From infrastructure development to breakthroughs in artificial intelligence and advanced manufacturing, China is shaping the future of global business. As industries continue to evolve, many see China not just as an opportunity, but as a critical engine of long-term growth. I sat down with Joanne Crevoiserat, the CEO of Tapestry, the parent company of brands such as Kate Spade and Coach.
Joanne, great to see you again.
It's great to be here, Quan. It's exciting for me to be here to understand how Tapestry can contribute to this 15th five-year plan.
This five-year plan system is really an invention of China, the organizing principle for China's socioeconomic development. In what ways do you see alignment between Tapestry and China's next five-year plan?
Well, it's so nice to have such clarity around the goals of the government and the building that's happening in China so that we can understand not only where we benefit from the Chinese market but also what we can contribute. And so what we see in terms of alignment for Tapestry is continuing investment in our business, in innovation, in sustainability, and bringing product to market, particularly targeting young consumers but also a growing middle class given the unmatched value and innovation we're delivering into the marketplace.
And then how would you overall rate the policy environment here in China because there has been so much volatility, external shocks in the world.
There have been a lot of challenges in the world, macro, micro challenges. But what we see in the marketplace is a vibrant economy, one where we're able to deliver innovation into the market, deliver compelling value, really work deeply with our consumers to understand them and then bring innovation to life for them, and that is powering our business. We've seen tremendous success in this market. We've been in this market for over 20 years. We have over 350 stores across 90 cities in this market. Yet we see continued growth opportunity and we're excited about that growth opportunity. In the last quarter, we've grown double digits, over 30% in this market, and for several quarters now we've grown double digits. So that gives us the confidence to see that we have a lot of opportunity and a long runway ahead in China with our category, which is primarily our core category is handbags. We are welcoming more consumers into the category. So we are driving double-digit growth as you mentioned, 34% in the last quarter, and that's been consistent double-digit growth over the prior quarters. And where we're winning is this understanding of the consumer. Our first priority is to get to know our target consumer deeply, and that's not just data on what they buy but really understanding the tensions in their lives. We do in-home visits with them. They don't know we're from Tapestry or Coach, just to understand what is happening in their life. We look at their wardrobe. They talk to us about their preferences and priorities in lifestyle, and we take those insights and the data. We harness all of that and we bring it to life through the creativity our teams are delivering with innovation into the marketplace. So that is how we're winning. It's by knowing our customer and then delivering the magic of the creativity of our product. And as I said earlier, we're delivering product at unmatched value into the marketplace. And that's how we're winning.
We notice the trend whereby a lot of companies are derisking from China, especially from across the Pacific Ocean. Some other companies are doubling down on China. If you think about some auto manufacturing companies from Europe, how is Tapestry positioning or repositioning the China market?
Well, more than 70% of our growth in the coming years will come from international markets and China is a key market. But it's not just a market for growth for us. It's a market for inspiration. We have, as I mentioned earlier, been in this market for decades. We also have a very important product development center in Dongguan that is an innovation hub for the world, not just for China. So we see China as a market again for inspiration. We are meeting with young consumers, engaging them in our brands in a deep way and leveraging innovation from this market and it informs what we do globally.
Let's talk about the digital space, Joanne, if you don't mind, because it is vibrant, as vibrant as it is diverse here in China. You see e-commerce, live streaming, instant conversion everywhere you go on digital apps, on social media. How is Tapestry tapping into that digital space in China?
It is a critically important space and what we like to say is we have to follow the consumer. So I don't have a point of view on we should be in a digital marketplace because it's the right thing to do. We want to be where our consumers are and the consumer moves fast, particularly in China, right? The innovation that's happening here, the requirements from that consumer, so we always have to stay close to the consumer and understand where they are. And then we leverage our deep presence, our talent, and we're investing in talent in this marketplace, we're investing in marketing, and we have partnerships with the biggest platforms here in China, the digital platforms and players, to help us leverage the data that we have, reach consumers where they are, and that's been really a driver for us and an enabler to meeting our customer as they continue to move.
Do you think say if a Tapestry or a Kate Spade or Coach works with a KOL in China and that KOL sells a Coach bag or a purse to his multi-million followers, does that enhance the luxury brand of Tapestry or do you think that actually makes that brand look more average, a commodity say?
Well, we're very intentional about how we reach our consumers and we want to reach them in an authentic way. So the most important thing a brand can do is to be authentic in that engagement with the consumer. And if we're engaging an influencer just to sell our product and they're not a fit with our brand, the consumer sees right through that to your point. So we want to make sure that as we meet our consumers, the platforms that we engage on, the influencers that are representing our brand are authentic to our brand and represent the brand in the right way. And at the end of the day, this is a consumer who likes to shop in stores as well. So they may be influenced digitally in terms of their product discovery, but they like to go in stores and touch and feel the product. They like the community aspect of being in a physical location. And I will say we have great teams here in China that can engage the customer authentically in the store. So what we think about is having that authentic and seamless engagement with the consumer whether they're online or offline and making sure that online to offline experience is a quality one.
