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A Bright Spot In Retail: Handbag Segment Grows While Apparel Flat
Kathleen KusekFormer Contributor
Photo credit SEBASTIEN BOZON/AFP/Getty Images
Amid lackluster news in retail, a bright spot is the handbag segment with 5% growth to $11.6 billion in 2015 according to a new report from the NPD Group, Inc.
The $214.6 billion U.S. apparel segment is flat versus a year ago according to NPD, but growth in the handbag segment is attributed to increasing importance of technology and more casual lifestyles.
Shoppers are looking for new and better ways to spend on handbags, according to Marshal Cohen, Chief Retail Analyst at NPD. While there hasn't been much new in attire, handbags have evolved to meet women's wide and varied demands. Segment growth is fueled by both spending more per bag and buying more bags overall. NPD's report indicates that women 18-45 own an average of 13 handbags across 7 different brands.
More casual wardrobes and flexible work situations have made handbags surrogates for home closets or office desk drawers. In a world less tethered to traditional workplaces, handbags are necessary mobile storage for laptops, cell phones, and miscellaneous items needed throughout the day, including smaller bags that can be pulled out for evening use. Functional needs like easy access to cell phones and keeping hands free require multiple bag options including open-top totes and crossbodies. Growing demand for big bags resulted in an 8% increase in dollar sales over 2014 and trending upward so far in 2016.
The growing importance of handbags in women's lives is not limited to function. Fashion insiders once dictated that, combined with a good watch and good shoes, one can wear almost anything and still look stylish. Handbags have usurped watches and footwear as signature items that instantly inform the world of the owner's fashion sense. While clothes are generally perceived as a "purchase," handbags are an "investment."
"It's about bang for the buck," according to Jenny Lefcourt, partner at Freestyle Venture Capital. "A $1,200 Phillip Lim backpack may seem like an extravagance, but it can be used every day for a year. Two or three jackets totaling the same amount can be worn once a week at the most."
In addition to favorable amortization, big-ticket handbags can be justified by the burgeoning resale market including online resellers like Rebagg.com and The RealReal, where certain luxury bags like Hermès, Chanel , and Gucci can actually appreciate in value. Nina Markoutsis, a Dallas attorney, has invested in a variety of high-end handbags over the years. Her favorite Gucci retailed at $1,400 and is worth $1,600 more than two seasons later. "I love that bag and would definitely buy it again."
But for most women, even the most clever rationalizations can't justify purchase of an Hermès Birkin, known as the world's most sought-after handbag. Getting a Birkin takes more than the purchase price ranging from around $10,000 and up to the record-setting $298,000 for the Himalayan model, recently sold at auction by Christie's in Hong Kong. Procuring a Birkin can require extensive research, schmoozing with sales associates, and constant combing of blogs devoted to luxury bags to gain access to the inner circle of supply.
Across the entire category, average U.S. handbag expenditure is only $42 per bag according to StyleCareers.com, with quantity sales at the lower end from Gap , Target and fast-fashion retailers like Zara and H&M. Approximately 20% of women reported spending more than $200 per bag, with 8% spending more than $400 according to the same study. Brands like Coach, Kate Spade and Michael Kors have struggled recently, with some analysts hypothesizing that broader distribution reduce premium perceptions in a category where perception is everything.
At whatever price point, experts agree that the handbag a woman carries is among the most important fashion statements she can make. Even in the tough retail environment, handbags will likely continue to get more than their fair share of wallet.
Kathleen Kusek
I have been deeply and happily immersed in marketing strategy, consumer research, advertising and integrated consumer communications for nearly two decades. Despite the…
I have been deeply and happily immersed in marketing strategy, consumer research, advertising and integrated consumer communications for nearly two decades. Despite the potential fame and veneration of alternate career paths, working for and with companies like Kellogg's, Kraft, Quaker, Clorox, Miller Brewing, Pillsbury, Genentech, Pioneer Electronics and The Four Seasons Hotel and Resorts, has proved intellectually challenging and richly rewarding. Understanding the underlying psychological reasons why consumers behave as they do has never been more interesting in this era of "always on" marketing. That's where I come in: To contemplate and share the trends and implications in the world of consumer goods and retail.