As luxury brands expand to accessories or footwear lines for fall 2023, the categories’ ability to translate into sales is coming into question.
Ahead of Daniel Lee’s debut Burberry collection, CEO Jonathan Akeroyd said in an earnings call in November that he wants to grow the brand to become a £5 billion business. To do so, his plan is to grow Burberry’s accessories business from 37% of its total sales to more than 50%, driven by Lee’s “rare talent” for leather goods.
Akeroyd also pointed to plans to push footwear to the forefront, highlighting the brand’s military history and know-how in the category. Lee, creative director at Bottega Veneta until 2021, delivered outstanding results across both categories, with bag styles like The Pouch and The Cassette becoming signature pieces. At the same time, the brand’s Stretch sandals and Puddle boots gave rise to a new type of leather accessory that cemented Bottega as the brand of the moment.
According to Kering’s 2019 annual report, released in February 2020, the Pouch was “the fastest-selling bag in Bottega Veneta history.” And a 2021 review by digital consulting firm Lectra showed that 74% of Bottega Veneta’s global sales were generated by the handbag category that year, with leather goods accounting for 42% of Bottega Veneta’s product range during Daniel Lee’s total tenure.
The question now is whether that success can be replicated at Burberry. And, more importantly, are there customers willing to buy into Lee’s new accessories, considering the lowered discretionary spend among aspirational shoppers? Executives at Kering, which owns Gucci and Saint Laurent, said in October that they’d seen some pressure on entry-level items in the most recent quarter. And Marc Metrick, CEO of Saks Fifth Avenue’s online operations, said in a November 2022 interview that the company was seeing a slowdown in growth among aspirational shoppers.
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Handbags represent a growing category among comparatively affordable brands. In December, 20-year industry veteran Nili Lotan launched a range of handbags for the first time. Meanwhile, Brandon Blackwood, who launched his brand in 2015 with a focus on handbags, expanded to footwear during New York Fashion Week earlier this month. The collection features seven styles retailing from $285-$565, building on his usual strategy of targeting shoppers who may not want to spend $1,000 on an accessory.
In London, after eight months of development, British luxury brand Ahluwalia debuted a 11-piece shoe collection at London Fashion Week this month. The line includes loafers, boots, strappy heels and mules in multiple colorways. It will launch on Ahluwalia’s website and through a limited number of retail partners, with styles selling for $470-$1,200. According to January 2023 data from descriptor Brainy Insights, the global luxury footwear market is expected to reach $56.2 billion by 2030, at a compound annual growth rate of 8% from 2022-2030.
According to market research company NPD, the total footwear market, excluding direct-to-consumer brand sales, was essentially flat in 2022, compared to 2021. Dress footwear gained market share by increasing sales 34% year-over-year — though dollar sales in the category are still below 2019 levels. Handbags sales grew by 1% in 2022.
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“According to our data, there is definitely slowing down, but a lot of this is still on the back of a massive drop that we saw in most markets during the pandemic,” said Ffleur Roberts, head of global luxury goods at market research company Euromonitor. “High net worth individuals still have money to spend on luxury. However, even within those high net worth and affluent consumer groups, they would rather spend money on things like health, wellness and travel over fashion. If their disposable income is also being squeezed because the cost of living going up, then buying a luxury bag is not necessarily a priority compared to those other categories.”
For some luxury brands, shoes and bags continue to see strong interest from shoppers. On its earnings call on February 27, Lanvin Group reported that Lanvin’s wholesale sales increased 145% year-over-year, “demonstrating strong brand appeal and demand among global luxury retailers and buyers, especially for accessories.”
And Ryan Kleman, Moda Operandi’s director of non-apparel, said accessories and footwear remain a significant portion of sales for the company’s luxury brand partners, based on their ability to reach a wider audience of clients. “Given that these categories typically have the most accessible pricing, they’re often still the first and most frequent purchases for the brands’ [shoppers]. … Our focus is on [shoe and handbag styles] that will stand the test of time.”
However, multi-brand retailers like MyTheresa are seeing less demand for accessories and footwear . According to its February 23 earnings call for the period ending December 31, demand for shoes and handbags slowed, as aspirational shoppers shopped less as a result of the recession and lower discretionary spend.
On the call, Michael Kliger, CEO of Mytheresa, said, “If you go by category, the share of top customers is the highest in ready-to-wear, and the aspirational customers are much more important in shoes and in its subcategories like sneakers, and in bags. A slowdown in demand by aspirational customers is evidenced by a slowdown in shoes and bags overall for our business in the second quarter, versus the ready-to-wear category which was much less impacted.”
As a result, the retailer is catering to true luxury customers for the long term by expanding exclusive designer launches in ready-to-wear and focusing on curated brand experiences like its Pucci skiwear launch and lifestyle.
