Insight Deep Dive: CE data examines global luxury shopper trends ahead of Tapestry’s acquisition of Capri

Last month, Coach parent Tapestry (TPR) announced that it would be acquiring Michael Kors parent Capri (CPRI), attempting to create a European-style fashion conglomerate on this side of the Atlantic. But while the European models span product categories and price points, these two companies represent a combination concentrated in fashion and leather goods targeted at the accessible luxury shopper. How much overlap is there between these companies? Our luxury shopper data shows that in the US market that represents the largest portion of sales for both companies, there is a significant overlap. Taking advantage of Consumer Edge’s global European data, it is possible to verify that pricing trends are very similar by region with similar pressures on growth. Additionally, prevalent Coach cross-shop with European-based Accessible Luxury brands points to a more crowded marketplace where the combined company may have to fight harder for growth.

Within Consumer Edge credit and debit card transaction data, the combined brands of Tapestry and Capri represent 17% of Direct-to-Consumer Single-Brand Luxury spend. However, they represent 37% of spend under $500 and 42% of spend under $300. Though the combination will have significant market share at this price point, the frugal nature of the Accessible Luxury shopper is likely to keep this share from translating to pricing power. Additionally, it seems unlikely that the combination would be able to leverage design synergies as Accessible Luxury preferences are usually dictated by the aspirational goods produced by higher-end brands.

Accessible Luxury Market

Globally, Jimmy Choo and Versace are able to command higher price points than other companies in the combined Tapestry-Capri portfolio. The average ticket for both brands is about 2.5x that of Coach and Michael Kors in the EU, and about 4.0x that of either company in the US.  In the UK, Jimmy Choo has an average ticket premium at around 3.5x the Coach and Michael Kors tickets versus Versace at 2.5x. Capri’s ownership of these higher-end brands gives it some experience in upmarket sales if the combined company wishes to invest beyond accessible luxury, but they are still a relatively small percentage of the total combined portfolio.

Note:  364 days ending 9/10/23; direct-to-consumer only
Note:  Calendar 2023Q2; direct-to-consumer-only; local currency for each region should not be compared across regions

Luxury Shopper Global Growth

Direct-to-consumer global spend growth for both companies has been decelerating in all geographies since the beginning of 2022 as inflation has made luxury spending less accessible for many lower and middle income shoppers. Over the longer period some of the UK deceleration could be attributed to tough compares after 2021 COVID lockdowns. However, even comparing Calendar 1Q23 versus Calendar 2Q23, only Tapestry in the EU and Capri in the UK are showing flat trends, with continued deceleration in other areas.

Note:  Share of wallet for subindustry in two weeks ending 7/9/23 minus share of wallet for subindustry in two weeks ending 7/10/22

Luxury Shopper Cross-Shop Data

In the US, 9.5% of shoppers who have purchased from a Coach store or website in the last year have also made a purchase from Michael Kors. This high level of overlap could lead to some synergies for the combined company in real estate and marketing. These synergies may also manifest in Europe given UK shopper overlap is 7.4%. But the presence of many more brands with higher overlap (including several which are US-based) also calls into question whether European shoppers may have more Accessibly Luxury choices that the combined entity would have to compete with.

Note:  364 days ending 9/10/23; direct-to-consumer spend only

By merging, Tapestry and Capri are doubling down on Accessible Luxury and sector-level drivers. While there are some synergies and cost savings from a highly overlapping customer base, there are also many risks especially in the more crowded European marketplace. Tracking the companies after the deal closes next year will provide important insight into whether the European luxury conglomerate model makes sense for the US as well.

Consumer Edge is the leading provider of alternative data for consumer spending behavior, and the only provider of global revenue signals. Our data offers insights into not only luxury brands like TPR and CPRI but hundreds of other tickers and symbols. If you’d like to benefit from using Transact US or other products for luxury, restaurants, retail, and other industry data year-round to track trends and dynamics like these, reach out to insights@consumeredge.com.

Stacie Rabinowitz is the VP of Product Research at Consumer Edge. Explore more of her insights here and follow her on LinkedIn.