As shoppers weigh up the difference between a synthetic bag from New Look and a botox-injected Zagliani python-skin handbag, we ask what’s next for the accessories market.
It seems that fashion fans are “so over” emulating handbag queen Victoria Beckham and her mini-me Wags, Coleen McLoughlin and Alex Curran, with their luxury brand excesses. Consumer caution is sending women back to the high street in their droves to pick up cheap versions of the coveted catwalk arm candy, according to research by Mintel, which polled 1,083 women aged 15 and over.
However, Mintel predicts the handbag market will grow by 18% this year, busting the £500 million barrier. In 2007 sales were approximately £468m, and between 2002 and 2007 the accessories market grew by 72.8%, suggesting it is still one of the most attractive sub-sectors for those chasing growth in overall womenswear sales. To put that into context, women’s outerwear sales were flat over the five-year period.
So is this growth really coming from low-ticket high-street copies? Not exclusively. The accessories market, like many other sectors, has polarised between luxury and value. Department stores, which largely sell premium and designer brands, saw their accessories sales rise to £217m in 2007, equivalent to a 31% market share. They remain far and away the market leader in terms of retail sales.
Selfridges reported a 50% increase in the average sale price of handbags last year. Handbag transactions at the department store now average £800, while luxury goods group LVMH reported continuing growth from its accessories-driven Louis Vuitton and Fendi brands in 2007.
Similarly Radley, the premium accessories brand, was sold for £130m in December to Exponent Private Equity, proving there is still a healthy appetite in the City for accessories firms. Mintel senior fashion analyst Katrin Magnussen says: “Of course there will always be a group of consumers who want to be seen with a brand. The luxury market won’t be deflated.”
The death of celebrity is of no real concern to these brands, who claim it is natural fall-out as the market matures.
Roger Best, chief executive of handbag brand Radley, the market leader with 14% market share, says: “Celebrities started a new wave of growth in bags a few years ago, and their accessorising definitely boosted the market. Now the market is growing up and shoppers are more confident in their choices. Just as in women’s clothing, individual tastes are emerging, and shoppers are not just slaves to whatever is being promoted. They consider quality and look. This is a natural trend and a sign of a more mature market.
Magnussen adds: “In fact, luxury brands would prefer regular people don’t buy into their brand, and are selective in who they target. Just look at the Burberry backlash – it did not want to be associated with ‘chav’ culture.”
Specialist clothing multiples on the high street also charted growth in accessories last year, with sales rising from £88m in 2002 to £175m in 2007 – a 25% market share, up from 21.7% in 2002. Supermarkets have also taken accessories sales and now account for £63m worth of the market, a rise of 125% on 2002 and equivalent to a 9% market share.
Most of this growth seems to have come at the expense of variety stores such as Marks & Spencer and Bhs, which saw their accessories market share fall from 18.5% in 2002 to 17% in 2007, and the independent sector, which saw its share dip from 16.8% in 2002 to 12% last year. But both posted overall healthy sales rises of 58.7% to £119m and 23.5% to £84m respectively between 2002 and 2007.
Some analysts predict the high street is gearing up to take more accessories market share as shoppers tighten their belts and the bag market becomes less ‘It’-bag obsessed. However, handbag sales seem unlikely to go the way of footwear, where the likes of New Look and Primark have swallowed more and more sales from specialists and middle-market brands.
Magnussen says it is inevitable the high street will steal market share from specialists such as Accessorize because of the conven-ience factor. She says: “When you see accessories alongside an outfit, and matching with that outfit, it’s easy to pick up an add-on sale. The value end of the market also gives consumers the option to have a bag in every colour and for every occasion. Specialists need to give shoppers a reason to go there.
“If your goods are priced higher, then the offer must be outstanding or unique. Shoppers will buy a basic hoop earring in Primark, for example, but might go to a specialist if they want a chandelier earring.”
However, there is still evidence shoppers want quality rather than just value when it comes to handbags. Simon Ashley, owner of handbag brand Jocasi, which has a concession in Topshop’s Oxford Circus store in London, says: “Topshop has high-grade, intelligent shoppers. I watch them look at themselves with a bag in the mirror, then open the bag up, check the lining, check the pockets and check the stitching before going back to the mirror again.
“Only a certain person buys luxury bags and in the mid-range sector there are labels springing up to feed demand. It is definitely still a growing sub-market.”
This view is echoed by other brands, which say the consumer spending slowdown is unlikely to have much impact. However, the high street believes belt-tightening will bring more handbag shoppers their way.
Best says: “The handbag market isn’t immune to the slowdown, but when Mintel is predicting growth of 18% it shows it is quite protected. If it gets knocked by a couple of percent, it will be hardly discernable.”
But Magnussen argues: “Handbags are a not very expensive pick-me-up. When you’ve got to pay more for bills, it’s easy to buy [cheap] accessories to update a look. People will be prepared for ‘good enough’ rather than top of the range when it comes to bags.”
Steve Swaby, brand director at footwear retailer Faith, which is expanding its handbag and accessories offer, says: “Customers are realising you can get good-quality bags on the high street.
“Accessories are very disposable, so why pay a grand for a python-skin bag when you can get something similar for £50? The high street is getting better at doing bags but also the snob element around ‘It’ bags has gone. There hasn’t really been a very strong bag since the Mulberry Roxanne or Balenciaga styles. In fact, there are almost too many of them. Customers can’t buy into all of them.”
Magnussen agrees. “Consumers have cottoned on to the fact PRs are giving bags to celebrities, and that celebs didn’t actually choose them,” he says. “There is an excessive amount of publicity around them and it’s easier to opt out and buy something more nondescript that is good quality.”
Yvonne MacKenzie, head of buying for non-clothing at Asos, which offers celeb-style fashions and premium labels, says: “Now it’s less about having an identifiable ‘It’ bag, but shoppers are still interested in designer bags and are influenced by celebrity styles.”
The handbag and accessories market seems to be creating plenty of winners so far, but it is unclear who will be the biggest sub-sector winner in 2008.
“Shoppers mix it up now and there is so much more choice in handbags,” says MacKenzie. “This makes shoppers more indi-vidual and more willing to experiment.”
A handle on bags:
£468m: Estimated value of retail sales of handbags in 2007
£1.15bn: Projected sales of women’s accessories by 2012
36%: Percentage of handbag sales that came from own-label product in 2007, against 29% luxury brands and 35% other