It used to be that tracking earnings results from Tapestry Inc. and Capri Holdings Ltd. was a good enough read on the landscape for the North American handbag market, but not anymore. And certainly not in the age of Instagram.
According to Jane Hali, chief executive officer of investment research firm Jane Hali & Associates, Millennials have broadened their search through social media and key influencers for inspiration, with Instagram the winner as the top go-to resource when they want to know what’s new in the handbag sector.
Her firm at the end of January did an Instagram check on handbag brands resonating well on Instagram and then tallied up the results. Private handbag firms were the ones getting a lot of attention, with many of the brands selling online, at specialty doors and high-end department stores, such as Nordstrom or Bloomingdales. Some are also sold overseas at Harvey Nichols, Selfridges, and Harrods.
More established brands have a sizable Instagram following, and they include: Rebecca Minkoff at 837,000, Jacquemus, 782,000; Everlane, 652,000, and Mansur Gavriel, 614,000.
But other brands in the mid-tier contemporary market are beginning to gain some traction and are building up a cult-like status. These also have mid-range price points that make them direct competitors to what used to be the go-to department store brands: Coach, Kate Spade and Michael Kors.
Hali said of the private brands, “These bags are very distinctive, very Instagrammable and for many of the consumers, they satisfy a need for an updated fashion bag. This market has become very competitive.”
Boyy was started in 2006 in New York City as a handbag brand, and has now expanded into footwear and accessories. It has 181,000 followers and price points average between $475 to $1,235. The brand is sold at Selfridges, Net-a-Porter, Moda Operandi, My Theresa and Harvey Nichols.
Parisian brand Clare V began life in Los Angeles in 2012, but now includes accessories such as small leather goods, tech, men’s and footwear. Price points begin at $89 and go as high as $500. The brand is sold at Nordstrom, Net-a-Porter, ShopBop, Revolve, Anthropologie and Bloomingdales.
Dagne Dover is a relatively young early-stage firm aimed at making the working woman’s life easier through organizational pockets within its bags. With price points for its totes beginning at $125 for neoprene and reaching $495 for some leather styles, the company has a sizeable following at 116,000. That following is sizeable given its smaller distribution: online at the company’s site, Nordstrom, Equinox, Bandier, MoMa design store and some company operated pop-ups.
Danse Lente is a London-based handbag brand focused on creating architecture-inspired styles. Price points range from $430 to $580. It has 74,700 Intagram followers and is sold at Net-a-Porter, My Theresa, Matches, Moda Operandi, Need Supply, Farfetch and Nordstrom.
Hunting Season is handcrafted in Colombia by artisans, while the materials are sourced from far-flung locales, according to Hali. The brand has 22,200 followers, and is sold at FWRD, Goop, Matches, Moda Operandi, Net-a-Porter, TheLine and Saks.com. Price points range from $450 to $1,300.
These are just a selection of the mid-tier contemporary brands that are grabbing market share, gaining attention from consumers through social media. Other brands popular on Instagram include Polène, Linjer, Mackage, Staud, Cafuné, Wandler and Susan Alexandra, a brand that typically sells out its collection of beaded bags. Linjer is primarily a footwear firm that added handbags to its mix, and Mackage is a Canadian outerwear firm that also has added a line of tote bags.
According to Hali, “A number of these brands have a wait list for their product. Many of the brands look architectural, and that represents a lot of value for the price…I think the customer is looking for differentiation. It has become a form of luxury, having a different handbag from the rest of consumers.”
So what does all this mean for the stalwarts represented at the department store channel?
The two are scheduled to report earnings next week. Capri, formerly Michael Kors Holdings Ltd., is expected to report third-quarter results on Wednesday, while Tapestry, the corporate umbrella for the Coach and Kate Spade brands, will post its second-quarter results on Thursday.
The American companies represent the three big mass aspirational brands sold in the U.S. And they still will be able to provide a read on the North American handbag market for their own brands at the department store level, as well as at their own stores. Both the Coach and Kate Spade brands have pulled back from their reliance on the department store sector, while Michael Kors is still working on its turnaround plan, which also includes having a presence in fewer doors.
As for earnings, both Tapestry and Capri have added brands to their corporate umbrella. Tapestry has Coach, Kate Spade and Stuart Weitzman. Capri has Kors, Jimmy Choo and Versace. Even if North American sales turn out to be lackluster for the reported quarter, that’s likely to be offset by the overseas businesses.
Coach has essentially a fully-developed business in China, with more runway for growth. Kate Spade is in the early stages of making inroads there. As for Capri, it is looking overseas too, and its the other categories that would likely fuel growth for the firm. Its plans for the men’s business still seems to be on track to reach $1 billion over the next few years.