Changing priorities and a growing resale market leaves handbag retailers holding the bag.
When it comes to consumer products and services, sometimes the best way to determine which way the market it headed is to take a look at your own behavior patterns and buying habits. After all, we’re all consumers.
Last week, in our TrendCast on teen spending trends, I noted handbag spending hit a Piper Jaffray survey low. That didn’t really surprise me (though I’m not a teen), since I hadn’t bought a new bag this year—and I would describe myself as a bit of a handbag junkie.
A report from NPD confirms this downward trend extends beyond teens and me. The women’s handbag/totes business is down over 20% in the first eight months of 2019, compared to 2016. NPD says, “This is clearly not a blip—it’s a major shift. The challenge is that it’s not just one thing driving the decline—it’s a convergence of many marketplace dynamics.”
NPD says those dynamics include:
Changing priorities. Consumers are spending more on products offering “convenience at home, media entertainment, and wellness.” Plus, it adds, the new fashion status symbols are active apparel and footwear.
Consumers want “a solution, not just a bag.” NPD says consumers expect “function and versatility” and look at a company’s “engagement in the social and environmental issues that matter to them.”
NPD calls the growth of the resale market “a threat and an opportunity for the handbag market.” It expects “renting will gain traction in handbags during the next few years.”
Going forward NPD says they don’t think the handbag business will “return to its former glory, where a few hot brands/items were enough to drive the market as a whole.”
This is all further complicated by the millennials, who in another NPD survey said, “shopping for handbags is ‘closer to buying a car than to buying clothing’” and by concern about tariffs. In its Navigating Pricing in a Post-Tariff World study, NPD said handbags were a “high-impact” category, at risk for additional sales declines, since consumers consider handbags “nice-to-have” but not a “must-have”.
The good news for entrepreneurs is NPD says the industry “bright spots” will “likely come from smaller players” who are tuned in to consumers’ priorities. And that if you want to make it in this business, you need to “become far more consumer centric.”