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Woocommerce Category Post Widget
A shopper looks at a Michael Kors handbag on display at the Macy’s flagship store in New York.
Jeenah Moon | Bloomberg | Getty Images
The appeal of flashing a brand-new designer purse isn’t what it once was.
Sales of women’s handbags and totes in the U.S. are down more than 20% over the first eight months of 2019, compared with the same period three years ago, according to NPD Group’s Consumer Tracking Service.
“This is clearly not a blip — it’s a major shift,” NPD Group analyst Beth Goldstein said. “Today’s consumer is looking for a solution, not just a bag. Consumers expect a lot from the products they are buying, from function and versatility to a brand’s engagement in the social and environmental issues that matter to them, and the luxury market is not immune to these pressures.”
Goldstein went on to say this market won’t “bounce back,” but instead handbag makers need to become “far more consumer centric.”
Another factor that’s increasingly reshaping the industry is the emerging resale market. Names such as Rebag and The Real Real offer used luxury handbags at steep discounts, from brands including Fendi and Chanel.
Retailers such as Coach and Kate Spade owner Tapestry, and Michael Kors’ parent Capri Holdings, haven’t been immune to these trends and shifts in spending. Capri Holdings in August lowered its full-year sales outlook because of a weaker wholesale market in North America.
Tapestry replaced CEO Victor Luis earlier this year with Jide Zeitlin, its chairman at the time. In an interview with CNBC the day the management shake-up was announced, Zeitlin said that one of his main focuses would be to work on the Kate Spade brand, making sure the merchandise is “as appropriate as possible.”
NPD has, meanwhile, called out the handbag category to be “high-impact” and at risk for more sales declines because of tariffs. It said shoppers think of purses as a “nice-to-have” category, not a “must-have” one. And it said the sentiment would only grow should the U.S. enter another period of economic slowdown.
Tapestry shares are down about 26% this year, while Capri Holdings’ stock has fallen nearly 25%.
Earlier in the week, Piper Jaffray’s biannual survey showed teen spending on handbags had hit an all-time low in the survey’s 38-year history. The study said female teens are spending an average of $90 per year on purses, down from peak spending of $197 on the category in the spring of 2006.
The study also found that more “accessible” handbag makers in the U.S. have been ceding market share to European brands. Kate Spade dropped to the No. 4 spot on the firm’s list, with Louis Vuitton moving up to the No. 2 spot in the handbag category and now taking 14% market share, for example. Female teens’ favorite handbag brands include: Michael Kors, Louis Vuitton, Coach, Kate Spade, Gucci, Vera Bradley, Chanel, Steve Madden, Calvin Klein and Guess, Piper Jaffray said.
As spending has dipped, the rise of names such as Louis Vuitton may seem surprising. But not so much when you factor in the new options that teens have for getting their hands on these luxury labels. Analysts say the growth of higher-end handbags can at least partially be attributed to the fact that secondhand sellers are flourishing, especially among younger shoppers.
Not only do secondhand sites make products such as purses more affordable, younger shoppers also see them as more sustainable.
The Real Real stock soared more than 70% last month.