A Nuclear Winter

And so today, March 6, 2007, Coach pushed the button, unleashing the "Nuclear Option" on its Special Markets Division. The fallout has already hit some of us, and sooner or later we all will feel the impact.

The move was being made, in part, in the words of their VP of Corporate Communications "to ensure that the company has more control over where Coach product is ultimately sold". I've been trying to figure out how that isn't an insult to resellers, especially those that never trans-shipped Coach product to unauthorized channels. Including me, by the way, as Coach was part of Laureate, my online gift card concept.

It appears to me that Coach had plenty of control already, and could have exercised more if they wanted to. Most of us would have gladly signed any reasonable document they might have put in front of us to "ensure that the company has more control". But we never got that chance.

At least everyone got the same deal--even Coach's biggest clients are doomed in the longer term. The Big Kids' legal agreements buy them time, but when those run out they will suffer the same fate as the rest of us. And make no mistake-EVERYONE lost on this deal:

Coach's Reps have lost a significant income stream. Coach resellers have lost a line where they could make healthy margins because of the perceived retail value of the Brand. And depending on whom you ask, Coach has lost $40 million ($50? $60? More?) in revenue.

Mike Landry of Tumi said recently that the entire market gets a black eye when something like this happens. And what are we to make of the market when a major Brand believes that our business is out of control enough to warrant the "Death Penalty"?

"Control" is the operative word. Every company that plays in our market has to weigh "growth" against "control". The Brand must make a choice--you can't have both. And when the "control" issues cause more trouble than the benefits "growth" provides there's a serious problem. We're seeing it in 3-D with Coach.

I was visiting with some contacts today and in the discussion a number came up that represents the impact on the Incentive Market of Coach's departure. The impact of lost margins, of lost commissions, of opportunity. It stunned me.

$50 million.

While there's no doubt that Coach can do whatever it wants to with its businesses, the impact on the market at large is egregious. Was there NO other option that would allow the Brand to continue in the market?

And somewhat lost in all this is my friend Paul Spitzberg. The man who sat in the chair and oversaw the major growth in Coach's Corporate business. Someone who was visible in our Associations and educational events. Where was Paul? His voicemail mentions a family medical emergency and I hope everyone's all right.

I hope we get a fuller explanation than some emails from a laryngitis-stricken VP of Corporate Communications. Coach's impact in our business is such that I think we're owed that.

Rest in peace, Coach. Dooney & Bourke, anyone??


Pete