Women Wear Their Wealth on Their Arms
By Bernice Hurst, Managing Director, Fine Food Network
High tickets apparently indicate high fashion, at least where bags are concerned among the mega-rich on both sides of the Atlantic. Whether or not the fad has reached its peak, this season’s must-haves include a couple of bags that are ordered at select parties attended only by invitation. Heaven forbid retailers should expect customers prepared to spend five or more figures to just wander into a store for a browse.
The newest example of the expensive bag genre is one by Burberry, made of alligator skin and selling for £13,000. It’s not as expensive as the Chanel bag with the diamond studded clasp that costs in the region of £100,000 or last year’s Louis Vuitton version that sold out in spite of (or because of?) being priced at £23,484.
According to Susie Rushton, writing in The Independent about the British market for these flashy “IT” bags, there are economic reasons for designers and retailers to be featuring accessories as well as clothes. The bottom line, literal and figurative, according to Ms Rushton, is that bags “are very profitable. They are the fastest-growing sector of the fashion market, they take up little space in stock rooms, and clients need to replace them each season.”
For all the show-offs who take pride in owning something that so few other people can afford, there are far more women who are happy to have a large wardrobe of bags that each cost a mere fraction of what their wealthy sisters are flaunting.
A Mintel survey found that 55 percent of women in Britain have bought a handbag in the past 12 months while sales in the UK have gone up by 146 percent in the last five years. The explanation, says Pamela Danziger, author of Why People Buy Things They Don’t Need and founder of the research company Unity Marketing, is that bags “convey status both financial and fashionable, do not require a size four figure, and are utterly frivolous.”
There is plenty going on at the less expensive end of the market, however. Whether it be copies sold for pence rather than pounds or eco-friendly bags like those designed by Anya Hindmarch and Stella McCartney, most women can decide what kind of a statement they want to make without taking out an additional mortgage to cover the cost.
Discussion questions: What do you think is driving the trend toward ultra-expensive handbags? Do aspirational purchases represent a bigger opportunity for retailers today than the past? Do you think consumers will back off these types of purchases in light of the current economic climate?
As the sub-prime melt down impacts a large part of the US population, there are still those who function in an economy all their own. They view these handbags as somewhat of an investment in a time when real investments are questionable.
I’ve never understood it. I’ve never been in a position to understand it. But in Los Angeles it is clear that, even with the writer’s strike, there is an audience that remains ripe for high end purchases that make no sense to mere mortals. And it’s starting younger and younger. Retailers don’t need this audience to be that sizeable. They just need to have a small, loyal following. And the branding that has been done has passed down from generation of wealth to generation of wealth. It must be nice.
For the rest of us, there are now rental business models that allow for the use of a Louis Vuitton or Gucci purse for a few days.
Handbags and other accessories continue to shine as apparel makers fail to excite us – largely due to retailers over-saturating us with a few looks (how many cropped, 3/4 sleeve cardigans does a woman really need?). Until that changes, expect the accessories market to remain strong as women will continue to desire a great look.
The trend of wildly expensive 1-of or few-of-a-kind bags has been going on for some time now, driven by brilliant marketing from brands owned by the “big 3” luxury players: LVMH, Richemont, and PPR. Their careful strategies of real and perceived scarcity, artisan craftsmanship, and celebrity buyers will continue to drive the top-end luxury bag market, as well as inspire the aspirational brands and consumers. The current economic malaise will not last forever, but purchases of aspirational labels like Coach and Dooney & Burke will not be as robust as true luxury brands like Hermes and Louis Vuitton. Any drop off from the aspirational buyers of these elite brands will be more than made up by the top end. Further, unless there is a true and sustained worldwide downturn, I expect markets outside the US to keep these brands growing.
Finally, the nascent but growing on-line luxury bag rental services will ensure that anyone of at least moderate income means can sport a Chanel, a Prada, a Louis Vuitton…
The aspirational high end handbag market of the past few years has thrown on its head the old fashion saw; that a woman “with class” should always buy a few beautifully designed, beautifully cut, beautifully finished, perfectly tailored “break the bank” garments that would last, and then use less costly, more trendy accessories and bags to keep the look current. Now the fashionista gals are buying knockoff designer clothes at H&M and topping them off with authentic LV and Chanel bags.
