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If a brand is going to succeed in today’s retail environment, staying close to its customers is more crucial than ever, according to Joanne Crevoiserat, chief executive of Tapestry, the American group that owns accessible luxury brands Coach and Kate Spade and footwear label Stuart Weitzman. Having joined Tapestry from Abercrombie & Fitch in 2019 as chief financial officer of the group, the retail veteran went on to secure the top job the following year, just after the pandemic hit.

Crevoiserat steered the group through the challenging period, pivoting Tapestry’s business model to adapt to a new world order: under her leadership, e-commerce sales more than tripled to drive 30 percent of the business today. Total group revenue reached $6.7 billion in 2022, up 11 percent on pre-pandemic levels, with the aim of hitting $8 billion by 2025.

Now the industry is facing yet another period of uncertainty, as global economic turbulence will likely push customers across the income spectrum to become more discerning. For accessible luxury brands like those in Tapestry’s stable, the key is to focus on creating value for the customer beyond pricing, said Crevoiserat. “That value equation is a combination of the quality of the product, the style and the price,” she said. “It’s not just about price.”

BoF: The past 12 months have seen the industry trying to figure out what business looks like in a post-pandemic world. How have you approached this at Tapestry? What are the rules for success that have shifted, what dynamics are more or less constant compared with pre-pandemic times?

Joanne Crevoiserat: I think the only constant is change. That’s the one thing we’ve learned. As we embarked on our transformation, which we’ve been working on the last couple of years, we were asking exactly that question: What do we need to compete in the new world of retail? We were seeing a lot of trends in the market, and we wanted to position the company to win in the midst of those trends.

The customer is moving quickly, both in how and where they shop, and those buying behaviours and preferences, and also how and where they discover brands. Those behaviours are changing, which requires companies to stay very close to the customer so that you can move with the customer, but also, [understand] what they value. I’m not sure [their values are] changing, but their values are coming to the surface, so they want to align with brands whose values reflect their own, and this sense of authenticity in a brand is critically important.

Consumers today are more omni-connected, so having a digital presence and capabilities to deliver an experience for a consumer that’s authentic to your brand and consistent across different channels is also critically important.

BoF: Gen-Z is the growth engine of the luxury industry at the moment. What are the most common mistakes that brands make when trying to engage this cohort?

JC: It’s a cohort that is very discerning about what is really true about a brand and what isn’t. It is so important to really represent your true values and understand where you have the right to play, because it can’t be surface level.

The other aspect for this cohort that we’re learning [is] their desire for self-expression. They want to express their individuality. This is a place where we’re also leaning in. As we’ve developed and thought about how our brands fit in with their lifestyle, it is really to unlock this self-expression. In fact, as we think about this next phase of growth for Coach, we’re moving from what was once called “accessible luxury,” which was really about luxury at an accessible price point, to the concept of “expressive luxury,” where we’re more inclusive in our price point, but allowing our consumer to express their individuality through our brands.

BoF: The accessible luxury sector is potentially more at risk during a downturn because, when times are tough, wealthy consumers tend to trade up and aspirational consumers tend to trade down, leaving the middle squeezed. How can brands safeguard growth during times like these?

JC: History would show that our space, our brands and our category have been incredibly durable through downturns. I do believe that’s related to our positioning and the value we represent in the marketplace.

Over time, handbags and leather goods, the accessories category has proven to be more durable through downturns. This is a space that customers continue to spend, because it doesn’t only serve a functional need, it serves an emotional need for consumers. So, in the accessories and leather goods and footwear categories, customers are emotionally tied to the category.

We saw it during the pandemic. In July [2020], when all stores were locked down, one of our best-selling handbags at Kate Spade was a $348 pineapple handbag. Nobody needed a pineapple handbag, and we talk about it a lot because our product strikes that emotional connection with consumers. It brings them that sense of confidence, that sense of joy as an added part of their wardrobe.

The other thing that we’re seeing is the very high end of the market, those traditional European luxury players, are taking prices way up. So the white space for us to deliver value that a customer really recognises in the function and the emotion of that bag and the quality, gives us the room to take price and still maintain that tremendous value that we deliver in the marketplace.

