"Michael Kors, Prada Skimp on New Handbag Designs"

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Aug 3, 2014
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by Stephanie Hoi-Nga Wong
From Bloomberg 01/10/2017
  • Burberry, Louis Vuitton also cut number of styles introduced
  • Macy’s has blamed poor handbag sales for weak holiday results
Handbag makers are busy battling waning demand and markdowns at stores, and that may have diverted their attention from what could make them successful in the long run: creativity.

Michael Kors Holdings Ltd., Prada SpA, LVMH’s Louis Vuitton and Burberry Group Plc all reduced the number of styles introduced last quarter, according to Edited, which provides fashion industry analysis. Though manufacturers and retailers are worried about being saddled with too much merchandise, the lack of innovation will make it tough to recapture the excitement of shoppers, said Milton Pedraza, a New York-based luxury consultant.

“There’s a feeling of doom out there in the industry -- everything is defensive and not offensive,” said Pedraza, who runs the Luxury Institute. “What you’re seeing is a tremendous amount of copying, less innovation and less creativity, at a time when exactly what you need is to be bold.”

Demand for U.S. high-end products took a hit last year from a strong dollar and global economic woes. Terrorism fears also crimped tourism, a big source of luxury spending. Shares of upscale brands suffered. Michael Kors, Coach Inc. and most other rivals underperformed the Standard & Poor’s 500 Index.

Dead Stock
At many stores, the handbag selection from several high-end labels was significantly smaller over the holidays. In the final three months of 2016, the number of new styles introduced by Michael Kors dropped 24 percent from the preceding quarter. Prada and Louis Vuitton rolled out 35 percent fewer new designs, while the number at Burberry dropped 8 percent, according to Edited, whose clients include Ralph Lauren Corp. and luxury e-commerce retailer Net-A-Porter.

Michael Kors didn’t have an immediate comment on the reduction. LVMH and Prada declined to comment. Burberry also declined to comment, though in November the company said it was “simplifying” its offerings and tailoring innovation for “local needs.”

Rolling out the right number of styles is no easy task. Brands need to strike a careful balance between creating a glut of inventory -- so-called “dead stock” -- while ensuring there’s enough trendy, new merchandise to entice consumers, said Katie Smith, a senior fashion analyst at Edited.

“Dropping newness too low could certainly threaten sales,” she said.

A few brands, including Kate Spade & Co. and Ralph Lauren, did introduce more new designs in the fourth quarter, Edited found. But many tried to ride out the holidays without breaking fresh ground.

Elusive Trends
Fashion is an unpredictable industry, but handbag makers have relied on innovative features and flourishes -- mini bags, for instance -- to get the attention of shoppers. With fewer designs hitting store shelves, there’s less opportunity to hit on a hot trend.

The past year also brought high-level personnel changes in the luxury industry, which may have affected new product output. Both PVH Corp.’s Calvin Klein label and Yves Saint Laurent replaced their creative directors. And Ralph Lauren Chief Executive Officer Stefan Larsson shook up management last year, including bringing Coach Chief Financial Officer Jane Nielsen on in the same role.

Handbag makers have faced other challenges as well. Younger consumers are demanding faster availability of the latest trends, and some are showing preference for shoes and jewelry over bags.


Macy’s Inc. partly blamed poor handbag sales when it released dismal holiday season results last week. The largest U.S. department-store company also said it would cut 6,200 jobs and push ahead with a plan to close 100 underperforming stores.

Macy’s has struggled to stock enough of the market’s top-selling purses. Popular top handle bags, for instance, made up just 8.7 percent of Macy’s total bag offerings, according to London-based Edited. That compares with 33 percent at Barneys New York Inc. and 20 percent at Nordstrom Inc.

“They’re missing out on the critical products that can drive full-priced sales,’’ Smith said.

Discount Binge
That’s forced the chain and other retailers to rely on discounting to move merchandise. And consumers have now been trained to expect markdowns, said Simeon Siegel, an analyst at Instinet LLC. Macy’s discounted almost 2,500 handbags last quarter, while both Neiman Marcus and Barney’s New York marked down at least 900 items, according to Edited.

“They need to figure out a way to operate in a new normal” of discounting, Siegel said.

