Luxury Handbags Market

The global luxury handbags market is expected to grow at a rate of 6.15% during the forecast period and is attributed to the growing working women population and the growth of the e-commerce industry. In addition, the increasing revenge spending on fashion products and the rising men’s preference for handbags are fueling the growth of the market. However, the presence of private-labels and counterfeit products might hamper the growth of the market. Nevertheless, the preference for eco-friendly bags, the increasing use of social media marketing, and shifting consumer preference toward the luxury resale market are expected to create opportunities for the players in the market during the forecast period. The issue of animal cruelty in raw material procurement is posing challenges for the players in the global luxury handbags market.

The working women population in the US is increasing over the years (refer to figure 11), this translates to increased financial freedom, thus impacting the spending on fashion products positively. In addition, the US government is also taking several initiatives and programs to boost female participation in the workforce including the Protecting the Right to Organize Act, American Jobs Plan, Gender Equity and Equity Action Fund, Women Entrepreneurs Finance Initiative, etc. The initiatives are expected to fuel the growth of the working women population further in the upcoming years.

In the UK, women's participation in the workforce has been very promising over the years (Refer to figure 12) and according to the Office for National Statistics, UK the labor force in the nation has witnessed an addition of 2 million more female in 2021 compared to the level in 2010. Women occupying leadership positions including managers, senior officials, and directors have recorded a growth of 25% over 2010 figures. In addition, female in the age group 16-24 is one of the fastest-growing segment among the working women population in the UK. The working women population is expected to increase in the upcoming years fueled by various government measures like child-care support facilities, increasing investments in jobcentre through Department for Work and Pensions (DWP), etc. Similar were the trends of working women population growth in many developed economies including Canada, Germany, France, Japan, Finland, Denmark, etc. For instance, between 2011 and 2021, Canada’s working women population witnessed a growth of 14.62%.

Handbags have varied roles in working women's life including serving as storage and carrying means of their day-to-day amenities like phones, wallets, laptops, cosmetics, medicines, etc. More than a means of essential accessories, handbags are considered a style element in the daily dressing of a woman. The status symbol created by owning a luxury handbag along with the exclusivity and style it adds to a women’s personality is some of the key factors that contribute to women’s tenacity in buying luxurious handbags. For instance, according to ICSID.org, a business and industrial blog statistics, on average women in the UK spends Euro 6,144 on handbags alone annually. Earning wages of working women provides them the financial freedom to meet their grooming needs and boost their buying capacity for luxurious goods. Also, post-lockdown, employers have rolled out a return to office initiatives which are further expected to boost the demand for handbags in the upcoming years. Thus, the growing working women population is anticipated to drive the growth of the market during the forecast period.

Consumers across the globe highly calculating the impact of their consumption on the environment, these days. The environmental concerns have increased to a greater extent, and with that, the concept of eco-friendly or going eco-friendly has progressed. The benefits of eco-friendly bags including high durability, ergonomic design, and value proposition are boosting the preference for sustainable and eco-friendly handbags among consumers. In addition, the survey conducted by Wharton School, University of Pennsylvania in 2022 reported that willingness to pay a premium for a sustainable product by consumers across different generation groups has increased, with 90% of Gen Z consumers ready to pay 10% or even more for eco-friendly products. Another survey conducted by GreenPrint, a company offering sustainable services among US adults in 2022 revealed that 66% of consumers are willing to spend more on sustainable products despite higher price inflation. This shift in consumers’ inclination towards spending more on sustainable brands is expected to create lucrative opportunities for players in the market to design and develop eco-friendly handbags.

According to the World Bank estimates, the fashion industry alone contributes to approximately 10% of carbon emissions. From the brand’s perspective too, as the fashion industry is already contributing to approximately 10% of carbon emissions, manufacturers are taking several initiatives towards making a positive impact on the environment. This includes the launch of sustainable and eco-friendly handbags as well by some of the established luxury brands. For instance, Louis Vuitton has committed to achieving 100% eco-design by 2025 and has redefined its bag and sneaker products categories. The brand’s Maxi Multi Pochette Accessories handbag is one such eco-friendly bag that is made using econyl regenerated nylon. Herme’s launch of the mushroom leather-based Victoria bag is an eco-friendly bag in 2021 and was developed in collaboration with MycoWorks, a startup that has a patent for the mushroom-derived textile. In line with these launches, manufacturers in the market are expected to design and develop eco-friendly luxury handbags in the forecast period.

The increasing demand for luxury handbags is attracting unorganized players to manufacture counterfeit products. The small-scale manufacturers and private label brands offer low-cost handbags that are at times substandard to price-conscious consumers who may not look at the brand name and quality standards but only concentrate on the design that imitates the branded handbags. The counterfeit products are designed in such a way that they imitate the design, and it becomes difficult for the consumers to differentiate between the original and spurious handbags. However, the economies of scale achieved through the mass-production help them to price the handbags at a substantially lower value than their branded counterparts. These manufacturers also sell their products in the unorganized market, thereby limiting the growth of players in the global luxury handbags market. The sales of private-label products are largely unaccounted for, which creates a gap between the production volume and the revenue generated in the global market. It not only affects the revenue of the branded handbags but also dampens the goodwill of the brand.

According to International Trademark Association, the total global sales of counterfeit products across various categories stands at USD 461 billion. The majority of these sales are generated from digital platforms including Facebook groups, Instagram pages, WhatsApp groups, etc., and are driven by the growth in the e-commerce industry globally. For instance, stats from an article published in Reuters highlighted that as of October 2021, there are 26,000 and 20,000 accounts on Facebook and Instagram respectively that sells counterfeit products. For years, the luxury industry is taking several measures against counterfeited goods, and established brands spend significantly on anti-counterfeiting legal action annually. But the threat posed by private labels and counterfeit products is continuing to impact the growth of the market during the forecast period negatively

Animal fur is one of the key raw materials used in the handbag industry. Crocodiles, foxes, angora rabbits, and minks’ skin are some of the exotic skins that are popular among luxury handbag manufacturers. A segment of people across the globe are constantly engaging in movements to prevent animal cruelty caused by raw material procurement in the leather industry through organizations including, People for the Ethical Treatment of Animals (PETA), American Society for the Prevention of Cruelty to Animals, Cruelty-Free International, etc. Through blogs, videos, and posts, these organizations share content on animal cruelty caused by various brands for their manufacturing process and also elucidate the impact caused on the environment by such acts. For instance, PETA has a video of a crocodile farm in Vietnam that is supplying the animal’s skin to Louis Vuitton, the video showcases the environment in which these animals are brought up and how they remove the skin. This type of content might impact the consumer’s buying preference for these luxury handbags made from exclusive and rare skin types.

Also, there were incidents of manufacturers resorting to illegal trade practices in sourcing animal skins for their manufacturing. According to an article published in National Geographic, the United States Fish and Wildlife Service has seized around 5,600 products of luxury brands including Gucci, Ralph Lauren, and Michael Kors, among others in the period between 2003 and 2013. These products were made from illegally sourced animal skins and 70% of the goods seized were exotic leather goods including handbags, purses, and wallets. Though some manufacturers have banned the use of exotic animal skins in their products, for instance, in 2018 channel, has banned the use of exotic furs and skin in its products which have been used significantly in the past years. Still, some manufacturers and a few luxury handbag categories are produced using animal skins that go through cruel practices during rearing impacts the consumer’s preference in buying these products. Also, the constant movements and campaigns by the animal welfare organization pose a challenge to the smooth operations of the players in the market.