In the Bag

NEW YORK — NEW YORK -- It's with an almost blase air that Reed Krakoff mentions his latest dabblings as president and executive creative director of Coach.

Grabbing a fistful of gloves splayed on a chair outside his office, he mutters, "We have mink-lined mittens, stripes, oranges." He casually gestures over at a nearby Game Boy pouch for Holiday 2003 that has fuchsia patent leather piping. And, during a quick tour of his floor, he stops briefly to inspect a new Coach shopping bag featuring a sharp pattern of pink and blue flowers.


Flowers? Game Boy pouch? Orange gloves? Just seven years ago, it was unthinkable that these words would have been linked to the staid, leather powerhouse.

These days, however, the unexpected has become expected at Coach, a brand that has undergone one of fashion's most dramatic and successful reinventions in recent history.


Once known only for sturdy -- but, often, unexciting -- leather goods, Coach has blossomed into the place to go for trendy clutches, hats, even dog leashes. With purse prices ranging from $140 to $400, Coach has become the working woman's Louis Vuitton, the brand they (realistically) can aspire to save up for and own. But it's also attracted high wattage fans ranging from Jewel to Julianne Moore, and it's been spotted on red carpets, in Jennifer Lopez music videos and on the stylish women of Sex and the City. As for sales? They've been stellar even in this trying economy. Just last week, Coach announced $953 million in sales for fiscal year 2003, up 32 percent from last year.

And Coach's recent success story began with the hiring of one person in 1996 -- Reed Krakoff, whose creative and commercial instincts have been guided by one simple question: What do women want today?

"Coach had an incredible reputation -- it was just a little dusty," says the baby-faced Krakoff, clad in jeans, a black Prada leather jacket and (as always) Coach shoes. "We'd never made a bag that wasn't all leather. All the bags were this heavy cowhide, unlined. That says a lot right there. It was a brand that made one kind of bag, basically, but did really well with it. ... So the idea was, 'Well, how do we make it more relevant for people today?'

"Women want something functional, they want something lightweight, they want something stylish, they want something seasonally appropriate," he adds. "All those things were not really taken into consideration for a long time."

So, one of the first things Krakoff did was, he made sure they were.

In the beginning

Long before Krakoff came along, however, Coach already had been a certified success. The company began in 1941 in a small loft on Manhattan's 34th Street, where artisans made leather belts and wallets. It quickly grew as people increasingly knew to turn to Coach for quality leather accessories.

In 1962, co-founder Miles Cahn, inspired by a luxuriously soft, seasoned baseball glove, commissioned the creation of the company's first handbag. The company's reputation for fine leather goods would steadily grow domestically and internationally in the following decades. In 1981, Coach became even more fashionable after a mention in Lisa Birnbach's popular The Official Preppy Handbook.


This, however, began to change in the 1990s, as European companies such as Gucci and Christian Dior began focusing more on accessories.

"European luxury brands were targeting both the U.S. and Japan for expansion, and we had some early indicators from our consumers that their future purchase interest was not going to be as great as it had been before," says Lew Frankfort, Coach's chief executive officer. "It became clear that we needed to rejuvenate the brand if we were going to continue to be America's No. 1 accessories brand."

To achieve this, Frankfort called in Krakoff, a graduate of the Parsons School of Design in Manhattan who'd designed womenswear at Polo Ralph Lauren and was creative director at Tommy Hilfiger.

The two brands on Krakoff's resume shared much in common with Coach. Both were brands rooted in a distinctively American identity that played big parts in their mass appeal and both companies had expanded their fan bases by branching out into new categories such as ties or children's wear. At Tommy Hilfiger, sales grew from $80 million to almost $1 billion in Krakoff's time there.

"Reed brought a great sense of magic to Coach," Frankfort says. "What attracted me about Reed is his natural understanding of brands, his ability to be respectful of the core equities of the brand and recognizing the need to layer on more personality."

In December 1996, Frankfort and Krakoff met. And Coach's next chapter officially began.


When Krakoff joined Coach, its sales had been hovering at about $500 million. And Frankfort estimates that the average Coach consumer was about 40 years old.

Krakoff immediately recognized the fundamental change that had to be made.

