Market Analysis : Handbags And Leather Accessories Market

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Market Description
• Handbag and leather accessories market
• Retail market for global luxury goods
Market Size
• $96 billion in 2013
• In 2013, 36% sales in the US, 21% sales in Europe, 16% sales in Japan, 11% sales in China
Market Growth
• Affected considerably by market conditions (financial crisis had 0.6% annual decline in sales)
• Growth in China and other emerging markets expected increase sales by 7.8% in 2015, reaching $350 billion o Asia Pacific region expected to be the largest market for luxury goods by 2018
Market Players and Scope of Rivalry
• Divided into three main categories o 1) Haute Couture – highest end, most exclusive, custom for wealthiest (Prada, Burberry, Hermes, Gucci, Polo Ralph Lauren, Calvin Klein, and Louis
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• Several: Coach, Michael Kors, Kate Spade
• Coach uses e-commerce strategy including invitation-only factory flash sites and third-party flash sites; global lifestyle brand
• Michael Kors: two primary collections include the luxury collection and the accessible luxury collection (designed to appeal for younger customers); strategy in 2014 focused on brand awareness, expansion of retail store base in North America, increasing comparable store sales, and expansion internationally
• Kate Spade owns a jewelry group, and had owned Juicy Couture and Lucky Brand; achieved industry-leading growth in 2013; focused on having additional product category licenses, and international expansion
• Customers can purchase used products
• Customers can choose to purchase low-quality products (Target, Wal-Mart, etc.)
• Customers can choose to purchase handbags and accessories from boutiques that don’t have the brand name
Threat of New Entrants:
• Very difficult to develop brand name recognition/customer loyalty
• Expensive startup costs
• New entrants are strong when looking at boutiques
Buyer Pressure:
• Customers are easily able to see prices from different shops due to online sales
• Outlet stores and the constantly evolving fashion trends can make prices for last season significantly lower
Supplier Pressure:
• Suppliers can easily increase costs because luxury items require high-quality materials
• Operating expenses for new locations are
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