As some customers struggle to justify spending thousands of dollars on Hermes Kelly or Chanel 2.55 bags, shoes like Jimmy Choo gladiator sandals are set to become a faster-growing luxury, according to estimates by Euromonitor International Plc.
Having trailed bags in the five years before and during the recession, sales of luxury shoes will rise 20 percent in the four years through 2013, compared with 16 percent growth in handbag revenue, according to a study by the research company.
Demand for $1,000-plus bags may not match pre-recession levels as consumers now hang on to their clutches and totes for more than one season, said Fflur Roberts, Euromonitor’s luxury goods research manager. While also curbing spending on shoes, shoppers may purchase more designer footwear than bags because it’s “more forgivable” to pay $500 for a pair of Manolo Blahnik blue satin heels, Roberts said in a phone interview.
“There are still ‘It’ bags out there, but it’s not the same as it was,” Roberts said, citing the mania of three or four years ago for “arm candy” such as Mulberry’s Paddington and Fendi’s Spy. “The entry price for shoes is easier.”
In the past decade, PPR SA’s Gucci Group NV and LVMH Moet Hennessy Louis Vuitton SA boosted sales and earnings by expanding their seasonal bag ranges to tap demand for the latest “must-have” accessory. Luxury bag sales advanced 49 percent in the period from 2004 to 2008, while designer shoes rose 35 percent, according to Euromonitor.
Luxury chains in the U.S. are driving retail sales to the fastest pace of growth in the past four years, a sign consumers may be overcoming concern about unemployment and depressed home values, the International Council of Shopping Centers said in advance of its June report.
Burberry, Valentino
Excluding currency swings, sales of designer shoes fell about 8.7 percent to $9.77 billion in 2009, the lowest level since 2006, according to Euromonitor. Sales of designer bags declined about 8 percent to $6.7 billion in 2009.
Growth is set to resume this year, the researcher predicts. Footwear revenue is forecast by Euromonitor to rise 3.2 percent this year, faster than the 2.1 percent predicted for bags.
As demand returns, so are the rewards. Burberry Group Plc, the U.K.’s largest luxury company, said in May annual profit increased 23 percent as it sold more shoes and accessories. Salvatore Ferragamo SpA, the Florence, Italy-based shoemaker, has seen “very significant” growth in sales of men’s footwear in Asia as businessmen upgrade to luxury shoes, according to Chief Executive Officer Michele Norsa.
Rubber Soles
“We have a very functional offer in Asia, including shoes with rubber soles,” Norsa said in a May interview. In Japan, sales of Ferragamo shoes grew by more than 10 percent in the first quarter, he said.
Valentino Fashion Group SpA’s shoes are “performing in an outstanding way,” CEO Stefano Sassi said in an interview. “It’s the product category that is doing more right now.”
High-end shoe sales may accelerate fastest through 2013 in Malaysia, Russia, Canada, the U.S. and South Korea, with growth being split equally between men’s and women’s footwear, according to Euromonitor forecasts.
Handbag sales will get a lift from a non-traditional customer -- men, particularly in Russia, Malaysia and China, according to the researcher. Excluding suitcases, sales of men’s designer bags may grow 18 percent between 2009 and 2013, compared with 16 percent for women’s luxury handbags.
‘Manbag’
“It’s all to do with the ‘manbag’,” Roberts said. “It’s more acceptable now for men to walk down the street with a Mulberry bag. It’s the norm.”
Mulberry Group Plc’s fall 2010 bag range includes the 495- pound ($750) East West oak natural leather messenger bag and the 895-pound Picadilly chocolate natural leather tote, according to the London-based fashion company’s website.
“The Mulberry boys are functional before being fashionable and are looking for value for money,” said Nicholas Roberts, the company’s retail director. “Our functional, understated bags sell well in season, while our high-fashion products sell more in sale.”
With sales of men’s luxury bags in the U.S., the world’s biggest market for the category, projected to grow 23 percent through 2013, according to Euromonitor, retailers including Saks Inc. and Barneys will add competitively priced own-label men’s satchels, purses and messenger bags from spring 2011, executives at both department-store chains said in interviews last month.
“Whatever product we offer needs to offer value, especially in men’s wear,” said Thomas Ott, Saks senior vice president of men’s wear.
And for the fashionable female still seeking her luxury fix, albeit at a lower price point, Roberto Cavalli SpA and Ferragamo are making less expensive products. Cavalli is cutting production costs by putting one brooch on a handbag instead of two, CEO Gianluca Brozzetti said in an interview last month. Ferragamo is making more bags priced around $500, Norsa said.
“Brands have possibly got a bit carried away with all the markups that they’ve been allowed to get away with,” said Euromonitor’s Roberts. “People are more careful about buying.”
