Luxury Leather Goods in the US

2021 DEVELOPMENTS

Despite returning to growth, luxury leather goods remains depressed by restrictions

Luxury leather goods saw a record current value decline in 2020, as domestic and international travel restrictions, lockdowns, and other efforts to curtail the spread of COVID-19, including significant limitations on in-person events, as well as social distancing and hygiene regulations in stores, significantly diminished demand for luxury leather goods. The category returned to growth in 2021, as restrictions eased, and consumer behaviour began to normalise.

Versatile bags outperform the category, leading to new product launches

Although international and domestic travel restrictions, stay-at-home orders, and other changes in consumer lifestyles brought about by the pandemic especially hurt sales of luxury travel goods and some other product lines in luxury leather goods, more everyday and versatile bags, including luxury handbags, as well as crossbody bags and other small bags, performed better in 2020 and into 2021. This was thanks in large part to their usefulness for activities that were able to remain in place, such as more local and socially distanced activities, including neighbourhood walks and dining out, which consumers were quick to resume when they were able to do so, especially as larger group activities remained restricted.

Disruptions to in-store shopping continue to boost sales via e-commerce

The vast majority of sales of luxury leather goods were through store-based retail channels prior to the pandemic, including bags and luggage specialist retailers (classified as non-grocery specialists) and department stores (classified as mixed retailers). However, many consumers found themselves either unable or unwilling to purchase their preferred products and brands in stores throughout much of 2020 and into the first half of 2021 amidst COVID-19 restrictions, which varied across states in terms of timing and severity.

PROSPECTS AND OPPORTUNITIES

Pent-up demand for experiences will benefit luxury leather goods over the forecast period

Luxury leather goods is expected to deliver its strongest year of post-2020 recovery in current value terms in 2022, and recover to the 2019 level of sales in 2023, when in-person working and events, as well as business and international travel, are also expected to recover to pre-pandemic levels. Consumers were already increasingly prioritising spending on out-of-home experiences, including travel, dining out and other forms of entertainment, before the pandemic, and luxury leather goods benefited from this shift, as consumers chose stylish and versatile bags from luxury brands to both carry their things and convey status on these outings.

Consumers will increasingly participate in the luxury resale market

Interest in the resale market is amongst a number of consumer trends that have come to the forefront amidst the pandemic. Offering environmental merits and the opportunity to buy certified-authentic luxury handbags and other luxury leather goods for more affordable prices, the luxury resale market in the US had already been growing in popularity in recent years, fuelled by the arrival of new digital native players including Rebag, The RealReal and Fashionphile, and an overall destigmatisation of second-hand goods, at least at for the highest-end brands.

As e-commerce continues to grow, luxury brands will accelerate digital investments

As many consumers’ only available, or otherwise vastly preferred, sales channel for luxury leather goods throughout much of 2020 and 2021 due to COVID-19-related restrictions on in-store shopping, dramatic growth in the category’s e-commerce penetration came as many consumers became increasingly comfortable shopping for and purchasing items of increasingly high-value online, with many doing so for the first time. To facilitate this growth and to aid in its acceleration over the forecast period, luxury leather goods brands and retailers have overhauled their investments in digital merchandising and digital marketing channels.