The global luxury handbags market is anticipated to grow at significant pace during the review period. The market's growth can be attributed to the increased presence of the private labelled brand and growing number of working women. Market players are expected to witness profitable growth opportunities in the global market due to the augmented growth of the E-commerce industry.
Market Strategy Analysis
The key players operating in the global luxury handbags market include Ralph Lauren (US), PVH Corp (US), Kering (France), LVHM (Paris), Giorgio Armani (Italy), Channel SA (France), Dolce & Gabbana (Italy), Burberry Ltd (UK), Inditex (Spain), Capri Holding, ltd (US), Nordstrom (US), Valentino spa (Italy), Prada Group (Italy). The market comprises tier-1, tier-2, and local players. The tier-1 and tier-2 players have a global reach and diverse product portfolios. Ralph Lauren (US), PVH Corp (US), Kering (France), LVHM (Paris), Giorgio Armani (Italy), Prada Group (Italy), and Inditex (Spain) are the players dominating the global market due to brand reputation, product differentiation, financial stability, and diversified regional presence. The market players are focused on investing in research & development and adopting strategic growth initiatives such as product launches, joint ventures, patent approval, acquisition, expansion, certifications, partnerships, and investment to strengthen their market position and capture a large customer base.
The benchmarking is done by assessing the product breadth & price range offered; strategic partnerships, collaborations, and M&A conducted by the company in the sector; and product based on years of experience in the industry.
Product Portfolio
Each product and service that a company offers are compiled into a product portfolio. The origins of the company's sales, profitability, and growth possibilities can be revealed by a thorough review of its portfolio. The portfolio can be seen as a collection of product lines or as a collection of distinct items. Sometimes having a strong portfolio helps in creating a good customer base.
Regional Presence
The regional presence helps to identify the number of areas in which the company is having its presence. A strong territorial network creates value by determining the priorities of the cities, states, or countries and this helps in maintaining the product portfolio of the company.
Strategic Alliances
A strategic alliance is an agreement between two businesses to work together on a project that will benefit both parties while maintaining their individual freedom. Compared to a joint venture, which sees two companies pool their resources to form a new company, the arrangement is simpler and less legally enforceable.
Industry Experiences
The knowledge and skills in a particular field or trade are known as industry experience. Through industry experience, one can figure out how many years the company is operating in the market. It is easy for consumers to trust a company with good industry experience.
Threat Of New Entrants
The global luxury handbags market is large and highly competitive. The initial investments required are high including the purchase of processing equipment, marketing, advertising, promotional costs, and certifications on approval for imports. While the technical expertise for procuring the right quality animal fur, eco-friendly alternatives, processing, and research & development is moderate and requires the hiring of the right qualified professionals.
Owing to the increasing demand for luxury handbags and high returns on investment, the global luxury handbags market has witnessed an increasing number of new entrants, like Aranyani (2019), Starthberry (2013), Miuur (2021), and Polene Paris (2016), among others. However, existing brands through innovative marketing strategies like influencer marketing, digital media marketing, established brand image, etc. have captured a strong customer base and have a better reach in the market. In addition, the products of different manufacturers are highly differentiated with intricate design and material, the well-established players have a strong market presence and brand awareness which creates barriers for new entrants.
Hence, the threat of new entrants in the global luxury handbags market is expected to be low.
Bargaining Power of Suppliers
The raw material suppliers for handbags are the manufacturers of fabric, threads, zippers, hooks, locks, spray, etc., and animal farmers involved in the distribution of animal skin and hide. There are several suppliers of these raw materials providing a competitive advantage for the manufacturers to choose between various options and as they do not pose much differentiation in their characteristics, reduce the manufacturers' switching costs. Also, the market players enter into partnerships and agreements with raw materials producers and suppliers to ensure uninterrupted supply.
Hence, the bargaining power of suppliers in the global luxury handbags market is expected to be low.
Threat Of Substitutes
The potential substitutes for luxury handbags are cost-effective or inexpensive handbags. However, the value proposition, satisfaction, brand equity, and status symbol provided by the luxury brands to the customers cannot be achieved through the alternatives. Also, the demand for eco-friendly handbags might affect the demand for synthetic luxury handbags at an internal level, there wouldn’t be any threat to the luxury handbags and instead, the eco-friendly handbag options are anticipated to create additional opportunities for the manufacturers. Thus, there is no external threat of substitutes to the luxury handbags market.
Hence, the threat of substitutes in the global luxury handbags market is expected to be low.
Bargaining Power of Buyers
Several well-established luxury handbag manufacturers in this perfect competition market increase product breadth and availability which ultimately reduces the switching costs for the buyers. There are several buyers of luxury handbags in the global market including clutches, crossbody bags, hobo bags, and briefcases used by both men and women. However, the buyer concentration is high compared to the overall industry concentration as luxury handbags are known for their limited availability. Also, luxury handbags constantly transfer the cost increases to customers through a price increase, unlike other goods, as people's preference to spend on luxury goods tend to be higher in all circumstances.
Also, the awareness of various brands in the global luxury handbags market is high with some key players like Chanel Inc., LVMH Moët Hennessy Louis Vuitton, Ralph Lauren Corporation, The Kering Group, and PVH Corp. having high brand recognition among consumers. Thus, all these factors are expected to affect the bargaining power of buyers significantly.
Hence, the bargaining power of buyers in the global luxury handbags market is expected to be moderate.
Intensity Of Rivalry
The market is highly competitive, marked by competition among the market players in terms of product quality, variety, and pricing. The established players are engaged in expanding their customer base through various marketing initiatives and product customization, thus intensifying the competition among the manufacturers. For instance, Prada launched an ad campaign for its Galleria Bag in 2021, to regain the attention of its old product among the new generation by emphasizing the brand value and product craftsmanship. Also, as the industry is expected to grow at a CAGR of 6.15%, the manufacturers are focusing on product innovation and strategic partnerships to strengthen their business in the market.
Hence, the intensity of rivalry in the global luxury handbags market is expected to be high.
