I’ve long been a Michael Kors fan, buying gorgeous double-faced wool dresses on sale at Bergdorf Goodman or in the Michael Kors store on Madison Avenue—only at 70% or more off, after Christmas and in the early summer.
These dresses, and some pants, skirts, jackets and wonderful cashmere sweaters, are lined up like so many soldiers in my closet ready for almost any outing. The styles remain basically the same year-in and year-out. Beautiful fabrics such as the double-faced wool, along with heavier wools and tweeds, matte jersey, raw silk, satin, and cotton twill for summer. All styled classically and elegantly. Feminine. Flattering. Simple sleeveless sheaths and separates with some accessories, handbags and shoes to round out the collection. Wearable, luxurious, classic American style.
But now, since Michael Kors has gone public, the positioning of a lower tiered line, Michael by Michael Kors, into a global lifestyle brand seems a distinctly different brand proposition and one that is, perhaps, at odds with the couture line. Of additional concern is the thought that the couture line has suffered as a result of the greater attention to, and investment in, the lifestyle brand.
The lifestyle brand is designed and merchandised for a different and younger customer who likely has never seen, heard of, or cared about the Michael Kors collection or its understated, classic American positioning and style. These customers know Michael Kors from his successful appearance on Project Runway; from Michael Kors advertising; and from Michael Kors licensed watches, handbags and small leather goods featuring a prominently displayed MK logo in shiny brassy, brass. The new Michael Kors brand is described by management as a “global luxury lifestyle brand with a multi-channel strategy, unique design and strong infrastructure…a compelling assortment of luxury merchandise and exceptional service in a Jet Set store environment.”
The term “Jet Set” appears often in company communications. As a child of the 60’s when ‘Jet Set’actually meant something—picture Princess Margaret flying off to Mustique, Bianca Jagger going anywhere. And before international travel became so much more like getting on a bus at the Port Authority than departing in style at the Eero Saarinen designed TWA terminal at Kennedy— “Jet Set” was defined as: “An international social set made up of wealthy people who travel from one fashionable place to another.”
Well, the young people in current Michael Kors advertising aren’t getting on any planes. They are portrayed as a somewhat diverse group, upscale, a bit glitzy, and they seem to be having fun clubbing while staring at the camera and wearing lots of watches, sunglasses, bracelets and pocketbooks—the new heart of the brand. The first time I got one of the ‘look books’ in the mail for Michael Kors—which is actually Michael by Michael Kors, or Kors by Michael Kors—the brand architecture seems not to be clearly defined, I thought: “Wow: these styles are cute and look how cheap they are!” But upon inspection in one of the ‘lifestyle’ boutiques, I realized the difference. A bare hint of the actual Michael Kors classic style, but with an edge. A zipper, a brass plate, some jewelling, leather or other accoutrement to add pizzazz, and a price point that can appeal to a broader, younger customer base. Now the professional in me is wondering if the dual branding can work. Will the couture line suffer from inconsistent positioning in both product and communications and the emphasis on the lifestyle brand which clearly must make up the majority of the business and will be the engine for continued growth? Is it possible to have a “global lifestyle luxury brand” when the top tier of the brand is subsumed by, and different than, the more mass appeal, lower tiered products? Unlike Ralph Lauren, who invests heavily in the top tier, and whose brand architecture and product is well defined and well controlled both in store and in communications from Collection, through Black Label, Blue Label and the more mass distributed Lauren sub brand (yes, that too along with Michael, by Michael Kors or Kors by Michael Kors can be found at TJ Maxx and Marshalls) Michael Kors seems to me in need of the brand police.
I made several store visits and conducted qualitative research to find out how the brand duality is playing out with customers. The Madison Avenue store, which really does showcase the total couture or ‘runway’ line is often an empty crypt. According to one associate, when lifestyle customers come into this store they say: “DUH! What is this?”
