A couple of months ago, it was widely reported that a Birkin bag was a better investment than gold, with its value increasing more than 500% in the last 35 years, following a study by Baghunter. I don’t know if the report is accurate, but it made me think about the relevance of handbags for the fashion industry, especially in the luxury market.
There was a time that a bag was just a bag. An accessory that essentially existed to carry wallets, keys, make up etc. Of course, the Chanel 2.55, the Hermès Kelly or the classic Louis Vuitton were around, but their importance was almost insignificant compared to today’s standards. If you look at middle 90’s ad campaigns for big brands, such as Prada and Gucci, there is no bag in sight. No “it bags”. No Alexa, Gisele, Venetia or Stam. No waiting lists. No $2000 average price tag.
Nevertheless, as we can’t think about fashion before Instagram, can we conceive going into a luxury department store and not finding hundreds of bags, begging to be taken home and make its new owner happy? Handbags are democratic since they don’t require certain sizes or specific cuts to fit. You don’t repeat a dress or a shirt everyday but can carry the same handbag for months, even years. You can buy fragrances and makeup from your favourite brand but only makes a real statement when a designer handbag is on your shoulder. Regardless of what you are wearing.
As Dana Thomas says in “Deluxe – How Luxury Lost its Luster”, handbags are the easiest luxury fashion item to sell because they don’t require sizing or trying on. They are easier to create than perfumes, and the profit margin is astounding (between 10 and 12 times the cost to make an item). Does it make sense now? The handbag mania is nothing more than a marketing strategy to enhance its importance in the fashion system. I still remember American Vogue February 1998 cover proclaiming the “ultimate status symbol” and the buzz around the Fendi Baguette, the one that ignited the whole trend.
That’s the game, that’s how many brands were able to grow and as long as people are not going into debt to buy a small clutch, I’m fine with it. But, I’m wondering, with the exception of the Birkin, when the party will be over? Yes, because enough is enough and the market is reaching saturation point with mixed financial results for big players. So, what’s next?
Every business needs a cash cow and handbags, along small leather goods, are a great deal of it for most luxury brands. Notwithstanding, the speed of fashion is demanding more styles in less time and is tiring the consumer, who has already noticed that there is no big reason to purchase similar designs every season. The slow down on emerging markets is also a threat to revenues as these consumers are more willing to spend on status items.
It’s time to the financial, marketing and design departments sit together to decide which direction to take and stop putting all eggs in one basket. Or bag.