Home foreclosures are up, the market is down, unemployment is high, and consumer spending is flat. These days, nobody wants to buy a five-figure handbag—or do they?
In the middle of the financial malaise, one of the accessories market's most expensive sectors—exotic handbags—are actually on the rise, say some in the retail industry. Satchels made from rare and pricey crocodile, python, and lizard skins—with price tags in line with everything from a monthly mortgage payment to the price of a small car—have been selling well over the last 12 months, even in recent tumultuous weeks.
That's not to say that deep-pocketed shoppers are looking for flash; quite the contrary.
"Women are starting to think of something that looks a little timeless and isn't so identifiable the way the 'it' handbag of the minute was," says David Wolfe, a trend forecaster at the Doneger Group in New York. "They're looking for things that maybe have fewer details and gimmicks but [with] recognizable quality. The exotic skins certainly deliver that. Anybody who looks at those bags knows that they're pricey."
Not everyone is convinced that four- and five-figure handbags are here to stay.
"Retail prices have increased tremendously over the past four or five years," says David Lamer, former president of Lambertson Truex and a managing partner at retail consultancy BBD Consultants. "It's primarily the result of exclusive product, but particularly due to the weakness of the dollar."
Luxury shoppers typically lag the broader consumer in spending reductions during a downturn, but the current conditions are hitting everyone--and prices that seemed high but acceptable a few months ago aren't digestable any longer. "What was once considered expensive has quickly become insane," Lamer says.
Retailers say the most successful exotic bags are offered in classic shapes, like clutches and totes, that won't date the way a trendier bag might. "In a tough economy, when people do shop, they think about the investment they're making," says Lou Amendola, chief merchandising officer at Brooks Brothers, which is experiencing double-digit growth of its exotics business this year, despite the tough retail environment. "They say, 'I will have this for several years to come,' rather than buying something that may just be the fad for the season."
The market for these goods is strong enough that companies are offering new products. Even brands that have had great success with logo-driven pieces, such as Louis Vuitton and Coach, are offering bags in skins like alligator and python, with price tags that head into five figures.
"There is 100 percent a move towards things that are less branded," says Lincoln Moore, who oversees handbags at Saks Fifth Avenue. "Our business in [logoless bags by] Bottega Veneta and Nancy Gonzalez, to name a few, is very good right now. The customer is saying, 'I don't want to be vulgar. I don't want to be obvious about the money that I'm spending if I am spending money.'"
With traditional shapes and no flashy logos, many of these bags have the "old money" look of a piece that's been in the closet for years. "The vintage feel of things is interesting, because in times of uncertainty, people always go back to when they felt safe," observes Santiago Gonzalez, president of Nancy Gonzalez.
Although exotics brands are doing well, more attention is being paid to making sure each bag offers substantial value. At Nancy Gonzalez, where sales over the last 12 months are up 30 percent, some designs have been tweaked to make them more cost effective to produce. (On one style, for example, the number of inner gussets, which are expensive to manufacture, was reduced.) At Brooks Brothers, prices are kept down by a sales structure that eliminates wholesalers by using its own stores as the bags' sole point of distribution.
Presumably, with even luxury customers feeling the economic downturn, investing in one long-lasting but expensive crocodile bag instead of an armful of trends can actually feel like, well, a bargain. "People will not downgrade," Gonzalez says. "They're not going to buy a less-expensive brand of bag. They're not going to buy a Zara jacket if they were wearing Chanel before—they're going to buy five Chanel jackets instead of 10."