The customers I interviewed who did not know the difference between the lifestyle and the couture product, and who judged the lifestyle brand on its own merits, seemed to get at least part of the message the lifestyle brand is sending: \”Mid-priced similar to Tory Burch… Youthful clothes at good prices.\” I interviewed one customer from Australia in the Michael Kors accessories boutique at Bloomingdales who was ooing and aahing over the handbags. “What do you like about Michael Kors?” “I just love Michael Kors.” “Well, what do you like about the Michael Kors?” “I just love everything about Michael Kors.” “Do you think about the clothes when you think about the brand?” I asked. “No, I don’t know anything about the clothes. I’ve never seen the clothes.”
But those who know the brand and have had some history with it tell a different story. They recognize the difference and see that while there is some value and style in the lower-tiered line, the overall quality has been diminished by the lifestyle expansion. One customer described the lifestyle brand as: “very classic, casual with a tiny bit of exaggeration…but, actually, when I saw it up close the quality was just so-so.” Another, “I love the style, but the quality is just OK.” While still another has turned away from the brand altogether: “I really don’t buy or wear Kors…my overall opinion is that it is too brassy and sort of stale.” A fourth rejected the line \”…the lower priced version of the brand as a bit too mainstream and mid-market for me.”
Some customers were disappointed that Michael Kors is no longer exclusive: “It’s really nice stuff, used to be much more exclusive and special, now a bit overexposed.” While others found that the product lacks distinction or originality: “The bags are copycats of LVMH, Prada, Ferragamo, Fendi, you name it… the same bag styles are stolen then blinged up a bit.” “I could buy a bag, but, I find them not that original…prefer Hermes, Prada, Chanel.”
Of greater concern are those customers who equate the broader appeal with diminished quality which further weakens overall brand equity.
One customer purchased a Michael Kors dress for her son’s wedding. Now she feels that he “is more mass market today than seven or eight years ago.” Another customer describes the brand as “Now crummy…the big fake watches…the purses with huge logos…” An elegant Westchester customer “used to buy Kors when I was younger. I think it was more high-end then. Their bags are all in the discount stores now.”
Brand equity is something that is built over time. A brand is a promise fulfilled. An expectation of a certain quality, style, design, price point and image that over time comes to represent something a specific group of consumers can count on. A good deal goes into building brand-equity. Once it is built, it needs to be nurtured with continuing consistency in product, fit, pricing, promotion and fulfillment of consumer expectations. It is always tempting to draw on the equity that has been built in a brand (or a house, or a valuable portfolio of any kind). But what goes in must be drawn down judiciously and wisely. Because, once withdrawn and spent, there is the distinct possibility that there will be nothing left.
My concern for Michael Kors is that the company is diminishing its brand capital to build the global lifestyle brand where a big return on equity is hoped for. This is easily achieved in the short term by investing in new stores and advertising and promotion to support the lower tiered brand. But, I think attention must be paid to the top tier of the brand. The couture line/runway collection, executed successfully, is what will continue to provide Michael Kors with design and fashion authority. This is the equity that goes into the brand bank which offers the opportunity for a “jet setting lifestyle global brand” which may in reality be nothing more than stores filled with handbags and watches featuring those brassy MK logos. But to remain valuable, the MK logo must mean something and that something requires significant investment and acceptance on the runway and by customers. Otherwise I fear the brand risks descent into that nether world of meaningless mass market brand extensions. One customer described it well: “I used to think of Michael Kors as an upscale modernist—as in clean line—classic with a very current vibe. Now it strikes me as a down market imitator. We have a Michael Kors store in a mall in Pittsburgh so I go in about once a year but have never bought anything—seems like a bit of too trendy risk.”
I heard recently that one Michael Kors executive earned $50 million dollars after the initial public offering. Good for her I say. But, for future long-term investors and customers, maybe not so much. Time will tell, and it takes a long time to build companies with design authority and heritage. Certainly, there are some long-term success stories. But, in the end, many brands take profit by selling down the price line until there is little value left whatsoever.