Sales growth in handbags is estimated to decelerate to 3.1 percent by 2020, from 16 percent in 2012, according to market research firm Euromonitor. The slowdown has prompted companies to diversify. Michael Kors is expanding into menswear, and Kate Spade is growing in other categories like home goods.



craftmanship services, letting customers design their own bags at its Fifth Avenue store in New York. It also named actress-singer Selena Gomez as the face of the brand, aiming to appeal to millennials. Coach also opened an adjacent Fifth Avenue store for its Stuart Weitzman shoe label, which it acquired in 2015.


The sad state of the industry is spurring companies to take action, said the Luxury Institute’s Pedraza.

“For the first time in many years, there’s a real sense of threat,” he said. Companies are focused “on survival and dismantling the old structure.”
 

cdtracing

Authenticator
Nov 1, 2014
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Well...the handbag industry, as a whole, is struggling. The economy affects consumer's pocketbooks & that affects consumer spending. Michael Kors is just one of many who will have to weather the storm & find a balance. I agree that many designers have lacked creativity over the past few years. I have been less than impressed by many of the current offerings, MK included. MK has discontinued making some bags in sizes that I would buy. He no longer makes the Lexi from his Collection bags which is a disappointment to me...I have 2 & find the style very functional for me. I am now having to look for them in the secondary resale market. There are a couple of colors I would like to find in this style. I didn't buy any new styles that were offered in any bag this season. I did buy jewelry & some shoes instead. My next big purchase will be a fine time piece...Rolex, Cartier, or maybe a Chopard....just depends on what I find that I like & the price of course.

I would like designers to put more effort into creativity in producing new styles & improving quality.
 
Jul 23, 2006
10,565
3,058
I remember a recent article stating the decline of handbags purchases and the increase of athletic wear & shoes among millennials. I'm definitely finding this to be true. My 17 y/o daughter loves getting a new bag about once per year but I'm constantly buying new athletic shoes to match new outfits. The same holds true for most of her friends.

As for me, I've found that I have enough bags in multiple styles and brands. I'm taking a step back and choosing to spend my money on other things. I still love bags but just realizing that I don't have to have every one that I like.
 

mrs moulds

2020 Bye,Felisha! Nipsey Hussle, Miss you...
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Sep 13, 2006
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In love with my life ❤️
I remember I was an Coach addict, that changed when I walk into one of their outlets and saw my bag marked down by 30%. After that I never purchased another. That is why I don't own MK, especially when their sold at TJ Maxx!
Now, LV,where do I start, I understand the the marketing strategy to be more fashion forward and attract younger buyers, but, I haven't purchased a LV in at least 2 years, partly due to my daughter's college tuition and because I didn't see a bag that was so special that if felt I needed it. All of these funky colors and designs on a bag at cost in the high hundreds and thousands, really? Why change what has worked for many years.
I will be purchasing me an Alma bag sometime this summer because it is a beautiful,classic bag. LV need to stick with that standard.
 
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melissatrv

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Oh wow, I was literally just thinking this and was going to post something along the lines of Is it just me or is anyone else bored with MK? Because I have noticed they have had hardly any new bags. The ones they released in August were the ones around all season. As much as I like Selma, I want another satchel alternative. The discontinued my beloved Sutton and Susannah does not do it for me. I hate the bonded leather they use for the Mercers. I have also thought that MK needs to do more hardware options. We often see pinks and purples with gold hardware....I would love to see more silver, bronze, rosegold, gunmetal, even muted light gold. And the colors from this year were nothing new but recycled from last year. I know there are only so many colors but it's so recent, they just did Cinder last year and the Brick. I would like to see them bring back something older like Pomegranate.

The stock that Macy's carries in store is abysmal. Belk which is a store like Macys in the southeast, used to have a huge Coach section, they now have a very small selection of Coach mixed in with everything else and the separate section they used to have is now Brahmin. Also I have noticed Kate Spade and Coach seem to be excluded from "limited exclusion" sales at Belk, Macys etc where they used to participate in the limited exclusion sales. Kate Spade is discontinuing their Maise satchel which is their most popular seller. I am just scratching my head over this.