Since it is becoming more and more clear how many of these luxury items have recently been purchased on credit card debt and home equity loans, I predict that a time of more prudent spending and less obvious consumption is upon us and will particularly play out in this “look at me” segment of luxury accessories. The ultra rich are still out there, but many of the “aspirational rich” are sweating bullets.
Fashion of course is cyclical and in my humble opinion, this trend is either at peak or very close to it.
Back in the ’80s, designer labels were also all the rage until the market became so over saturated with knock offs and licensed product that the designer product lost its cachet. I see the same thing happening now as we see Vera Wang in Kohl’s and (for now) Isaac at Target, and knock offs that look very much like the real thing.
Quite frankly, with some of the very real issues this country–and for that matter the world–is facing, I hope that some of the women carrying a $10,000 handbag would stop and think, “Does having a $10,000 handbag really make me a better person than someone who doesn’t?”
Ultra-expensive iconic bags from designers such as Gucci, Fendi and Chanel are hardly a new development. The handbag has been the key designer accessory for several years, in part because of its size and the logo-recognition factor. While the market for these bags may or may not continue uninterrupted, there has been a trickle-down effect for the past several years driving sales of aspirational brands such as Coach and Dooney & Bourke. There is strong evidence, based on numbers reported by companies like Coach, that the economic slowdown is taking its toll on these “affordable luxuries.”
Of course, the price is absurd. But so is $400 for a piece of plastic and canvas, just because it carries a Burberry, Kate Spade or Coach logo. Is it made in a better part of the factory in Malaysia than items that cost $40?
However, let’s not underestimate the marketing and branding genius that enables sales of high end goods to continue. I love the analogy used by marketing consultant Paco Underhill who says this is a sales strategy that goes back to the 17th century. You sold one item to the king, but everyone in court had to have a similar but lesser item. This is one reason that women forgo the Hermes bag for a Hermes t-shirt, he said. It’s a status thing.
There was also a great letter to the editor in the Financial Times a while back by Sarah Fraser a marketing professor at the University of Singapore. The question was “Why do women buy black high heels?” The answer she gives her classes is that they don’t! They buy products that make them look taller, slimmer and sexier. Again, you’re not necessarily buying the the $100,000 bag–but how it makes you feel.
High-end handbags have become an extension of the jewelry business. Apparel itself hasn’t been too exciting lately, so accessories take up the slack.
Counterfeiting and gray market discounting cut heavily into sales and profits. It’s analogous to the effect fake diamond sales have on precious jewelry. You get the look you want at the price you can afford. eBay is a great indicator: high-end genuine handbags achieve unusually avid bidding action.
There’s so much about this issue that resides in the woman and her psychographic/demographic profile as well as how she’s hardwired. Many great points are made here, some are stronger than others. I feel at the core of the answer is that certain women could care less what their bag is and says about them and others care far too much. The media is constantly zooming in on what movie star has what super-pricey designer bag on her arm and spurns lots of lust in those that need to feel part of the “in” crowd to be valuable. And some women are simply materialistic and always want to have the best of the best. Others are quality-driven and just want a good investment.
Based on the economy and what’s currently happening regarding world events, it will be interesting to see if this trend progresses!
Accessories are a permanent fixture of the human form. Men, especially the youth, use this medium to express themselves in manifold ways. The vast majority would purchase low to medium priced products, trend right, fashion products instead of a lifestyle product.
Lifestyle products are typically for the fairer sex where the vast majority opt for sane price points, rapid change in styles and expression. The gifted clan in the fairer sex will in the meanwhile continue to purchase those beyond reach. The younger generation in this category will drive consumption since they are driven NOT by the need to stand apart but by the need to live it up.
A rental market for such products (luxury end) would drive the base of this category. Most certainly. Children of the lesser gods !