Luxury Handbag Market Strategies
The luxury market has been undergoing significant changes since late 2023. This has led brands to rethink their strategies for leather accessories, a key category in luxury businesses. In order to combat stagnation in the market and adapt to slow growth, brands increased prices by reducing small leather accessories or entry level items. Instead they focused on high-end products. This was shown in a Retviews study by digital consultancy firm Lectra.
Most luxury brands will increase the prices of leather goods from 2023-2024 compared to previous years. Bottega Veneta, Gucci, and others are leading with each 16% increases. Prada kept its entry-level price at EUR290, while Gucci repositioned its brand by offering its lowest entry price of EUR200. This suggests that future price increases could occur while still remaining competitive.
China is the country with the highest luxury brand retail prices. Prices for handbags increased across all brands, including Gucci (50%), Valentino (33%), Prada (27%) and Bottega Veneta & Loewe (20%). Japan and South Korea kept their pricing levels stable and lower, indicating significant growth potential in their respective markets. US prices increased between 12-22%.
This inflationary trend is having a noticeable effect on the best-selling “it bags” from different brands. Prada’s Re-Edition Nylon Handbag Prices have risen dramatically, especially in China where prices are 20 percent higher than in Europe. Fendi’s Baguette bag now costs EUR2,900 but EUR3,560 across the board. Gucci’s Jackie 1961 handbag costs EUR2,790 in both regions.
Retviews found that China prices of Prada Cleo handbags and Re-Edition Nylon bags are almost 30% higher. They also noted a consistent trend in inflation from 2022-2024 throughout Europe, Asia, and America. Retviews tracked the price of its Galleria Saffiano bag and found that it has increased by 37% in Europe, compared to 28% in USA. However, this increase is concentrated in Europe alone.
The study shows price increases differ among brands. Bottega Veneta increased its leather accessory price three times between July and December 20, 2023. Prada, on the other hand, made four adjustments totaling 6%. Retviews noted that the price increases coincided with changes in assortment strategies. Major labels are now prioritizing expensive items targeted at consumer clusters who have higher budgets and more propensity to buy.
Prada’s share of the leather goods assortment fell from 30% to only 23% in just one year. Only fake birkin bag bucked this trend, increasing its leather goods share each year to cater to different customer segments.
A second strategy is to offer different versions of luxury “it” bags, which are real signature pieces. According to Retviews, “to appeal more effectively to consumers, brands are increasing their selection by offering products in limited editions and different sizes.” The Row’s Margaux bag, for example, comes in five different models, using materials such as suede and patent leather. Prices range from EUR4,650 up to EUR7470, depending on the materials selected (retviews data, for instance).
Brands can increase their revenue by creating limited-edition bags. They also create exclusive models that are more appealing and reduce production runs. Brands can increase profits by limiting production runs.
Mini handbags are also continuing to grow. The leather goods collection and their assortment share have increased significantly compared to the previous year. According to a study, “their presence in collections has increased dramatically compared to the beginning of last year.” Louis Vuitton saw 107% more miniature models. Gucci reported 69% more, and Bottega Veneta 46% more. These smaller models require less materials so are highly profitable for brands.
