After a period of time in which handbags seemed to be declining in popularity, they appear to be making a comeback. According to a note that Wells Fargo analysts wrote to clients, consumers seem to be embracing handbags again. That is good news for brands like Coach, Michael Kors, and Kate Spade. All of those companies reported strong results in the fourth quarter and are continuing to improve.
In recent years, many analysts said that Michael Kors and Coach were struggling because their products were becoming too commonplace. Michael Kors tried a strategy of creating three tiers of products: high-end, middle market, and discount-level. This strategy seemed to be undermining the brand and causing fewer consumers to choose to pay full price for the company’s handbags. Selling discounted products at outlet stores also seemed to backfire and led to declining sales.
Coach appears to be in the early stages of making a comeback. The company has been renovating many of its stores and reducing the number of promotions it runs in order to repair its damaged reputation and increase sales.
For a while, consumers were also avoiding buying handbags with recognizable logos in favor of less expensive products without them. Now, however, consumers seem to be saving their money to buy better quality, longer-lasting goods instead of choosing less expensive products. Consumers have begun embracing handbags with well-known logos again.
Even though things are improving, handbag makers still face some challenges. This past fall, many young people expressed a distaste for handbags. A study conducted by Goldman Sachs and Teen Vogue found a lack of interest in handbags among young women between the ages of 13 and 29. Women in that age group preferred to spend their money to buy other products, such as athletic wear and cosmetics, instead of purses.
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