Meredith Galante/Business Insider
The brand utilized consumer one insight that helped it excel while aspirational competitors like Tiffany & Co. and Coach have struggled.
Michael Kors succeeded because it was the first retailer to hit the market's sweet spot: people with money to spend but who aren't rich.
HENRYs are a growing segment, while the wealthiest people are making less than they used to.
Danziger explained the concept to us in an emailed note:
Ultra-affluent (i.e. those at the top 2 percent of U.S. households with incomes starting at $250,000) cut their spending by nearly 30 percent from 2010, while the HENRYs (High Earners Not Rich Yet with incomes $100,000-$249,999) increased their spending on luxury by some 11 percent from 2009 levels. Even though HENRYs individually have a far lower spending threshold than ultra-affluent customers, there are nearly ten HENRY households for every ultra-affluent. That is why with a total of 21.3 million households, the HENRY segment is a critically important part of the consumer market.
With Michael Kors' $450 handbags and $250 watches, HENRYs can show off their success without feeling like they're going overboard.
Kors, like his competitor Tory Burch, wisely chose the right audience. It's paying off.