He saw a massive gap in the market between cheap, trend-conscious department-store brands and European designer models that cost upwards of $600. In 1996, Frankfort hired creative director Reed Krakoff, who had established himself at Tommy Hilfiger, to create bags that offered consumers a third choice—handbags that would be sold in beautiful boutiques by well-trained staff at prices of between $250 and $300. The result was not only a new incarnation for Coach but also the birth of the accessible luxury category in the $8 billion high-margin leather-goods industry.

Frankfort likes to say that Coach is a blend of "logic and magic," referring to the balance between commercial necessities and creative impulses. But logic usually wins out. Intense quantitative scrutiny has always distinguished the company from its more exclusive competitors, many of which get carried away by a designer’s inspiration and end up with beautiful, impractical products that languish on the shelves. At Coach, every aspect of every product is tested with methods that make traditional focus groups seem quaint. The company conducts nearly 70,000 in-depth interviews a year, often in simulated retail environments—sometimes in stores that are temporarily closed and filled with prototype products, and other times on storelike sets, where the entire shopping experience, beginning with the greeting at the door, is rated. As a result, each step in the retail process is codified, from the dress code of the floor staff to the merchandise displays, which are identical in all stores.

When research revealed that customers would visit the stores more frequently if items were introduced faster than the seasonal schedule typical in the fashion business, Frankfort and Krakoff decided they should bring out a significant new group of products every month, despite the added work. As a result, the average Coach customer started visiting every month instead of three times a year. "We leave nothing to chance," Frankfort says. "By the time we release a product, we usually have a good idea how well it will do."

From the beginning, Frankfort and Krakoff also dismissed the idea of developing an "it" bag, like the Prada mini-backpack, the Fendi Baguette, or the Balenciaga motorcycle carryall. "In a way, that iconic status is a negative," says Krakoff. "The bags get copied and they're all over the place, and then no one will touch them." Instead, the company concentrates on having four or five product lines at any given time, phasing silhouettes in and out over the course of a few years, with accessories and new colors added to the most successful lines. "Reed has a very commercial sensibility," Frankfort says, "and that's my highest compliment."

But as both men admit, it is precisely that sensibility that makes Coach controversial within the fashion industry. European rivals don't bother masking their contempt. Frankfort says that one such rival recently referred to the company as the "McDonald's of luxury." That attitude may be a response to how Coach has stolen massive market share in North America as well as in Japan—where it overtook Gucci and is now second only to Vuitton—but it is also a visceral reaction to the brand's very DNA.

Coach is, in a word, American—not merely in its address but in its intent, with all the allusions the term encompasses. François-Henri Pinault, the C.E.O. of PPR, which owns the Gucci Group, may occasionally peek into the Paris boutiques of his top brands, but it's hard to imagine him blithely buttonholing customers as Frankfort does in his stores on a regular basis, shaking their hands and asking them where they're from and who they're shopping for. Frankfort likes to say that his products are a "good value," words that have probably never passed the lips of his European rivals. He insists that the quality is comparable, that Coach uses leather from the same sources and hardware that is just as sturdy. Krakoff claims that his designs often start trends for which the other brands are later lauded in the fashion press. In Krakoff's mind, only one thing separates Coach from the European luxury brands: Their bags are stitched by artisans in places like Florence, Italy, while Coach assembles its products in low-cost venues like China.