Essay: Michael Kors

Michael Kors is one of the most rapidly growing and successful luxury lifestyle brand in the world, operating in over 95 countries worldwide. American award-winning fashion designer, Michael Kors and his team of professional managers successfully lead the mega brand. The brand has produced a range of distinctive products with a jet-set aesthetic with strong and coherence to its brand image.
For this report, in-depth researches, analyzing of financial figures and the studying of case study are conducted to allow proper investigation to seek explanation to the rise and fall of Michael Kors’ market stock value and profitability. The report also uncovers the underlying challenges and potential threats to Michael Kors that could hinder its business prospect and its global expansion plans.
The report will also cover the design management and management strategies that Michael Kors have adopted, as well as its globalizing and localizing effort.
Lastly as a design manager, solutions are thoughtfully analyzed and put together to aid Michael Kors to prosper and accelerate its business growth.
I believe Michael Kors is a successful global brand because it has a very strong and cohesive brand image that portray the luxurious and jet-set concept very efficiently. Michael Kors is a fast-growing business that experience steady rapid business and expansion growth.
Michael Kors maintained great relationship/friendship/partnership with high profile celebrities and influential politicians, and dresses notable celebrities on high publicized events such as Oscars and Grammys.
In addition, Michael Kors make sure he gives back to the society by joining forces with UN World Food Program and design an exclusive collection of watches for #watchhungerstop campaign. With every 1 watch sold, 100 meals are delivered to people suffering from starvation all over the world.
As a Design Manager, my objective includes analyzing what caused the drop in Michael Kors’s share in 2014, and uncover the challenges & potential threats faced by Michael Kors. Then, provide solutions and recommendations for future business’s growth.
Michael Kors is established in 1981 and one of the most rapidly growing luxury lifestyle brand in the world. The brand is successfully led by leading American award-winning fashion designer, Michael Kors and his management team of experienced professionals.
Michael Kors produce a range of distinctive products with a jet-set aesthetic under his signature labels Michael Kors & MICHAEL Michael Kors.
The brand has stores operating either directly or through licensing partners in prestigious cities over 95 countries worldwide.
The graph above depicts Michael Kors’ business activities that have caused the fluctuation of its profit over the past 5 years.
The huge jump in interest contributed from Brazil and China lead to the rise of Michael Kors’ market share during the mid of 2012 and 2013. With the successfully collaboration with celebrities, the brand continue to experience steady growth over the next year.
However, due to its heavy investment into its enormous expansion plans , Michael Kors’ stock declined from the mid of 2014 into 2015. The brand has recently announced its largest flagship store opening in Japan.
There have been speculations that the drop in Michael Kors’ share in 2014 could be caused by its product failing to appeal to the market and that the brand has lost its momentum.
There have been other few speculations that Michael Kors drop in revenue could be primarily due to higher rent costs associated with store openings , execution of its overly-ambitious expansion plans and its large investment in its stores that are recently opened Shanghai, China.
Michael Kors target both genders but more specifically the women, aged between 25 to 54 with an annual Income above $50 000.
The brand is also looking into targeting the well-to-do youth demographic that are often unnoticed by luxury brands.
The top three interest of the targeted demographic includes Fashion, Art and Music
Michael Kors produces luxury accessories, watches, jewelry, footwear, fragrance , eyewear, men’s and women’s ready-to-wear apparels. These products are effortlessly incorporated with jet-set aesthetics to ensure that the brand image is cohesive.
This campaign aim raise awareness and help fight global hunger issue faced by many under-developed countries such as Africa. Michael Kors designed an exclusive collection of watches with globe clock-face design in conjunction with the campaign.
Michael Kors seek to demonstrate the success of the program & encourage further participation among its customers to believe that the brand is dedicated in this good cause and want its community to be part of doing something remarkable.
Claiborne Swanson Frank is an establish stylist and portrait photographer. In her new book, she featured Michael Kors as one of the most influential designers in the fashion industry.
This collaboration aim to build strategic relationship which allow the artistic creativity of Swanson to highlight Michael Kors artistic vision with her aspiration imagination.
This newly established partnership allow Michael Kors & Swanson to leverage both of their networks and gain support from both photography and fashion industries .
Michael Kors use his good relationships and the fame of celebrities to help raise the brand awareness through promote collaborated projects.
Celebrities have enormous fan base made up of supportive and loyal followers that constantly look up to them for their styles advices.
