The fashion world is abuzz over Mary-Kate and Ashley Olsen of the Row’s new line of handbags that includes a $39,000 crocodile backpack. The question is, are luxury consumers ready to spend that big again? The Olsen twins may actually be right on the mark in reading the luxury recovery. A recent survey by American Express Publishing and the Harrison Group forecasts that spending on luxury goods will increase by nearly 8 percent to $359 billion this year compared to 2010.
Are Consumers Ready To Spend $39,000 on a Backpack?
According to Barneys, where the backpack will be sold, two have already been pre-ordered (the bags will hit the shelves in August). Amanda Brooks, Barneys’ Fashion Director told Style.com, “I think if you were ever going to spend $39,000 on a bag, that’s the bag you should buy because I think you’d wear it for a really long time. There’s enough design to make it interesting and beautiful but they truly are classic bags -- and I think you also might be the only one who has it.”
Others that are finding success at the high-end of the handbag market include Victoria Beckham whose first shipment of handbags sold out in 24-hours when they hit Net-a-Porter.com this year -- including a $13,950 hexagonal chain crocodile bag. Luxury stalwarts are also feeling the return of the good times. Second-quarter revenue at Hermès rose to 668.4 million euros ($941 million) from 566.9 million euros a year earlier, based on demand for accessories including its famed Birkin and Kelly bags, which can cost tens of thousands of dollars.
Kwesi Blair, a Senior Associate at New York-based luxury consulting firm Robert Burke Associates says, “I think that the luxury consumer is no longer afraid or embarrassed to shop. He or she has been reluctant over the past few years, but it seems like they’re back and willing to spend. True luxury brands are really embracing their customer base and are seeing an uptick in sales and traffic. The Internet is a powerful tool, which the luxury consumer has become more comfortable navigating. Luxury websites are much easier to use and more transparent, increasing sales and overall brand awareness.” That being said, Blair cautions luxury companies to realize that their customers haven’t forgotten the sting of the downturn. “I do think that most consumers, including the luxury set, have become more discerning shoppers. It has become really important for items carrying a high price tag to truly be unique and make the buyer say, ‘Wow, I have never seen anything like that before.’”
So what does it take to succeed in the stratosphere of the accessories market? Designer Lana Marks, whose famed exotic skinned handbags have been worn by everyone from Angelina Jolie to Jennifer Aniston, says bags at this price point have to take into effect “design, color, hand craftsmanship, quality and couture elements of the seasonal collections. At this level the consumer expects the best of the best.” And the best of the best at this level means handwork and detailing. The $250,000 diamond studded Cleopatra clutch that Helen Mirren wore to the 2007 Oscars specially created by Marks included a “side frame with alligator handstitched onto the metal in little holes.” Marks’ Princess Diana handbag includes a “front flap cut on the contour, which requires a high level of skill, and the factory owner, the master artisan of our Italian artisans, cuts this himself.” Marks, who has new boutiques opening in Dubai and Istanbul, asserts that more than ever the consumer is looking to the high-end for “investment pieces with lasting value.”