If you don’t know by now, Michael Kors will be acquiring Jimmy Choos in a billion-dollar deal. The news broke late Monday and I heard it on the radio while driving to work on Tuesday. Perhaps I’m not well informed, but this has to be one of the most mismatched, or should I say backwards, mergers I’ve witnessed since I started actively paying attention to financial markets in the past few years. It would have made more sense for JC to acquire MK.
These 2 brands have such differing target markets and styles that I can’t imagine how this will be sustainable in the long run. Already Jimmy Choo fans are outraged by the deal as they find MK to be too “low brow” for their high end tastes. Some statements have been more “politically” correct in their prediction that the shoes will be made in China and will be of lower quality, while others have gone full scorched earth with statements like “ew… MK is so ghetto.” I think it goes without saying that perceptions of both brands will change, like anything that meets the intersection of class and money. There is an equal chance that MK might be viewed favorably than there is the possibility that JC’s stock might be lowered. After all, with JC’s London roots, royalty was a contributing factor to its popularity. The question becomes which force will be more powerful than the next.
I think Michael Kors and co. are well aware that they cannot produce Jimmy Choos with the same quality that they produce their existing product and expect to retain the same luster that made the company an attractive acquisition in the first place. At the same time, regardless of the standards they maintain, they do not have control of how the elite customers of JC will perceive the MK brand association with their beloved luxury footwear. All the quality reassurances in the world will not be sufficient to deter snobs from jumping ship. At the same time, I think this has the potential to be a powerful lesson in brand association for the rest of us.
We have a front row seat to the strategy that their senior management will take to keep the MK brand from becoming toxic to JC at the very least. And ideally, they may even market it well enough to improve the public’s view of MK. I encourage everyone to watch this closely because whether or not we own companies, we can all learn the importance of PR genius because we market ourselves every day to the rest of the world. We are our own brand and we put our best foot forward daily to keep our won social stock high.