We’ve developed capabilities and disciplines over the last few years through our data and analytics capabilities, better marketing capabilities and better management overall. We’re disciplined stewards of our brands, and we will not resort to driving price down through this. When the consumer’s pressured, we’re going to stay close and speak to the consumer, deliver the value that they recognise, without relying just on pulling a price or a discount lever for our brands.

BoF: Inflation more broadly has left companies facing cost pressures. Transport and raw material costs continue to rise. That cost is going to be passed down to the consumer if a brand’s going to protect margins. Do you see price increases as beneficial or alienating in a tough economic climate?

JC: When you go through a downturn, customers tend to be more selective. When they’re more selective, they put their money where they see the value, and that value equation is a combination of the quality of the product, the style and the price. It’s not just about price.

I do think that pricing power helps us as a business to be able to absorb some of those cost increases, but we’re also very focused on managing our business better to avoid or minimise the cost increases that we see, whether that’s our sourcing footprint that allows us to move production around the world, or the work we do in terms of logistics, to try and reduce our dependence our air freight.

BoF: How do you see the potential for alternative business models to create new revenue streams or opportunities? Coach is expanding its Reloved resale programme at the moment; how do you see that business evolving?

JC: We’ve always done repairs and refinishing and refurbishing work, so it was a natural extension of our history to test this idea of bringing the Reloved product into our stores. We saw a tremendous response, so we’ve been building those capabilities to make it even bigger.

To scale this opportunity, we’re now taking back handbags at all of our retail locations in the US. We’re having to hire more leather craftsmen to help refurbish and repair because the volumes are going up. We started an apprentice programme, to help build and train new craftsmen in this space.

Interestingly, it has also informed a new business model that we’re pursuing, called Coachtopia. It is a completely circular business model, and we’re building product in Coachtopia with circularity in mind from the beginning.

There are new techniques in terms of bringing this product to market with full circularity in mind. Regenerative agriculture; we’re using and leveraging sustainable materials, including regenerative leather; but also techniques in terms of making a handbag with consideration for end-of-life “unmaking” of a handbag. As we learn about those techniques through Coachtopia, we can bring them into the main brand and make it better and more sustainable.

BoF: Off-price businesses can boost sales but, equally, they have the potential to damage brand equity and cannibalise the full-price business. How should companies approach off-price amid this challenging macroeconomic climate?

JC: It depends on how you manage it. If the off-price business is just discounting regular-price product, I fully agree with your thesis, that it could be brand damaging. The way we think about our outlet channel is, frankly, less of an off-price business. In fact, we’ve spent the last couple of years refining and differentiating the product in each channel, and we’re very focused on delivering value within that outlet channel that a customer recognises.

In many ways, it’s a different customer. This was part of our focus on the customer, it’s embracing the customer that is shopping in these channels and understanding what they value, and bringing them the style, the quality and the functionality that drives the business. We have to do that at the low end of our business all the way through the high end of our business, and we want to be as proud of that business as we are at the top end.

Brands can maintain a healthy outlet channel business if they keep the consumer at the front of what they do, and they’re not just competing on price; that they’re delivering tremendous value product that they can be proud of into the marketplace at that price point. Delivering value and differentiating that from the high-end product. It could be materials, it could be silhouette, it could be level of functionality, level of style. Really, running the business as an important business in and of itself, is critical.

BoF: China is a crucial market for the luxury industry but the outlook for the market is so unclear, with ongoing disruption due to the country’s zero-Covid policy. How can brands navigate this?

JC: We’ve been in China for over two decades, and the one thing that has been incredibly consistent over time is the resilience of the Chinese consumer. What we’re seeing today is disruption caused by this macro outside force where customers are constrained in a way that they can’t get out and shop. But what we saw after the last lockdown was the Chinese customer came back much stronger than they had even pre-Covid. These lockdowns have been more inconsistent in terms of different cities at different times, so it’s been choppier, and we do expect that the recovery will be more gradual this time, but long term, our thesis on China, we remain very confident. It has not changed. We continue to see growth in China.

Our brands are targeting a very large middle class, and that cohort will continue to grow, and it’s a consumer who values Western brands generally.

This interview has been edited and condensed.

This article first appeared in The State of Fashion 2023, an in-depth report on the global fashion industry, co-published by BoF and McKinsey & Company.

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