Luxury bags are premium bags that cost more than a few hundred dollars. Luxury bags are not a necessity and are much more expensive than general bags. Fashion industry is full of uncertainties and has a high risk factor as the trends nowadays are frequently changing but the handbags segment has always been more relied upon getting the attention of the consumers by providing innovative features. Many of the big brands make huge profits from sale of luxury bags. Of all the Gucci’s products that priced over $1000, bags make up 39% of the total products. For Fendi and Prada luxury bags make up about 65% and 82% of their products priced above $1000 respectively. The most common types of luxury bags include tote bags, clutch bags, backpacks, satchels and shoulder bags among many others.
There is strong competition in the luxury bags industry. Dior, LVMH, Coach, Kering, Prada, Gucci, Michael Kors, Armani, Hermes, Chanel, Richemont, Kate Spade, Burberry, Dunhill, Tory Burch and Goldlion etc. are some of the dominant brands in the market. Coach is the market leader but has been recently losing it’s market share to many new entrants in the industry. The company has also failed to keep up with the new fashion and pricing strategies. Coach and Michael Kors are the most well known brands for luxury bags and are very easily available. Kors is also one of the most diversified brands and has recently entered into menswear segment as well.
There has been a recent slowdown in the industry. The sales of luxury bags have been reported to drop about 23% in 2016 when compared to 2015. The brands have introduced almost 13% fewer new designs to their collections. It can help the companies to bring only the best designs to the market and eliminate too many choices for the consumers to choose from but it may also become a problem as the companies may miss an opportunity to introduce a new trend, which could heighten their sales. There is also an increasing preference for jewellery or shoes over bags in the younger consumers. In addition, the market is demanding a faster availability of the latest trends and some of the stores selling luxury bags are not able to do so due to the high inventory cost of these products. The departmental stores have been putting up too many discount schemes on the luxury bags, which has led to the decision of some of the luxury brands to pull their products out of these stores. As a result, the prices of the already expensive bags will further increase and these brands may lose some of their potential customers.
One of the key strategies that the brands should be using is to fully analyse the designs, which are always in demand and the new styles that being introduced in the market. There have been many changes in the companies at the human resource level. There have been management changes in Ralph Lauren, Calvin Klein and Yves Saint Laurent, which may affect their outputs. Some companies have tried to tackle the drop in the luxury bags market by diversifying into other segments while some are considering mergers to strengthen their market holding.
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