"Having grown up with Coach -- in my family there was always Coach around -- I always understood it," says Krakoff, who grew up in Weston, Conn. "It's great quality, great craftsmanship, understated design, very Amer-ican, that mix of sporty casual but also chic. What we had to do was take the essence of Coach and build on that."

"In fashion, no one needs a new handbag," he adds. "You have to get people to want to go to the store and see something they don't necessarily need but they just want it so much."

First, he set about making bags that weren't just made of leather. And joining the revolutionary fabric bags was a new collection of men's and women's watches. Then in 1999, he started doing footwear and furniture. Two years later, luggage and jewelry hit the stores. Recently, he began doing entire men's collections, instead of sporadically introducing one or two items.

For inspiration, he looked to women on the street.


"I look at how people carry things," says Krakoff, 39. "I get a lot of ideas that way. What kind of bags are they carrying? Are they carrying a huge one and a hand-held bag? One big one? A briefcase and a tote? Just, what are people doing?

"There was a girl I saw carrying a tote and she had a little demi bag hanging over the handles of it and I ended up putting that in an ad," he adds. "And I saw a girl strap a little keychain to her bag once so we did more keychains."

But Krakoff also understood that wonderfully designed handbags can only take a company so far. At Tommy Hilfiger he had learned the power of image and advertising. At Coach, he soon began an overhaul.

Coach ads, which had prominently featured such "celebrities" as Gary Cooper's daughter and a descendent of Mark Twain, soon starred actresses Sela Ward and Marisa Tomei. The forbidding Coach stores with mahogany facades gave way to well-lighted stores done in a crisp, stark white. Krakoff also redesigned shopping bags, making them white, accented with sharp vermilion and a warm mahogany that was a nod to Coach's past.

"Everything works together," Krakoff says. "You can't just be a new product or just new advertising. It has to be everything working together. You have to create a whole world for people to buy into, to walk into the store, to hear the right music playing. You have to create the environment for people to understand what your brand is about."

The turning point


And soon, people did. Krakoff points to a collection he unveiled about four years ago that was the turning point in consumers' perception of Coach.

"The Hamptons collection was the first collection that looked different," he says of the summery, fabric collection of hats, bags, sneakers, scarves and raincoats. "It was a mix of sporty and casual and stylish. All of a sudden people were like, 'That's Coach.' It was the first comprehensive collection. Instead of just a bag or a shoe, it was the first time everything really came together."

Sales rose steadily -- a fact that fashion observer David Wolfe attrib-utes in no small part to Krakoff.

"Either the guy's a genius or one of the luckiest businessmen around because he reinvented Coach at the very moment that the top price European brands were about to slip into a decline because of the economy," says Wolfe, creative director of the New York-based Doneger Group, a retail consulting firm. "We had a consumer population that had never bought luxury brands who had awakened to the idea of buying Gucci, Dior and Fendi and, suddenly, they either didn't have the money or felt guilty about spending so much money but they still had the hunger for a luxury brand. And there was Coach just waiting to fill that niche.

"It was as if you had a consumer who had developed a champagne appetite and suddenly they felt they had a beer budget."

In the creative arena, Krakoff began winning kudos as well. In 2001, Krakoff won the Council of Fashion Designers of America's "Accessories Designer of the Year" award. And Sex and the City stylist Patricia Field professes to be a Coach fan.


"I just used a Coach hat on Charlotte in an upcoming episode," she says. "It's a little pink Coach hat -- she goes to Madison Square Garden in her coach hat. [The brand] is updated. It's become more conscious of its own quality, and it's a beautiful product. Let it live on."

As for what's next? Krakoff says he isn't one to reflect much on his achievements so far, choosing to focus instead on sketching constantly, usually working on three seasons at once in his corner office featuring clean, white walls and furniture. ("I'm surrounded by so much stuff all day," he explains. "I like nothing in my own space.")

"You've got to keep going," Krakoff says. "What's next is to really grow Coach into a global brand. We still have a long way to go in Asia and in the U.S. We're always looking to do better -- that's what keeps me interested in what I do. I enjoy the process and not the thing, like, 'Look what I accomplished.' It's more like, 'I love what I do.' That's rewarding."