New York, NY (PRWEB) January 22, 2014
Despite its positive performance over the five years to 2013, the Leather Good and Luggage Manufacturing industry is in a state of decline. Its revenue has long suffered from import competition and offshoring. According to IBISWorld Industry Analyst Zeeshan Haider, “Price pressures from downstream markets during the recession further worsened conditions for industry players, causing revenue to drop 16.6% in 2009.” The five years to 2013 signified a postrecessionary rebound for the industry's participants, with revenue growing at an annualized rate of 1.4%. In 2013 alone, IBISWorld anticipates that revenue will grow 2.6% to $4.1 billion.
These recent revenue trends are not entirely telling of the industry's condition, however. In the past five years, imports have become an increasingly important part of this industry, making up 87.7% of total domestic demand for luggage and leather goods. “Low-cost suppliers in China and Vietnam can deliver accessories at lower prices than local firms, making domestic items less attractive to downstream retailers and consumers,” says Haider. As a result, companies remaining in the industry have shifted their focus to designing and marketing activities, while contracting third parties to manufacture goods or opening up their own facilities abroad. As such, the number of industry locations has shrunk at an annualized rate of 1.5% to 6,503 since 2008. Some operators have kept production local, focusing instead on high-end designs that carry a higher price tag in niche markets.
In the five years to 2018, industry revenue is expected to drop. Much of the industry's operations have already moved to low-cost foreign countries, meaning that the remaining operations will increasingly produce high-value products. Profit (i.e. earnings before interest and taxes) is expected to inch up in 2013. Increased investment in technology will aid companies in achieving efficient production of high-end goods, helping these firms sustain profitable operations. Furthermore, profitability will improve because industry operators will be able to charge higher margins on domestically produced goods as the economy improves, disposable income rises and high-value customers start making discretionary purchases again. Still, imports will continue posing a competitive threat to the industry, expanding their share of the domestic demand for leather goods to comprise about 93.0% in 2018.
For more information, visit IBISWorld’s Leather Good and Luggage Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
Operators in the Leather Good and Luggage industry primarily manufacture clothing accessories, including belts, hats, luggage, handbags, wallets and various other leather goods.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.