Last week we talked about how buying a Birkin bag is actually a shrewd financial investment. This week we’re here to tell you the good news that some market analysts are of the belief we’re about to witness a drop in the price of luxury handbags. Get ready to eye that rainy days savings account with dreams of luxe leather clouding your vision.
In a Quartz article entitled ‘The handbug bubble has popped’, reporter Chase Purdy notes that Coach has cut the price of its bags and that this is an indication of where the market is heading. Purdy draws parallels between Coach’s moves and developments in the houses of Michael Kors and Kate Spade. All are mid-level luxury brands who have spent the past few years using social media and traditional advertising to secure a foothold in a competitive and overcrowded market. All aren’t faring as well as they hoped and increasing their promotional activity, that’s industry talk for sales prices.
Last quarter, Coach’s North America sales decreased 7% to $731 million. While the company is improving year on year in some aspects – the company bought profitable shoe company Stuart Weitzman last year – Coach’s gross margin has been in decline since 2013, a far cry from the company’s mid-noughties heyday. Michael Kors, Kate Spade and Tory Burch are going through a similar cycle, with Purdy writing last week about the intensity and growth in department store markdowns.
If you’ve been thinking of buying a grown up girl’s handbag, this year might be the exactly right time.