High-end fights to get sales in the (hand)bag
Luxury giants know shoppers are more discerning and are making arm candy more exclusive
Friday 17 January 2014
The cleaner has one, the checkout girl at Tesco has one, the local hairdresser has two. The patterned arm candy sold by Louis Vuitton, Gucci and other big fashion names is nowadays so common - with all the connotations that word carries with it - that it has forced the luxury goods giants to do something drastic.
Traditionally selling its bog-standard handbags for around £500, Louis Vuitton is now about to launch a range that includes "hyper-luxe" - with price tags rumoured to be upwards of $31,500 (£19,200) to $40,000.
The luxury giants have seen the warning signs for months. Louis Vuitton, which sells more than four million bags a year, has been reporting a sales growth slowdown for the past two years. The previous 20 per cent a year enjoyed by most companies in the sector cannot be sustained.
So what has changed? Most of the demand for these big brands had been fuelled by developing markets, especially in Asia. But shoppers there have become more sophisticated.
Imran Amed, founder of fashion website The Business of Fashion, said: "There will always be some consumers, particularly those early on in their consumption of luxury goods, who will be attracted to visual signifiers such as logos and icons which act as outward signs of their status and wealth.
"But as luxury brands become more and more ubiquitous - in a way becoming more akin to mass consumer brands themselves - discerning consumers are rejecting logos and looking for something discreet, either more subtle signifiers for those 'in the know' or no logos at all."
The true high-end shoppers have gone off the logo-heavy handbags because they don't appear to be special any more - and they have been heavily copied and counterfeited.
Not only that, but some savvy shoppers still willing to splash the cash have realised that rather than spend £600 or more on a plastic "big-name" handbag they can pick up a reasonable product from the likes of US designers Coach or Michael Kors or France's Longchamp for more like £300 and these companies have benefited from the shift.
One fashion expert said: "Discerning consumers are also making it quite obvious that the price barrier to entry is not that strong any more" meaning "cheaper" labels are gaining traction in the style stakes too.
The luxury sector is polarising – just like every other part of the consumer or retail industry. Shoppers want value or they want to pay for good quality.
Gone are the days when a company could whack their logo on a plastic bag made in a Chinese factory and sell it for hundreds of pounds.
The truly wealthy luxury consumers, Mr Amed says "are more concerned with quality and having something that is truly special, bespoke or made only for them".
But the balance between exclusive products and making money is fine for many of the high-end brands.
Erwan Rambourg, an expert in luxury goods at HSBC, published a report this week called "multi-baggers" and said the sector is in flux.
Previously brands could "recruit the new luxury customer when he/she starts to be able to afford luxury products as their logo is seen as an easy way to display social status. But this has changed, especially in Asia".
Mr Rambourg warned the big brands have a struggle on their hands, adding: "Chinese consumption has entered the 'French paradox' - how to create the illusion of scarcity to sell more of what is supposed to be exclusive and appeal to consumers who want to be in the know."
Louis Vuitton has reacted by hiring a whole new team. Owner Bernard Arnault's daughter Delphine joined as executive vice president last year and accessories guru Darren Spaziani was drafted in to reinvigorate the collection.
Those who have prospered as tastes change include Bottega Veneta, owned by Paris-based Kering, which is also the parent company of Gucci. Its products carry no logo whatsoever but have a price tag of around £2,200. Hermès sells hardly any non-leather bags and it controls supply - there is a two-year waiting list for its Kelly and Birkin bag.
As the big corporates vie for customers the accessories designers are now calling the shots. British designers Katie Hillier and Luella Bartley were last year appointed at US label Marc by Marc Jacobs, Coach poached Loewe designer and British-born Stuart Vevers, while the fashion world awaits news of who will take over Emma Hill's old job at British brand Mulberry.
Handbags are about to steal the fashion show from the clothes.
Crocs, rocks and metals are all the rage for hyper-luxe punters
The list of some of the world's most expensive handbags include exotic skins, rare jewels and precious metals:
Geranium Porosus Petit H Hermès sold at an auction (second hand) last year for $125,000
Alligator Day Luxe Tote by The Row from Barneys cost £24,218
Soft stirrup crocodile shoulder bag Gucci – £21,440
Leiber Precious Rose bag with diamonds, sapphires and 18-carat white gold – $92,000
Nancy Gonzalez Porosus with lizard skin sold for $30,000
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