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As the Eurozone crisis and austerity measures hit consumer confidence and constrain demand, growth for leading luxury bag brands such as Louis Vuitton, Gucci and Prada slowed down in 2013 and 2014. In addition, accessible luxury brands are headed towards a relatively conservative year in 2015. Looking towards 2019, we make a few predictions to help determine growth strategies for the industry.

New markets come into focus

China and the US are still expected to lead global sales in 2019. However, markets such as South Korea, India and Taiwan will further their influence on global sales and serve as ideal candidates for market entry or expansion. South Korea will overtake the entire Eastern European region and edge closer to Japan’s number three position by 2019. India is likely to be among the top ten bags and luggage markets in 2019, as it overtakes Italy and Germany on the way.

Top 10 Markets by Value Sales, 2019

Bags-Luggage-Growth

Source: Euromonitor International

Need to adapt to changing demographics

Females are still the primary target consumer as well as the driver of absolute sales for bags and luggage. Traditionally, backpack and handbag manufacturers in particular have concentrated their marketing efforts towards teens (aged 13-17) and young adults (aged 18-29). This is especially evident in the strategies of fast-growing brands such as Michael Kors and Kate Spade.

Progression of Age Groups from 2014 to 2019

Female-Pop

Source: Euromonitor International

However, with unemployment rates higher than usual and young adults staying with parents longer than before, marketing campaigns need to serve the middle-youth and mid-lifers to a greater extent. In addition, later-lifers is the fastest growing age group in the world, and is likely to have increased disposable income as growth is being driven by developed economies.

Polarisation of brands, and retail, is coming

Growth rates for accessible luxury brands Michael Kors and Coach have been conservative in 2014, and demand for bags and luggage is becoming polarised. High-end luxury brands such as Hermès and mid-priced brands such as Kipling are likely to lead growth rates in 2014 and 2015.

These patterns also affect bags and luggage specialist retailers, which is the largest retail channel for the industry. With leading retail chains such as Louis Vuitton, Coach and Gucci all losing share in 2014, 2015 presents mid-priced retailers such as Lapax and Strandbags with an opportunity to consolidate their position in their respective markets. It also presents global non-luxury brands such as Samsonite, Fossil and Kipling with an opportunity to expand their respective retail footprints in markets such as India and Taiwan, both of which have consumers used to shopping at bags and luggage specialists.

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