Handbag makers cut back on new designs to reduce discounting

Dive Brief:

Several high-end handbag retailers are cutting back on the number of styles they’re introducing in an effort to reduce discounting, but experts told Bloomberg that could hurt some brands’ ability to spark sales.
Michael Kors Holdings cut back on the number of styles it introduced last quarter by 24%, Prada by 35%, LVMH’s Louis Vuitton by 35% and Burberry Group by 8%, according to data from fashion market research firm Edited cited by Bloomberg.
It's a defensive position reflecting a “feeling of doom,” luxury consultant Milton Pedraza, a New York-based luxury consultant who runs the Luxury Institute, told Bloomberg. “What you’re seeing is a tremendous amount of copying, less innovation and less creativity, at a time when exactly what you need is to be bold.”

Dive Insight:

New styles are few and far between among the highest priced handbag makers, which are able to maintain full prices more consistently and see lower price cuts when they are discounted, according to a November analysis from Edited. “[T]hese brands introduce a few new styles every year and are able to replenish without discounting, Edited noted in a blog post. "To fully understand the marketplace it’s important to spend equal time looking at what’s coming into stores and what never stops being sold.”

While department stores are indeed using discounts to move handbags, the right timing for the introduction of new bags could help vendors avoid that, according to Edited. The highest number of discounts come in November and June, and discounted products sell out in the highest numbers in December, followed by January and July. That means that a month after reductions are applied, stock clears. Meanwhile, Edited found, full-priced sell outs are at their highest in December, followed — somewhat surprisingly — by January and February. But it’s March and October that are the big months for new product arriving into department stores.

Still, Bloomberg’s experts argue that the dearth of new styles could be due to personnel changes in the space. PVH Corp.’s Calvin Klein and Yves Saint Laurent replaced their creative directors, and Ralph Lauren CEO Stefan Larsson has shaken up management: Ralph Lauren’s son David Lauren came on as chief innovation officer in October, Coach CFO Jane Hamilton Nielsen arrived as CFO in June, and Bill Campbell, who most recently worked with Amazon in distribution, inventory and logistics roles for the past 11 years, was named corporate senior vice president of global supply chain and inventory management.

Younger consumers are helping push the “see now, wear now” trend into luxury and seem less enamored with the concept of an “it” bag. But that’s not necessarily pushing down prices of luxe bags, according to Edited. “Contrary to recent rumors, high end bags aren’t getting cheaper,” according to a blog post. “Instead, market data shows that retailers are upping the ante at the top end of the category’s price architecture. In the [the third quarter], 23% of all new arrivals at U.S. department stores were priced $1,800 or more. The same period in 2015 saw just 15.5% of all new arrivals priced accordingly.”