Michael Kors Testifies About the Struggle of Keeping Up in the Ever-Changing Fashion Landscape
The antitrust trial in Manhattan continues as the Federal Trade Commission (FTC) seeks to block Tapestry’s $8.5 billion acquisition of Capri. This merger would consolidate six fashion brands under one roof: Tapestry’s Coach, Kate Spade, and Stuart Weitzman, along with Capri’s Versace, Jimmy Choo, and Michael Kors. On Monday, Michael Kors, the namesake founder and chief creative director of the brand, took the stand and shared his candid experience of navigating the ever-evolving world of fashion.
Key Takeaways:
- Michael Kors admits to his brand’s "brand fatigue". Kors recognized that his namesake brand has lost some luster, highlighting the importance of staying relevant in a fast-paced industry.
- The trial centers around the alleged monopoly power of a combined Tapestry-Capri entity. The FTC argues this merger would create a "bag behemoth" that could raise prices and compromise product quality.
- The case highlights the changing landscape of fashion. The rise of online-only platforms, secondhand marketplaces, and fast-fashion competitors are creating a new playing field for established brands.
- Michael Kors’ struggles directly impact retailers. Former Macy’s CEO Jeff Gennette testified that Macy’s sales suffered after relying too heavily on the Michael Kors brand.
A Legacy Brand Facing Headwinds
Kors acknowledged the challenges he faces, stating, "Sometimes you’ll be the hottest thing on the block, sometimes you’ll be lukewarm, and sometimes you’ll be cold." He admitted that the Michael Kors label has reached a point of "brand fatigue" and needs a refresh. This candid admission underscores the ongoing struggle of legacy brands to stay relevant in a fashion landscape dominated by trends driven by social media and celebrity endorsements.
Kors pointed to the example of Aupen, a handbag brand he discovered when he saw a photo of Taylor Swift carrying one of their bags. The subsequent, overwhelming demand that crashed Aupen’s website highlighted the power of social media and celebrity endorsements to generate instant success for emerging brands. This demonstrates the stark contrast between established brands striving to maintain their position and newcomers gaining rapid traction through viral marketing and social media campaigns.
An Unpredictable Future
The trial comes at a time when consumers are increasingly sensitive to high prices and the potential impact of the upcoming U.S. presidential election could significantly influence the FTC’s approach to antitrust regulations. This adds an extra layer of uncertainty to the already challenging environment for legacy brands like Michael Kors.
Capri’s stock performance reflects the struggles described by Kors. It has fallen by approximately 24% this year, significantly trailing both the S&P 500 and Tapestry’s stock growth. This indicates a potential for a larger shift in consumer spending away from certain established brands towards new and fast-growing competitors.
The Battle for Market Share
The FTC’s argument centers around the potential for a combined Tapestry-Capri entity to dominate the handbag market, leading to price increases and decreased product quality. Tapestry and Capri, however, contend that the market is becoming more fragmented with the emergence of online-only platforms, secondhand marketplaces, and fast-fashion competitors offering numerous options to consumers.
While the future of the merger remains unclear, this trial underscores the rapidly evolving landscape of the fashion industry. Legacy brands like Michael Kors are facing a steep challenge in maintaining their relevance and market share in a world driven by social media, online trends, and the constant influx of new players. The outcome of this trial holds significant implications for the future of the fashion industry and the potential for consolidation among established brands.
