Sales of handbags grew 139% between 2002 and 2007, boosted by the rise in popularity of celebrity-endorsed "It bags" such as the Mulberry Roxanne and Chloe Paddington.
The handbag market was worth £468 million in 2007 and is set to grow to more than £500m this year, an 18% rise. However Mintel said this represented a slowdown in sales and that more women would opt to buy cheaper high street handbags over the next five years.
Katrin Magnussen, senior fashion analyst as Mintel, said: "Women have become more cynical about celebrity endorsed products. Many will no longer be as quick to spend hundreds, even thousands of pounds on a bag just because the likes of Posh Spice have been snapped with one. Especially when these days the must-have looks are quickly translated to the high street."
Magnussen added: "Also, in light of the uncertain economic climate, women may well need to tighten the purse strings and so less expensive handbags will help them satisfy their appetite for a new handbag."
Some 55% of women bought a new handbag in the last 12 months equivalent to 14.2 million women according to Mintel. 71% of women aged between 15 and 24 years old bought a handbag in the last year.