A strengthening global economy, intense competition between airlines and consumers’ increasing preference for experiences over goods have led to rapid growth in travel and tourism globally. With the growth of the US economy, fuelled by recent tax cuts and near record-high consumer confidence, luxury travel goods lifted luxury leather goods to growth in 2018, as US consumers invested in high-end luggage and other travel accessories for their more frequent travels.
Social media helped shape consumer preferences for handbags in 2018, as shoppers opted for pieces that would be instantly recognisable and impressive to their friends and followers. Consumers’ renewed affinity for logos, brought about by streetwear trends, grew sales at European fashion houses to record highs, as social media users sought to show-off logos and branded prints from Gucci, Louis Vuitton, Chanel, Balenciaga and more, in addition to less logo-heavy yet equally recognisable bags from the same brands, such as Gucci’s Marmont and Chloé’s Nile handbags.
Producers of luxury leather goods made headlines in 2018 for their controversial stock destruction practices, intended to prevent both discounts and secondary market sales, which could damage their brand image. Burberry revealed it destroyed USD37 million of goods for the year ended 31 March 2018, whilst luxury group Richemont, which owns Cartier, destroyed USD557 million of goods in May 2018, with other brands, including Chanel and Louis Vuitton, revealing that they also burn or destroy unsold stock.
France’s largest luxury conglomerates, Kering and LVMH Moët Hennessy Louis Vuitton, benefited from changing consumer preferences, as their brands’ creative directors were quick to capitalise on industry trends. Alessandro Michele’s recent transformation of Kering’s Gucci into a millennial-friendly and logo-forward brand has resulted in record sales and attention for the legacy brand, whilst Demna Gvasalia of Balenciaga (also Kering-owned) has earned similar praise and a subsequent sales lift for his streetwear-inspired and meme-inspiring design changes.
As European luxury groups enjoyed record sales and profitability, struggling US brands sought to replicate their success and cost-saving synergies by building luxury groups of their own through acquisitions. After acquiring the Kate Spade and Stuart Weitzman brands in 2015 and 2017, respectively, Coach Inc changed its name to Tapestry Inc in October 2017, in a bid to assert its new identity as a multiband company in the image of Kering and LVMH.
Internet retailing continued to be the fastest growing channel for luxury leather goods in 2018, as the number of internet-based retailers and shopping platforms grew, and consumers became increasingly comfortable purchasing high-end products online. Faced with competition from marketplaces such as Farfetch, which enables customers to shop in multiple boutiques throughout the world on one centralised site, traditional retailers are increasingly looking towards experiential retailing and product curation to compete with online competitors, as they seek to add value to store visits.
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