For years the handbag craze grew larger and larger, but the mighty must fall and the mighty is falling. According to Fortune, handbag sales have slowed down and the market grew only 2% last year. Who is to blame? Perhaps it has been the over-saturating of the handbag market by brands like Michael Kors and Kate Spade that have expanded their brands so much that their items now overwhelm outlet and off-price stores everywhere. With this decline in sales, brands are scrambling to revamp themselves by changing their targeted demographics or in Kate Spade’s case, putting themselves up for sale.
Moving up to a higher tier, even brands like Hermes and Chanel have experienced plunges in profits. This is all happening while the beauty department has been experiencing “blockbuster sales results”. What this means is that consumers are channeling back their indulging, and this can be neatly summarized by Leonard Lauder’s, “lipstick index”. This measure can be an “indicat[ion] that women facing an uncertain environment turn to beauty products as an affordable indulgence while they cut-back on more expensive items.” This draw towards entry-level luxury items may be a reflection on consumers’ reduced spending budgets.
We are seeing luxury brands capitalizing on this prestige beauty momentum that grew 7% in 2015. Prestige beauty includes premium scents that are performing much better than mass-market fragrances. Today it was announced that LVMH has acquired Maison Francis Kurkdjian, the latest fashion house to join the the prestige perfume moment by bringing its production in-house. Of course, LVMH has already been reaping the rewards of this growth with its numerous brands that have existing fragrance lines like Celine, Marc Jacobs, Givenchy, and Loewe, with the latest addition of Louis Vuitton perfumes this past summer. Outside of perfume, LVMH has been benefiting with it’s Benefit, Make Up For Ever, and Fresh prestige makeup brands.
Brands like Tom Ford have extended their already existing beauty presence by offering new products like bath products and nail polishes. In addition, in 2014, Christian Louboutin launched luxury nail polishes in 2014 and has now introduced luxury lipsticks.
It looks like we will be expanding our 5th avenue shopping wish-list to include beauty items too.