Most of my friends own one or two LV or Gucci bags, but buy several Coach bags for everyday wear ( go to work, grocery shopping, etc ). Therefore, the overal profit Coach made per person is much higher than LV or the likes. Although they sell much competitive prices.
Although factory stores sell at a deep discount, the profit margin is still sub 70%, check their last conference call. Because of the volumn, they are able to cut costs by 30% therefore more top and bottom line growth. It is true that it hurt the brand image, but the brand that makes biggest profit is premium mass brand, nike, northface, etc. Volumn plus margin, not just margin.
Well that's fine as everyone is entitled to their opinion but there is a huge difference between Coach and Crocs. Handbags are status symbols that women of all sizes can and will buy. You don't have to be a size 1 to have a Coach bag, nor do you have to go broke to buy one since you can find size coach bags in the $300-$500 range. It may sound like alot but in the scheme of things it is not. In the US, women, on average, will spend 20% of their income on handbags. In China, due to years of women's oppression, it's something like 40% of their income. Their preferred brand is Coach because for the price of one Louis Vuitton or Hermes, you can but 4 or 5 really nice Coach bags. Crocs, on the other hand, were a gardening item that went mainstream for a bit.
in china and other asian nations, buying a LV, Chanel, Hermes is actually a good investment. These bags increase in value annually. Coach, on the other hand, selling itself for 50% 'discounts' at its factory stores is debasing its value/image. This might not show up right away, but brand value is very carefully kept ... price and rarity are only few of the things necessary. Coach, in trying to boost its sales during bad economic times, risks ruining its brand image by increasing sales through its factory stores (cheaper models that still carry the brand name) ... risky strategy that can backfire. jmho