Firms will expand into new product lines and capitalize on revived sentiment
Los Angeles, CA (PRWEB) April 29, 2013
Despite moderate revenue declines during the recession, the Handbag, Luggage and Accessory Stores industry has fared well over the five years to 2013. According to IBISWorld analyst Nikoleta Panteva, “This strong performance is driven largely by rebounding spending by domestic and foreign consumers.” IBISWorld estimates that revenue will increase at an average annual rate of 1.2% to $9.2 billion during the period. In 2013, revenue is expected to grow by a healthy 4.0%, signaling the return of consumer spending on affordable luxury.
Nevertheless, industry participants have not been able to completely sit back and relax. “Companies are still making promotional efforts to cater to aspirational luxury shoppers, who indulge in purchases up to $300,” says Panteva. For example, major player Coach launched a lower-priced product line in 2009 to capture this demographic. These movements toward lower price points help increase affordability, which stimulates demand but hurts profitability. To balance lower price points and retain profit, the industry relies on imports. As a result, profit margins are recovering and expected to account for about 10.7% of revenue in 2013. Industry players are expected to expand after a short period of contraction during the recession. By 2018, the number of companies is expected to climb to 32,351, representing an average annual increase of 2.9% from 2013, versus the subdued 1.1% annualized growth of the previous five years brought on by recessionary closures.
The top four industry companies are Coach, Claire's Stores, Moet Hennessey Louis Vuitton (LVMH) and Genesco. Together, these operators hold 57.6% of the market, giving the Handbag, Luggage and Accessory Stores industry medium market share concentration. The industry is fairly fragmented, with more than 90.0% of firms employing four or fewer workers. Over the past five years, industry concentration has increased from about 49.6% in 2008. Coach's share of the market has grown from 28.2% in 2008 to an estimated 39.8% in 2013. Meanwhile, former major operator Wilson's Leather exited the industry in 2008, pushing down concentration. This exchange of power has caused the top four firms to gain more power, as their share of the industry has increased. IBISWorld forecasts that concentration will grow in the coming years. Players like LVMH and Genesco are focusing on acquisitions to expand their brand names and recognition. This factor will likely push the industry into the high-level concentration bracket, with the top four firms accounting for 70.0% or more of the market share.
As the economy rebounds during the next five years, industry revenue is forecast to grow at an even faster rate. Per capita disposable income is projected to grow in each of the next five years, spurring travel by domestic residents and creating demand for handbags and luggage alike. However, mounting competition from alternative retailers such as clothing stores, department stores and online retailers will curb profit potential during the period. IBISWorld anticipates profit to grow.
For more information, visit IBISWorld’s Handbag, Luggage & Accessory Stores in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes specialty retailers that primarily sell handbags, luggage or clothing accessories, or any combination of these products. Stores in this industry do not sell apparel.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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