The Ins and Outs of the Luxury Handbag Market

In 2022, when Sotheby's sold the infamous Diamond Himalaya Birkin 30 for more than $450,000 at an auction, the sale became the talk of the town. 

However, it would be wrong to say that the hype wasn't already there. Every once in a while, there's a new story that sparks the interest of fashion enthusiasts and luxury buyers even more.

The luxury handbag market is a dynamic and ever-evolving industry. It's no longer about owning an expensive accessory only. Instead, luxury handbags have become a symbol of status and wealth. 

The current wave of luxury handbag purchases is being spread by social media influencers and online fashionistas, unlike in the past, where Hollywood celebrities and business royalty were the main buyers. 

Here's a detailed guide on the ins and outs of the luxury handbag market, from its development in recent years to the key players and trends.

Luxury Handbag Market Size and Expected Growth 

Different research groups have different estimations of the CAGR (Compound Annual Growth Rate) of the luxury handbag market size. However, in all estimates, the CAGR is positive, and the market is expected to grow in the upcoming years. 

Allied Market Research reports that the luxury handbag market had a value of $58.3 billion in 2018. By 2026, this figure would rise to $89.9 billion, with a CAGR of 5.6% between 2019 and 2026. 

Data Bridge Market Research puts the value of the luxury handbag market at $22.61 billion in 2021, expecting it to increase to $42.4 billion by 2029, at a CAGR of 8.20%. The report covers major consumer groups in the USA, China, Europe, India, South East Asia, Japan, etc. 

Fortune Business Insights reports the luxury handbag global market to have a value of $47.57 billion in 2020 and $49.63 in 2021. The report suggests that the market value will catapult to $78.46 billion by 2028, with a CAGR of 6.7% between 2021 and 2028. 

At the peak of the Covid-19 pandemic in 2020, there was a decline of 25.6% in the global luxury handbag market. However, as economies opened up, the market recovered. 

Regional Sales by Segment in the Luxury Handbag Market

Forbes reports that most luxury brands have seen a lag in US sales in the Q2 of 2023. The dip may have come in the wake of the looming inflation. However, it is a different story in Asia. This also indicates new centres of wealth are emerging in Asia, like China, Vietnam, and Indonesia.

Louis Vuitton Moët Hennessy reported a 1% decrease in luxury spending in the US in 2023. However, the company revealed that it had made double-digit sales in all other global markets. Earlier this year, Richemont, the owner of Cartier, also reported a decline of 4% in US sales, as a result of which Richemont's shares fell by 10%. 

Kering, the owner of Bottega Veneta, Balenciaga, Alexander McQueen, Yves Saint Laurent, and Gucci, has also faced challenges in the North American market. However, the company's sales were strong in Western Europe, Japan, and Asia-Pacific. 

Prada saw a growth of 5% in the Americas, but it wasn't truly significant, compared to 55% in Japan and 28% in Europe.

 

 

These figures indicate that the Asian market is booming for luxury brands as the region's millionaires continue to grow in numbers. In fact, Asia now has more than 950 billionaires, which is higher than all other regions worldwide. 

India is also emerging as an important market for luxury brands, as the country is on its way to becoming one of the top three global economies by the end of the decade. A report by Knight Frank, a real estate consultancy, found that 4% of Indians will spend their wealth on passion-driven assets rather than those with monetary potential. 

New Consumer Class in the Luxury Handbag Market 

The former consumer class in the luxury handbag market comprised celebrities or women from high-net-worth families who purchased handbags for prestige and status. However, the market is now welcoming a new consumer class – millennials and GenZ. 

An interesting individual study found a close link between personal motivation and purchase intention in millennials buying luxury handbags. The same trend had also been seen before in a US-based study, where Sarah Giovannini and Yingjiao Xu, the study authors, found that people were motivated to buy luxury handbags due to high self-esteem. 

Currently, the luxury handbag market is also targeting HENRYs (High-Earners-Not–Rich-Yet). These are the young professionals who have a disposable income but are still working their way up to affluence. 

A Deloitte report shows that HENRYs earn more than $100,000 and have $1 million worth of investable assets. On average, they are 43 years old. Since they're digitally savvy and have enough to spend, they're big spenders who love online shopping. 

Current Trends in the Luxury Handbag Market 

The new consumers are different from the previous ones. They have different preferences in buying behaviour and are much more aware of sustainability issues. To capture this new market, luxury brands are making appropriate changes. 

 

 

As working women are now making more luxury handbag purchases, manufacturers are creating bags with laptop sleeves, key holders, mobile holders, extra pockets, and other essentials. Louis Vuitton has a whole line of luxury laptop bags, while the Goyard Saint Louis GM/PM bags have become the go-to choice for businesswomen. 

Trends by Product Type 

In 2020, luxury tote bags made up the largest share of the luxury handbag market due to their practicality. The demand for tote bags is expected to continue growing as women are now looking for stylish but functional bags. 

The Fortune Business Insights report also put totes in the ''most popular'' category, accounting for 34.52% of all luxury handbag sales. Other high contributors included clutches and satchels. The share of tote bags was almost equal to all other categories, minus satchels and clutches. 

 

 

A Million Insights report predicts that sling luxury handbags will see the highest growth between 2021 and 2028. Their popularity can be attributed to social media influencers and celebrities who have been seen sporting them. 

Trends by Material 

Leather remains the most popular material used in luxury handbags, accounting for 47% of all sales. It will continue to see growth as consumers prefer the durability and classic look of leather bags. 

