For bags and luggage, Asia Pacific will be the region to target. It is the largest region by far, at almost twice the size of North America. The region also accounted for 64% of total global value growth in 2016, cementing its position as the main engine of growth. While Western Europe and North America constitute mature markets, it accounted for a comparatively small 8% and 13% of 2015-2016 value growth. Yet, Western Europe will continue to be a crucial region despite the stagnant sales. This because other regions such as Eastern Europe and the Middle East and Africa, lacklustre.
Fashionable and functional cultures vary in performance as bags and luggage have had a turbulent decade and a half in Western Europe. The category saw its largest decline in 2008, as the financial crisis forced consumers to give up discretionary items, particularly big-ticket purchases such as luxury bags, and cut back leisure travel. This was followed by the Eurozone crisis, and it was not until 2014 that the region recovered enough to report overall positive real terms growth for the first time in seven years. There has been a stabilizer in luxury spending because of increasingly affluent tourists from Asia Pacific and the Middle East. These consumers find prices of goods cheaper in Western Europe than in their home countries.
France: Country Snapshot
France is a big producer of luxury bags and luggage, as the top three companies by sales in 2015 (US$ million) were LVMH Moët Hennessy, Kering SA, and Hermès International SCA. France’s per capita rank is 11 out of 80 and market size rank is 7 out of 80. Bags and luggage specialists retailers was the top distribution channel from 2002 through 2016 by share of total distribution. The top selling objects (Market size 2016, US$ million) in this category are handbags, luggage, wallet and coin purses, crossbody bags, backpacks, business bags, and duffel bags.
With Brexit underway, the Uk is forecasted strong growth and will be sustained with tourism. This is because of the falling pound, making it one of the cheaper markets in the world for luxury goods. In particular, handbags are expected to contribute 70% of the US$879 million in growth over the next five years. The opposite is expected for Switzerland and France, the two countries forecast to see the largest declines.
The lifestyle and travel trends fuelling luggage sales are expected to continue over the forecast period. However, as consumers have increasingly splashed out on premium, high quality bags and luggage, the durability of these purchases will render frequent replacements unnecessary. Furthermore, as bags and luggage remain discretionary items, other consumer goods, such as electronics and entertainment, are claiming a higher share of spending, and surpassing fashion goods in becoming “needs” rather than just “wants”.