Kate Spade’s Branding Challenge
Kate Spade, a leading designer-inspired company, dreamed of following the path of other aspirational lifestyle brandswhich are able to book huge sales at premium prices for everything from clothing to furniture to dinnerware. While company sales at Kate Spade were up more than 40 percent in 2014, Kate Spade is learning that creating a buzzy lifestyle brand is more difficult than it seems.
Kate Spade announced the closing of all 19 of its neon-yellow Kate Spade Saturday stores which featured a sassier, cheaper alternative to Kate Spade New York. At about half the price of its grown-up sister brand, merchandise was meant to introduce younger women to the Kate Spade lifestyle.
The extension proved to be a bridge too far. Clothes designed with a fun vibe for a professional woman in her 20s didn’t pair with Kate Spade’s designer feel. The stores were mostly filled with clothing, though the brand is best known for handbags and leather goods. Ultimately, Kate Spade Saturday had a hard time finding its identity.
Source: Kim Bhasin, “For Kate Spade, a Move Downmarket goes Bust.” Bloomberg Businessweek, February 5, 2015
http://www.bloomberg.com/news/articles/2015-02-05/for-kate-spade-a-move-downmarket-goes-bust
Discussion Question:
1. Is this brand extension problem unique to fashion, or do you think it is common across different types of products (cars, restaurants, etc.)?
2. Are their luxury brands that you think could successfully extend into lower priced products without hurting the overall brand?
