What’s in a bag? Plenty if you ask for Chanel, Dior, Louis Vuitton and Coach. Inflation may be on the rise, housing costs are rising and, contrary to what some may believe, the global COVID-19 pandemic is not over. Despite this, projections for the global luxury handbag market exceed a valuation of $35.4 billion by 2031. Luxury handbag makers attract customers by offering bags that combine fashion and technology .
The global luxury handbags market is estimated to grow at a CAGR of 5.9% from 2021 to 2031, according to a research report by Transparency Market Research. While there has always been a love for a good handbag, how, despite economic factors not favoring the growth of fashion, is the market for luxury handbags doing so well? The answer lies in one of the most powerful economic forces in the world: working women.
A rise in the number of working women around the world boosts sales of luxury handbags
A global increase in the population of working women leads to an increase in disposable income, and disposable income is still excellent for luxury fashion. During the global COVID-19 pandemic, the total number of women in the labor force has declined, with the global female labor force dropping from 50.1% in 1990 to 46.9%. However, this is offset by the number of women pursuing higher education globally.
As companies operating in the global luxury handbags market focus on developing innovative and profitable products, they are eyeing target markets for growth. Asia continues to be a key market for the growth of luxury handbags. Social media is the main factor driving working women to buy more luxury handbags.
Major players in the luxury handbags market, including Dior, Gucci, Louis Vuitton, Versace and Chanel, continue to dominate the social media landscape with engagement scores of 8 million and above according to Listen First Media rankings . The return of Dior’s Saddle Bag can largely be attributed to social media and influencer culture.
Major influencers including Susie Bubble, Bryanboy and Chiara Ferragni have all sported the Dior Saddle Bag. The bag quickly became one of Dior’s best-sellers and did wonders for the brand’s results. For young working women, especially in the Asia-Pacific region, the market for luxury handbags promises to be lucrative.
Ricardo Rubi, senior partner at luxury brand advisory firm Simon-Kucher Partners, told FashionUnited that the growth in the luxury handbag market is obviously people finally going out again after lockdown. of COVID-19. People are also returning to the office. Revenge shopping is still alive and well, and there has been growth in categories such as apparel and cosmetics.
With inflation, luxury brands have also increased their prices, which also leads to an increase in income. “When we’re talking about sales dollars, people have to remember that we’re talking about volume,” Rubi told FashionUnited. “Companies rarely talk about sales units. In these dollar figures, take into account the prices. Companies that were very cautious about raising their prices are taking risks because they have higher budgets and changing budgets. Until things get murky again, which could happen with rising interest rates, brands could be very adventurous when it comes to raising prices.
The Asia-Pacific market will continue to be a luxury imperative as there is still potential for growth as China has a burgeoning middle class. “All eyes have been on China for a very long time,” Rubi told FashionUnited. “From a luxury perspective, China has been able to achieve some of the largest historical margins in Asia.”
While there is an increase in the number of working women in emerging economies, Rubi told FashionUnited: “One of the challenges of emerging economies is that they are oscillating. If one emerging economy is doing really well, some others might not be. What you want to look at are economies becoming more stable while others destabilize. We all see what’s happening with Russia right now, and it’s going to have an effect on the luxury market for some time. Russia had a very spendthrift niche market.
He added, “India is a market that has a lot of room for growth in the luxury market. Looking at Latin American markets is very difficult because each country has such a different economic situation. The one thing that all countries have in common is that COVID-19 is having a negative impact on those economies. Now we have to see if their governments now in place will allow economic growth.
Rubi says that for luxury brands looking to raise prices, now is the perfect time to increase prices because “demand is increasing. Supply shortages are also coming from China. Luxury brands may use this as an excuse to raise prices. There is also a lot of money in the market right now because the European Central Bank and the Federal Reserve have released tons of money into the economy, increasing disposable income. The demand is increasing; supply is down. Prices are expected to rise, and that is what eventually happens. Until interest rates can control inflation, reduce demand, and we resolve supply chain issues, prices will likely continue to rise.
With brands like Chanel and Louis Vuitton continuing to raise their prices, now would be a good time for this investment before it rises again. The luxury handbag market is at its peak as we speak.