Luxury Leather Goods in the US

PROSPECTS

Goods benefiting from the shift to experiences

As US consumers, and millennials especially, prioritise spending their discretionary income on memorable experiences over material goods, luxury leather goods is one personal luxury product subcategory benefiting from the shift as consumers require new bags for increasingly frequent local and distant outings. For the second consecutive year, luxury travel goods grew fastest as a strong economy and an increase in affordable travel options lead consumers to take both business and leisure trips more often, motivating them to trade up to luxury travel goods.

Streetwear and social media fuel growth in men’s luxury bags

Ignited by the streetwear trend and fuelled by social media, a growing interest in fashion and appearance among men has caused the growth of men’s luxury bags and small leather goods to outpace that of women’s in recent years. With a growing familiarity of designer brands and a penchant for flashier logos and monogrammed canvases that stand out on social media, men are increasingly choosing designer backpacks, crossbody bags, belt bags and dopp kits to not only carry their things, but also elevate their outfits.

While handbags remain popular, women branch out to more versatile bags as well

Unlike men, women’s interest in bags is far from new, and women continue to depend on bags for both storage and style. Like men, however, they are increasingly choosing more comfortable and versatile styles including backpacks, belt bags and crossbody bags from luxury brands, largely with prominent logos that stand out on social media.

COMPETITIVE LANDSCAPE

Michael Kors continues to lead at brand level while Louis Vuitton displaces Coach

At the brand level, Michael Kors continued to lead luxury leather goods in 2018 as the ubiquitous American brand began to see success in its turnaround efforts. After years of sales decline as a result of slowing foot traffic to shopping malls and a dependency on brand-damaging discounting activities, the brand’s pace of decline began to slow thanks to steps taken to improve its product offering and retail partnerships, in addition to publicity from its parent company’s acquisitions of Jimmy Choo and Versace in 2017 and 2018, respectively.

Louis Vuitton opens Texas workshop amid trade wars

Amid new tariffs and other governmental policies aimed at curbing foreign imports in favour of domestic production, Louis Vuitton opened a new manufacturing facility in Keene, Texas, about 40 miles southwest of Dallas, in October 2019. The 100,000 sq ft factory will produce monogrammed canvas and leather handbags labelled “Made in the USA” for the US market, which will be priced at USD1,200 and up.

Secondary market lifts luxury handbag sales on primary market

Environmental benefits and a penchant for deals has long drawn consumers to the secondary market for several apparel and accessories subcategories, with luxury handbags one of the most popular to buy and sell due to high resale values and the continued popularity of classic styles. While formerly confined to physical second-hand shops, however, the advent of e-commerce has enabled rapid growth in the secondary market in recent years, with a number of consumer-to-consumer marketplaces and online retailers specialising in certified authentic, second-hand goods such as Rebag and The RealReal facilitating consignment and consumer-to-consumer transactions like never before.

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