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Bags of potential

Bags of potential

Growth, transformation and new possibilities in the global handbags market

Growth, transformation and new possibilities in the global handbags market

Do craftsmanship and heritage still have a place in today’s e-commerce-driven handbags market?

From function to fashion

Before the days of pockets, handbags were used by men to carry money and other valuable items.1 But that was in the Middle Ages – fast forward to the present day, and the handbag has spent many decades as a must-have female fashion essential.

The introduction of low-cost, mass-volume designs, coupled with the rise of e-commerce, has had a huge impact on both the production and purchasing of handbags. The worldwide market was valued at $47 billion in 2018, and this is set to rise to $55 billion by 2025.2 Here, we look at the exciting changes shaping the industry, now and in the future.

Style goes social

Miniskirts, slip dresses, scrunchies: the 90s was an iconic decade for fashion. Perhaps the biggest phenomenon of them all, however, was the ‘it’ bag. Fashion brands competed to have their designs worn by the celebrities and fashion models of the moment, helping to drive explosive growth in the handbag industry.

More recently, a global shift towards e-commerce and faster, more convenient fashion has been a bigger contributor to industry growth. Busy lifestyles mean consumers are increasingly choosing to shop online for their handbags. They’re even shopping on the go through their mobiles, and on social media. 

Research shows that 43% of internet users now use social channels to research products,3 while 30% say they would make purchases through them directly.4 

Figures have also revealed that despite competition from the world of mass-produced fashion, online luxury goods sales could triple by 2025.5 This is exciting news for handbags retailers, giving them greater possibilities to capitalise on this sales channel. Not to mention the fact it gives them the chance to reach shoppers in places where they currently have no physical store.

Mass production takes off

While Italian craftsmen gave handbags a firm footing in the world of global trade, this market has exploded far beyond its humble origins. Did you know that China is now one of the fastest-growing importers and exporters of handbags – and has been a driving force in bringing them online?

Cheaper materials and a growing manufacturing workforce have allowed Chinese business owners to create their own handbags and choose their own price ranges.6 And this has certainly paid off, with revenue in China’s ladies handbags market skyrocketing from $13.2 billion in 2012 to a projected $32 billion in 2020.7

But China isn’t the only country in Asia-Pacific ripe with potential for the handbags sector. With per capita income and e-commerce penetration rising in places such as India, South Korea and Indonesia – and consumers there becoming increasingly brand-conscious – experts are suggesting that these emerging markets could become ones to watch over the next five years, especially when it comes to high-end handbags.8

In 2017, luxury goods sales in emerging markets soared by 32%, and this growth is set to continue.8 India and Mexico in particular present exciting opportunities for businesses looking to expand, with the luxury goods sectors in both countries on track for future growth.

Yet despite rising pressure from mass produced brands, high-end designers are keeping Italian craftsmanship alive both online and on the ground. For instance, Artificial Intelligence is opening up some exciting doors, allowing brands to use the data they’ve gathered about their customers to curate a more personalised and interactive experience.9

Meanwhile, in places such as Scandicci, Italy, some of the biggest names in fashion are building factories for artisans to create leather handbags en masse.10 What remains to be seen now is whether these investments continue to pay off, and whether handcraftsmanship can hold its own against the lower cost products in the market.

Who imports the most Italian leather handbags?

Globe

13%

Hong Kong SAR, China

12%

U.S.

8.6%

France

Unpacking the emerging consumer trends

Bags and accessories are set to be one of the hottest e-commerce categories in the next couple of years,11 with worldwide revenue predicted to reach a huge $103 billion in 2022. This highlights how much opportunity there could be for smaller, more artisan retailers to jump on the digital bandwagon if they haven’t yet done so.

Handbag brands are also being encouraged by experts to concentrate more on consumer needs when it comes to developing and launching new products. Why? Because there’s a key trend emerging among shoppers – particularly the younger generations – to choose more versatile bags from brands that address the social and environmental issues that matter to them.12 

With millennials a key group for luxury retailers to target, businesses will also need to consider the fact this demographic isn’t particularly loyal to brands in markets such as Europe and China. Collaborations and celebrity endorsements have become bigger purchasing factors in the luxury fashion market – especially when it comes to handbags.13

Open your business to new possibilities

The global handbags industry – in particular the e-commerce market – is full of promise, both for small, heritage brands and bigger manufactuers alike. This should give businesses in every industry confidence that by having their finger on the pulse of consumer attitudes and embracing all facets of the digital revolution, they too could experience powerful growth.

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