The fashion industry is one of the most competitive industries in the world: sought after products and coveted brand-name garments can be “in” one season and just as quickly “out” the next. It is one of the most difficult industries for a new brand to successfully penetrate, as the top tier of respected and recognized designers have built their brand equity through many seasons of impeccable looks and styles that consumers have come to demand. Tory Burch LLC, however, made the feat seem easy in 2004 when the start-up brand stormed the women’s ready-to-wear apparel scene and introduced their luxurious, yet affordable, line of clothing. Selling out its first shipment in a matter of weeks, Tory Burch LLC set the tone for its furious rise in the fashion industry. Tory Burch, the founder of Tory Burch LLC, recognized a niche in the women’s high end fashion market for designs that are practical and easy to wear at respectable prices. She built her brand upon that concept. Four years after an initial $2 million investment to finance one freestanding boutique in lower Manhattan, Tory Burch LLC now has twelve locations across the United States. More recently, in an effort to hold down production costs and achieve economies of scale, the company added wholesale accounts including Saks Fifth Avenue, Neiman Marcus, and Bloomingdale’s. The collection, which started with a mere 20 styles, now boasts more than 1,000. After four years in business, the company’s annual sales are estimated at about $115 million. The question looming on the horizon is whether Tory Burch, LLC has the potential to become a timeless brand, or whether it is merely a passing trend in the constantly changing apparel industry. The explicit problem presents itself in the onslaught of brands vying for a share in the women’s fashion market. The already established and successful brands of Diane von Furstenberg, Theory, and Marc Jacobs offer styles and quality of products comparable to that which Tory offers. In addition, given their preexisting loyal customer base, it is questionable whether Tory Burch can continue to draw new customers, boost sales, and ultimately become a “timeless” brand. This paper will explore two of the four “P’s” of marketing which Tory has explicitly focused on to propel itself to success. The first is pricing. Tory Burch’s favorable pricing in the high-end fashion market has allowed it to experience rapid growth in the last four years. This pricing strategy may be an appropriate means to achieve continued sales growth in the niche women’s luxury apparel market. The second is product development. Tory’s product development strategies have given it a unique advantage over its competition and is one of the keys to Tory’s continued success. In addition, an understanding of how Porter’s 5 Forces affect Tory Burch within the fashion industry will lead to a series of recommendations as to how Tory should undertake to ensure its survival in the ever-fickle fashion industry and become a “timeless” brand.
Chapter 1: Competitive Analysis of Tory Burch and the Luxury Apparel Industry
1. 1: Threat of Potential Entrants
Although new brands are by no means guaranteed success, the fashion industry provides a relatively open space for new entrants. New market entrants offering products with similar styles and design philosophies have the potential to draw loyal consumers away from Tory. Tory has been very successful in past seasons by introducing appealing wardrobe staples, such as the extremely popular “Reva Ballet flats” that have been described as reaching “cult status.” This does not guarantee, however, that new brands entering the market will not rival the products that consumers will demand. There are two reasons why new entrants may not pose a significant threat to Tory Burch. First, designers must invest significant time to develop a unique vision upon which to build its line of...