By using celebrities’ creative input and style ideas to form refreshing collection. It also help to create hype, lend support and drive sales since the celebrity’s names are associated with the collaborated collection.
Celebrities are proven to be the gateway to successful globalization.
Michael Kors is very good at maintaining his good relationship with the celebrities and these strategic relationship are portrayed to the public through the media.
Michael Kors never fail to impress as he dresses notable celebrities for highly publicized events such as The Golden Globes and are often photographed with these celebrities.
He engaged Halle Berry to be the ambassador and face for his #watchhungerstop campaign and invited his celebrity friends to be in his promotional posters for the campaign. Recently, he invited supermodel Candice Swanapoel to walk for his runway show’s opening during fashion week.
Watched by broad spectrum of international audiences, The Project Runway is a competition program for aspiring designers to stand a chance to have a show in New York’s Fashion Week.
By making appearance and being a judge on the show, Michael Kors represent the brand and promotes the brand on the global platform.
It also allow Michael Kors to unleash his creativity and giving critical judgments that not only helps to educate the public that he has the talent but also the capability.
With his added sense of humour, audiences get to know the real designer behind Michael Kors and leaving a lasting impression in them.
Michael Kors does not have specific collection for localizing.
However, the brand choose to feature its products in background of destination to portray jetsetter’s travelling diary to surprise its followers on social media when familiar background of their countries appear.
Michael Kors has always beem actively updating and posting on its social media platforms. Little gesture of appreciation for local festivities such as Chinese New Year and Christmas enable the follwers to view Michael Kors as a thoughtful designer. This also helps to strengthen his relationship with its community.
Michael Kors’ primary competitors includes Coach, Tory Burch, Kate Spade and Ralph Lauren. These brands have similar style, price points and targeted demographics as Michael Kors.
These four brands are well known for their handbag collections and they have been Michael Kors’ toughest competitors in the industry for several years.
Michael Kors is popularly known for its handbag and luxurious accessories, especially the rose gold watches, which explains why the two product lines are in the growth and maturity stage.
However, the brand’s women apparel and footwear lines have experienced a slow down and decline in sales over the years.
Michael Kors’ menswear is at the introduction stage as the brand’s main focal product line has never been its menswear.
There have been accusations by established designer and fashion brand that can possibly tarnish Michael Kors’ brand reputation and affect its customer’s trust in the brand.
Notable source Forbes, has released an article in 2014 predicting Michael Kors’ decline. In the article, Forbes listed and explained the factors that could possibly result in the decline of the mega brand. One of the reasons include the brand’s overly-ambitious plan for global expansion.
Coincidentally, Michael Kors exerienced a decline in its market stock towards the end of 2014. Prediction from a notable source could potentially affect public’s view and belief in the brand.
Michael Kors has strong presence over 85 countries with 555 boutiques worldwide, including licensed locations. Huge concentration of the boutiques are located in North America.
Reputable departmental stores such as Bloomingdale’s, Nordstrom, Macy’s, Harrods, Harvey Nichols, Galeries Lafayette, Lotte, Hyundai, Isetan and Lane Crawford.
Other than in-store promotions , especially in the outlet stores, Michael Kors has not implemented other product discount promotion.
Michael Kors promote its product line heavily on social media and occasionally held competitions for participants to win its product. With the hype, it also promote the brand.
Michael Kors has strong multi-channel retailing that enable the brand to produce a broad price range of product covering large number of customers. It has a luxurious and edgy image, with a travelling jet-setting concept.
The brand has strong public relation done by notable celebrities, like Halle Berry and Miranda Kerr. Many celebrities are seen photographed and dressed up by Michael.
Michael Kors has large number of retail stores globally , and these number are never ending with the global expansion plans. The brand also sell through licensing partners and major stores such as House of Frasers, John Lewis etc.
Michael Kors position itself as an affordable luxurious lifestyle brand. The market positioning map above depicts the comparison of position between Michael Kors and its competitors in terms of price points and product quality.
In addition, the allocated area allow us to understand how big the brands have taken over the handbag industry.
Members of purchasing public voted for the brands they believe that have the desirable quality for their handbag collections. The ranks are as followed :
With the opinions and rankings agreed by the purchasing consumers, along with the price points of these handbag collections, a market positioning map has been created to give better understanding as to where Michael Kors stands in the market.
