When Rebranding Makes Sense

Rebranding is a risky endeavor, especially for an extremely popular brand. Consumers trust brands because they know what to expect. For instance, if a customer were to eat at a McDonald’s in Indiana and then at a McDonald’s in Florida while on vacation, that customer already knows what to expect. The food will taste the same no matter which McDonald’s restaurant he chooses, and the menu choices and prices will also be the same. The customer has explicit trust in this brand. However, if McDonald’s were to change its name after nearly 80 years in business, it would cause a tremendous amount of confusion among tens of millions of people who frequent the establishment daily. Most people do not like change. Therefore, a change in a beloved brand could create a negative effect. However, there are cases in which rebranding makes sense.

Coach is a well-known luxury lifestyle and fine accessory brand, known predominantly for its bags and wallets. While Coach also sells other types of products such as shoes, dresses, and accessories, its women’s handbags alone make up between 56-57% of total revenue. In business since 1941, Coach recently changed its company name to Tapestry. As in most cases, the initial response to the name change was negative among some consumers. In addition, the company’s stock fell the day of the rebranding announcement. When a popular company changes its name, there will always be people who do not like the change. Whether it is the way the new company name sounds, the mere fact that consumers don’t like change, or that consumers have a hard time relating to the new name, a new name creates a shock factor and even a confusion factor. Consumers get used to a particular name and look when it comes to a brand. Changing those things leaves consumers feeling off balance, taking away the familiar.

In 2015, Coach acquired another luxury brand, Stuart Weitzman, which specializes predominantly in women’s fashion shoes. Also, earlier this year, Coach acquired Kate Spade, yet another luxury brand specializing in handbags. As Coach incorporates the new brands it acquired, the company decided to create an umbrella name to encompass all of the company’s brands. Therefore, as of October 31, 2017, the company became Tapestry. However, the company still sells its individual brands Coach, Stuart Weitzman, and Kate Spade. Therefore, the brand names consumers are most familiar with will not change for them. So, essentially, the name of the overall company should not be a big deal among consumers. However, the umbrella name allows the company to become recognized as a company of various luxury brands, rather than just the one brand, Coach. It informs consumers and other companies that it offers much more than it used to.

Although rebranding can be disruptive as seen by the initial negative effects and expensive by changing logos and introducing the new name, in this case, the overall effect on consumers will likely be minimal. Also, in this case, the company does not have to rebrand all of the products it sells because they all keep the same familiar name. In addition, due to all of its brands, Tapestry can target a variety of demographics that it could not reach before. In this case, rebranding makes sense.