Coach’s new shops, the latest purse is made of cake batter and colorful shades of white chocolate.
The legacy leather handbag maker’s recent venture is a coffee shop that offers Tabby purse-shaped sweets, tiramisu- and pumpkin-flavored coffees, matcha drinks and more. Each shop is attached to a store that sells Coach’s lineup of handbags, sneakers and other apparel and accessories.
On Friday, the company opened another location of The Coach Coffee Shop – the third in the U.S. – in The Mills at Jersey Gardens, an outlet mall roughly 16 miles southwest of New York City. Coach will open the fourth in Woodbury Common Premium Outlets, also in the greater New York City area, on Oct. 3.
It plans to open about 12 to 15 coffee shops each year around the world, while also adding to the menu, rotating seasonal food and drinks and selling exclusive tote bags and other merchandise, said Marcus Sanders, vice president of global food and beverage at Coach.
With the coffee shops, the Tapestry-owned fashion brand wants to build on recent gains with shoppers, particularly Gen Z, by giving customers more reasons to keep coming back to its stores.
“We understand the consumer today loves experience,” Coach CEO Todd Kahn said. “They want a full experience, particularly the young consumer.”
Coach isn’t the only retailer that has tried to create experiences for customers. Ralph Lauren has coffee shops called Ralph’s and a restaurant, The Polo Bar. Luxury furniture and home decor retailer RH has opened restaurants across the country and even a hotel, which it calls RH Guesthouse, in New York City. And Uniqlo opened its first coffee shop in North America earlier this year inside of its clothing store on New York City’s Fifth Avenue.
Coach Coffee Shop
Courtesy: Coach
Sanders, who previously worked for Starbucks and Ralph Lauren Hospitality, said coffee shops offer a friendlier price point than Coach merchandise, especially for young teens. On a recent visit to The Coach Coffee Shop in Austin, Texas, he said he saw two teen girls split a Tabby Cake in half and clink the pieces against one another in a cheers while recording a TikTok video.
Some of those teens don’t have the budget now for a handbag, but may become future shoppers, Sanders said. And even older customers have limits on how many fashion purchases they can make in a month or year, he said.
“You can afford a coffee more often,” he said. “So I think that’s what we’re excited about is our customers being able to visit us more often.”
Building on Gen Z growth
Coach is trying to seize upon brand momentum that’s fueled sales growth, brought in new customers and sparked stock gains. The company has driven up the average paid by shoppers for its products at a time when many retailers are relying on promotions. Its bag charms have trended on TikTok and its Large Kisslock Frame Bag, which retails for $695, sold out even before Carrie Bradshaw carried it in an episode of HBO Max’s “Sex & the City” spinoff, “And Just Like That.”
Shares of its parent Tapestry, which also includes struggling brand Kate Spade, have climbed about 67% so far this year or about 600% over the past five years.
Coach has gained particular traction with Gen Z, which roughly spans ages 13 to 29. The retailer said it attracted 4.6 million new customers in North America in the most recent fiscal year ended June 28, including over 1 million in the fourth quarter. Nearly 70% of those new customers in the past fiscal year were Gen Z and millennials, the company said.
Coach has also blurred the distinction between its retail channels with those younger shoppers’ behavior in mind. It dropped the word “outlet” from the signs outside its outlet stores and is selling more of its best-known, full-price items at those locations along with the ones in flashier destinations like New York’s Fifth Avenue.
Kahn said it began experimenting with the approach about two years ago, but added more full-price merchandise to outlets last year after learning customers were racing to their nearest store for a Coach item they’d seen on social media and finding it wasn’t there.
“Since Covid, particularly for this younger generation, there’s a return to in real life shopping and malls and outlets are part of that equation,” he said in a CNBC interview. “They see the TikTok image. They see what they want. They’re like, ‘I want to go get that.'”
At an investor day this month, Kahn said he and the company have continued to study the shifting behavior of shoppers, especially the likes and dislikes of Gen Z. On…