It has been so long since I bought Coach. Ever since they moved to Stuart Vevers as designer and the prices that came with it, I have lost interest. I have one mini-Crosby which is too small and the non-mini is too big; I have a Swagger but it is not one of my faves. Go to Coach.com and look at their sale on some Swaggers for $350 at half price!!! This used to be the full price for most satchels before Vevers.

I would to see LV make more bags without vachetta handles. Some of the newer Pallas bags and some others do not. Or even better, let you choose! Also I would love to see a re-launched Multi-color Murakami in a line of new small leather goods.

Belen Echandia had a great concept with their bespoke bags, they did not market their products or services as well as they could have...plus they were not able get a real (and much needed) foothold in the US. I really miss their bags though
 
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melissatrv

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Feb 8, 2009
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With regards to Millennials, my daughter and her friends don't seem to care about bags. They either carry a small crossbody or backpack style and it it does not have to be brand name. My daughter is a vegetarian so doesn't want leather bags and buys a cheap pleather bag that she will carry all year. Why don't the companies stop catering to that age and instead use our age as their demographic, we have disposable income and we like nice bags. Once millennials get older they may find needs for other bags besides small minis to hold a phone and a lipgloss. So the designers are not going to lose the sale opp, they just have to wait for it and instead cater to the needs of the audience they have now
 
Jan 13, 2015
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In the Paddock
Well...the handbag industry, as a whole, is struggling. The economy affects consumer's pocketbooks & that affects consumer spending. Michael Kors is just one of many who will have to weather the storm & find a balance. I agree that many designers have lacked creativity over the past few years. I have been less than impressed by many of the current offerings, MK included. MK has discontinued making some bags in sizes that I would buy. He no longer makes the Lexi from his Collection bags which is a disappointment to me...I have 2 & find the style very functional for me. I am now having to look for them in the secondary resale market. There are a couple of colors I would like to find in this style. I didn't buy any new styles that were offered in any bag this season. I did buy jewelry & some shoes instead. My next big purchase will be a fine time piece...Rolex, Cartier, or maybe a Chopard....just depends on what I find that I like & the price of course.

I would like designers to put more effort into creativity in producing new styles & improving quality.
Agree, the trend towards doing so much on a bag is so limited, frankly it's like trying to be a Swiss army knife(which hey works for them but...) i want quality, classic pieces i can return to often in my collection, not ones i look at 6mths to a year and go wth? you can leave...
 

valerievo

Member
Jan 14, 2017
12
1
Well...the handbag industry, as a whole, is struggling. The economy affects consumer's pocketbooks & that affects consumer spending. Michael Kors is just one of many who will have to weather the storm & find a balance. I agree that many designers have lacked creativity over the past few years. I have been less than impressed by many of the current offerings, MK included. MK has discontinued making some bags in sizes that I would buy. He no longer makes the Lexi from his Collection bags which is a disappointment to me...I have 2 & find the style very functional for me. I am now having to look for them in the secondary resale market. There are a couple of colors I would like to find in this style. I didn't buy any new styles that were offered in any bag this season. I did buy jewelry & some shoes instead. My next big purchase will be a fine time piece...Rolex, Cartier, or maybe a Chopard....just depends on what I find that I like & the price of course.

I would like designers to put more effort into creativity in producing new styles & improving quality.
I agree with you on all points. My next big purchase will be a fine watch, too. I once bought a MK bag for my work laptop and while it looked pretty the first six months, it was downhill from there. I'm the type that needs one daily office workhorse and smaller, stylish ones for weekends, nights out, etc. I'm not hard on my bags but this one fell apart in no time and "customer service" attempts brought no resolution. I'd much rather save and spend on a higher quality bag than buy several $400 MK bags that come apart at the seams. I'd love to see designers reduce prices on the higher quality stuff and let go of the diffusion lines. I think ma c Jacobs started to do that.
 

the_baglover

Member
Feb 2, 2014
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Asia
Speaking as someone not American, the high exchange rate of the US dollar has made everything more expensive and really impacted my spending habits and those of other women I know. Brands like DKNY, MK, Kate Spade, etc, are fun to buy from but when the price of bags rises so high like Coach for example, I think I'll just save a bit more and buy a European brand instead.
And I speak as a person who loves MK.