" In the crowded and volatile market for handbags, not even Chanel and Hermès are safe, says Luca Solca, head of luxury goods at Exane BNP Paribas... For brands, handbags offer attractive retail economics, characterised by high sales productivity (sales per square foot) and strong full-price sell-through results.
Simply adding more retail space is no longer a sure route to growth, especially for luxury megabrands like Louis Vuitton, Gucci and Prada.
Adding to the problem, the megabrands have raised their entry-level price points in an attempt to reinforce the perceived exclusivity and desirability of their bags. But... the accompanying reduction in sales volumes makes revenue growth even harder. It has also opened a wide price umbrella under which several aspirational brands, such as Michael Kors and Tory Burch, have crowded, increasing pressure on megabrands from the bottom of the price pyramid... "
Read the full article at Business of Fashion.
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