The future remains bright for the luxury handbag market, despite some signs of slowing down. There are reports of U.S. customers perhaps taking a “pause” as are the more aspirational shoppers. And yet, analysts at HSBC still expect seven percent growth in the U.S. luxury market.
Moreover, financial reports suggest massive growth in the area through 2029. While other areas of the global marketplace have been adversely affected by the looming economic depression and continuing effect of the pandemic, our favorite fashion houses continue to thrive. They also continue to pursue new markets, such as the opening of new stores in smaller cities like Austin and Nashville, as Hermès is doing.
Not even geopolitical instability has yet halted the booming luxury handbag market in 2023. As to whether and how the banking crisis affects luxury, only time will tell.
In fact, based on our recent shopping experiences in Paris, scoring a bag is as hard as ever. Getting an appointment with a sales associate at Hermes in Paris is largely a crapshoot. And getting a bag can take months, if not years (unless you’re a VIP). The PurseBop team recently scoured the Chanel stores in Paris for the hot bag of the season. One PB writer had to wait an hour in line just to step foot inside the Louis Vuitton flagship store in Paris. Yes, the luxury handbag market is alive and well.
As discussed in earlier PurseBop articles, our favorite brands seem to be weathering the global market downturns with flying colors. Even the latest price hikes by our favorite brands don’t seem to have any negative effects on purchasing. Patrons were clamoring for Hermès leather appointments during Paris Fashion Week despite the recent price increases. Those hikes ranged from 3.6 percent to a whopping 24% percent.
And 2022, despite the remains of the pandemic, war in Ukraine, tensions in other geopolitical arenas, and a cryptocurrency meltdown, was a banner year for the elite brands. Hermès reported an “exceptional” year with revenues up 23%. Hermès benefited greatly from global travel and vacation shopping, as was evident in the Summer 2022. And China sales grew, which the brand expects and hopes will continue.
See: Hermès Financials Soared in 2022: Employees to Receive €4,000 Bonus/
LVMH Chairman and CEO (and recent richest man in the world!) Bernard Arnault explains that the strong 2022 performance of the conglomerate that includes Louis Vuitton, Dior, and Fendi illustrates the “exceptional appeal of our Maisons and their ability to create desire during a year affected by economic and geopolitical challenges.” Arnault pointed out the strong demand from local customers as well as the recovery of international travel as two reasons for this stellar performance.
The outlook is strong for luxury goods, even though prices have spiked. Hermes, Chanel, Louis Vuitton, Dior, Fendi, and Celine, just to name a few all recently upped the price tags. Interestingly, despite complaints on social media, these increases in prices do not seem to have substantially affected demand. In fact, the opposite appears to be the case.
According to the Global Luxury Brand Factbook 2023, (Globalnewswire.com), the demand for luxury goods is fueled by the increasing purchasing power of high net worth individuals. “Authenticity, prestige and exclusivity” are among the key factors pushing the significant growth of luxury goods.
Image courtesy @carodaur at Hermès after party, PFW March 2023
The report also notes that Gen Z and Millenials, heavily impacted by social media influencers, are also powering the growth, notwithstanding economic concerns. In fact consulting firm Bain and Company predicts that Gen Z’s overall more “precocious attitude towards luxury goods” will help the luxury market withstand an upcoming financial crisis. For example, a recent article in Vice magazine entitled “Young People are Moving Back In with Their Parents… To Save for Birkins” points out that saving for a down payment on a home has become almost an unrealistic goal. Instead young people are finding it more worthwhile to save for a more achievable tangible investment, such as a Birkin or other elite luxury brand. Morgan Stanley analysts concur, noting that Gen Z and young millennials have found a new way to afford luxury handbags– by living with their parents! Furthermore, the rapid rise and popularity of “unboxing” videos on Tik Tok has brought even more excitement and recognition to the younger generation. After all, as exciting as it is to score a quota bag, imagine how much more exciting it is to unbox it to a TikTok audience of hundreds of thousands.
Bernstein senior analyst Luca Solca summed up the global luxury market recently at a French American Chamber of Commerce event in New York. He noted that post-pandemic euphoria is leading to “freewheeling spending”, driven by exhilaration and excitement. According to Solca, people want to have a good time after two years of pandemic stagnation.
As Solca rather cheekily noted in a recent interview with Women’s Wear Daily,
“It’s probably not worth their while to be the richest person in the graveyard”.
As life resumes post-pandemic emergency, many are eager to be out and about, requiring new clothes, shoes and handbags. Also, it’s important to keep in mind that thus far the surge has been fueled by American and European shoppers– the expectation for 2023 is a very strong rebound for the Chinese luxury market. Solca forecasts a minimum of seven percent growth in the Chinese market alone, based on feedback from companies in China who predict above average demand for the industry.
Is the future bright for your luxury handbag purchasing? Tell us what you plan or hope to purchase.
See: Luxury Bag Market to See Massive Growth by 2031 | Michael Kors, Hermes, PVH Corp.-
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The Global Luxury Handbags Market is forecast to grow by $29125.59 mn during 2022-2027
Updated: April 1st, 2023
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