The revenue for licensing product has risen by 65%, which are driven primarily by the watches and eyewear categories.
This has confirmed Michael Kors’ leadership position within the global luxury market across several geographies and product sectors
Michael Kors has consistently outdo numerous US rivals in the accessible luxury category, which include Coach and Tory Burch. Michael Kors now see its primary competition as being from up-marketed brands from Europe.
Michael Kors have achieved steady annual revenue growth that was driven by corresponding sales. Michael is also the first retail designer to report a rough estimate of 20% or more sales growth which also resulted in the increase in its market share.
Michael Kors continue to experience steady annual revenue growth.
One of Michael Kors’ business strategy is to open more retail store in North America and Europe to leverage prestige & popularity globally, and accelerate the company’s market growth.
The figures in the report has proved that Europe is the second most profitable region that contributed to its revenue by providing significant revenue growth over the years.
Michael Kors is expected to enjoy steady market growth as the company has already execute its plan of entering the China and Asia/Pacfic market.
Two mega established investors, BDT Capital Partners & General Atlantic, bought over Chris Burch’s 28.3% stake. In addition, Tory Burch also sold 20% minority stake to Tresalia Capital. With mega investors joining the company, the market share and value increased tremendously.
In 2011, Tory Burch hired Barclay’s Capital to gain strategic partnership with Coach, Carlyle or LVMH.
Revenue has steady increment annually ever since 2004 launch. Market watches have analyzed that the company has potential and are expecting Tory Burch LLC to go public soon.
Consistent high quality
Wide range of products
Customer retention is high
(Michael Kors is all about maintaining good relationship)
Convenient access
Maintain cohesive brand image
More collaborated projects or launch of new product lines
Staff training courses for better customer service to build better relationship with customers
Fewer defects
Engage celebrities or designers to collaborate for unusual innovative input.
Motivate the design team and inspire them.
Design what customers wants to best ability.
Increase sales of certain product categories that are not doing well, such as footwear and menswear.
Improve on Return On Investments.
Sustain annual profitability percentage growth.
As Michael is the sole designer, the brand has a focused style direction and cohesive jet-set & luxurious lifestyle image.
The two different product lines allow Michael Kors to reach out to wider audiences.
Michael Kors is the muse and representation of his own brand. On most high publicized events, he was seen mingling with renowned celebrities and politicians and portraying great friendship.
His appearance on Project Runway enables him to gain global recognition and reach other market segmentations.
Numerous philanthropy honors for his contribution to the society (God’s Love We Deliver, Watch Hunger Stop , Cancer Research etc.)
Michael Kors is popularly known for producing high-quality goods at an affordable price.
Reputable licensing suppliers such as Fossil, Marchon and Estee Lauder.
Michael Kors suffer brand dilution as discounted products appears at mall outlet with incomparable vibe.
Michael Kors is the muse and representation of the brand and the brand relies on him greatly. If anything were to happen to him, the brand and its portrayed image could be in jeopardy.
As the sole designer of the brand, creativity might run out with time which restrict creativity.
Majority of his stores are in United States, followers in other countries find it inaccessible to Michael Kors’ product.
Other than focusing on business in the US, Michael Kors could
head for market expansion to strengthen its presence overseas
by opening more boutiques in other budding cities such as
Russia , Brazil and South Korea .
Children’s fashion market is a potential market that Michael
Kors could venture into, as this could be the key to accelerate
company’s growth.
Even though Womenswear is the focal line of the brand,
Michael Kors should work on its menswear collections. As
according to report, Menswear are expected to increase 3.9%
annually from 2014 to 2018.
Michael Kors could offer internship to winners of fashion
competition worldwide to serve as one of the strategy for
globalization and refreshing creative input to the brand’s collection.
Accusation of copying from established designers can leave
negative impact on the brand.
Michael Kors does not manufacture its own textile and leather,
thus the instability in textile price could force Michael Kors to raise
its product price, making it less affordable.
On the other hand, if the brand use cheaper textile, the quality
suffer and cause Michael Kors to lose what it was known for.
If the 3 reputable suppliers cancel their contract with Michael Kors,
the brand will suffer tremendous loss and lose quality assurance of
its product.
Michael Kors is popular with certain generation, specifically the
career minded women. In the near future, the new generation of
targeted market might not like the same style and have different
style & self expression.
With many laws and business legislation of different countries, it is
hard for Michael Kors to expand into a new market in countries.