 

 

Synthetic luxury bags are also expected to see an escalated demand as consumers become more environmentally conscious, especially ''luxury vegan handbags.'' 

Trends by Distribution Channels 

Since there is an ever-growing number of hypermarkets and supermarkets, the offline segment continues to dominate the luxury handbag market. It accounts for over 89% of all sales in the industry. However, the online channel is also forecasted to grow during 2021 and 2028 at a CAGR of 5.8%. 

Data from Statista also shows that the average order value for the purchase of luxury handbags online has also increased over the years. The order value stood at $463.32 in the Q4 of 2022 and increased to $564.5 in Q2 of 2023. 

Allied Market Research report indicates that the purchasing frequency has increased in every distribution channel since 2019. Most of this increase has been seen in hypermarkets and specialty stores. However, discount stores, online stores, and duty-free shops have also seen a rise in purchasing frequency. 

Luxury Handbag Resale Market Value 

According to Future Market Insights, the value of the resale handbag market will be $6,327.7 million in 2023. In the next ten years, it will grow to $11,439.3 million by 2033 at a CAGR of 6.10%. The same study also found that 30% of people buy second-hand handbags because of budget constraints, whereas 55% choose such handbags due to their sentimental value. 

However, this study was focused on regular handbags, including those made of fabric and leather. The Art Market Research report stated that the current value of the luxury handbag resale market exclusively is $72 billion, expected to increase to $100 billion in 2027. 

Handbags are a small segment of the larger global second-hand market, which will eventually be valued at $350 billion in 2027, according to ThredUp's Resale report. 

A Decline in Resale Value 

Earlier in January 2023, CNN reported a dip in the resale prices of brands like Louis Vuitton, Gucci, and Chanel. Sasha Skoda, the director of merchandising at The RealReal (an online luxury resale company), said that the demand for lower-priced luxury brands like Bottega Veneta and Miu Miu was up. 

The RealReal's Annual Luxury Consignment Report 2023 further shows that the luxury handbag resale prices fell by: 

17% for Gucci 20% for Louis Vuitton 10% for Hermes 9% for Chanel 

Some of the reasons for this decline were the climate crisis, a potential recession, global unrest, and value-based decision-making. 

Resale Potential of Luxury Handbags 

According to a Statista Report, Brandon Blackwool, the US-based luxury brand, had the highest resale premium in 2023, standing at 100.4%. That means you could resell a Brandon Blackwood handbag for more than double its original price. 

Other brands on this list include Dior, with a price premium of 38.1%, and Louis Vuitton, with 35.4%. 

Let's not forget the big gun, though: Hermes. Despite the aforementioned decline in resale prices, Hermes seems to be unaffected. The Hermès Birkin saw a resale value of 38% on average in 2020, which was the highest of all luxury handbags. 

According to the Robb Report, luxury handbags, mainly Hermes, are now outperforming classic cars, whisky, and art. Of the top ten most expensive Hermes bags ever sold, the Birkin has the top six spots, topping $200,000 consistently at every auction sale. 

In a comparison with Banksy's artwork, it was seen that Hermes Birkin is now the more valuable item. The Birkin saw a 42% increase in value compared to only 23% for Banksy's art from 2019 to 2020. 

However, the Birkin isn't the only luxury handbag that has seen a significant increase in value. According to Forbes, Hermes has reported a 21% rise in its sales in the US during the first half of 2023 due to the bolstering sales of four leather bags: 

In-The-Loop bag  The Maximors The HAC a Dos Picnic Birkin

Hermes sold the Picnic Birkin for $21,000 when it was initially released in 2021. However, its resale value quickly peaked, selling at a whopping $148,000 at Sotheby's. Currently, the resale price of the Picnic Birkin is around $50,000, which is over double its original retail price.

Forbes' telling of the Rebag Clair Report also revealed that Hermes luxury handbags are the only ones that gain value rather than losing it over time. The luxury brand's handbags retain 103% of their retail value on average, compared to 87% of Chanel and 92% of Louis Vuitton. 

Future Trends in the Luxury Handbag Market

As the demand for luxury handbags continues to surge, it is expected that the market will see even more growth in the coming years. 

Of the trends to keep an eye out for is the increasing demand for men's luxury handbags. Men are increasingly becoming more interested in luxury handbags with a focus on minimalistic and functional designs. High-end brands such as Louis Vuitton have already released luxury handbag collections specifically targeted towards men.

 

 

Also, sustainable and ethical practices are becoming more prevalent in the luxury handbag market. Some brands that have pledged to sustainable cotton production use by 2025 are Burberry and Kering. 

The sales in the luxury handbag space could also be affected by rentable handbag services, which have gained popularity in recent years. These services allow customers to rent luxury handbags for a fraction of the cost of purchasing them, making them more accessible to a larger market. Companies like Rent the Runway are already making waves. 

Takeaway 

The gist of this whole guide is that the demand for luxury handbags will increase, but the market will also see a shift towards sustainability and a shift in the consumer type. As for the resale market, some brands fare well, and some others do not. 

Overall, luxury handbags are here to stay, but their landscape is constantly evolving with changing consumer preferences and market dynamics. Brands will have to adapt and innovate to stay relevant. 

Whether you’re a fashion-savvy man trying to upscale your wardrobe, a woman of style, or someone who sees the investment potential of luxury handbags over traditional assets like gold, we’ve got something for you. Check out our collection of luxury handbags from all your favorite brands to take a pick.