Saturday, 18th May, 2024
Saturday, 18th May, 2024

The return of the luxury handbag  

As many European countries announced new coronavirusrestrictions in late September 2020, 100 handbag brands flocked to Milan toshowcase their new collections at Italy’s international leather goods fair, Mipel.

The gathering sent a clear message from Italy’s luxury fashion industry:“We are open for business.”When Italy became the epicentre of the pandemic in February,the luxury apparel industry was dealt a harsh blow.

Factories and workshopswere forced to close and brands were left with shortages of material, ordersand staff.

Italy’s fashion sector is a €90bn (£82bn) industry, whichaccounts for 40 per cent of global luxury manufacturing and employs almost halfa million people. Worldwide, the pandemic could cost the luxury market up to$100bn (£78bn), according to the Boston Consulting Group, reports BBC News.

But after months of turmoil and economic losses, Italian luxury brands are finally starting to revive their businesses. Despite very difficult conditions, 100 brands still turned up to Mipel this year, making upabout a third of the usual contingent, says Franco Gabbrielli, chief executive of Mipel.

“It was very important to do this edition of Mipel because we would like to show the world thatwe are here,” says Gabbrielli.

Some Italian leather goods producers repurposed their workshops to make protective equipment such as face masks during the pandemic.

Although brands, big and small, successfully adapted their business models to survive during the pandemic, many artisans are fearful offurther lockdowns. “Next year will be very difficult,” says Gabbrielli.

During the first lockdown, “many companies already had orders in hand. Now they don’t have new ones for the winter.” Italy is by far the biggest exporter of leather handbags in Europe, selling €6.3bn (£5.7bn) of them last year, according to Mipel.

Italy’s first, two-month lockdown caused the leather goods industry’s turnover to drop by around 43 per cent and the total value of exported goods to fall by 31 per cent in the first half of 2020, according to research carried out by Assopellettieri, Italy’s national leather goods association. Small family-run businesses are the beating heart of the industry.

Many global brands, including Prada and Gucci, rely on artisans in Florence to produce their collections. If these small businesses do not survive the pandemic, “the craftsmanship that is the result of excellence and skill passed down through generations, and the source of the ‘Made in Italy’ aura –could be lost forever”, a report by the management consultancy McKinsey warned in April.

Italian handbags are world-famous for their craftsmanship and authentic, bespoke design. “The Italian product has always been the best[among] the leather goods. It is artisan, [rather than] industrial.

All the bags have something different,” says Gabbrielli. Many brands relied on the global appeal of “Made in Italy” luxury goods to weather the coronavirus storm.

“Clients have turned to brands that represent value and are a safe investment,” says Mireia Lopez Montoya, managing director of leather goods and accessories at the luxury brand Bulgari.

“This has definitely helped.” Bulgari launched its Arkadia leather goods and accessories collection on schedule, despite difficulties sourcing materials during Italy’s lockdown.

Montoya says the lockdown was not disastrous for Bulgari as handbag collections are normally produced eight months in advance and are lesstrend-driven than fashion, which gave the company time to adapt.

“We don’t havethe same seasonality as fashion. Our models are timeless, they don’t age,” shesays.Bulgari’s European market has suffered the most as a largeportion of sales comes from tourism, Montoya says.

When Europe locked down,Bulgari closed many of its airport stores, which are important sources ofrevenue for the company.While sales fell sharply in Europe, the firm’s Italian handbags were snapped up in China.

“There the bags are really flying,” saysMontoya. “The Chinese have this appetite for luxury goods. They are buying moreas a result of not travelling right now and having more money.”

Luca Solca, a luxury goods analyst at the asset management and research firm Bernstein, says it is not surprising that the Chinese market was the first to rebound, as regional lockdowns were lifted there months before those in Europe.

“During the summer, luxury demand has been resurging even ifpeople haven’t come back to traveling,” says Solca, who has also noted that lockdown lifestyle meant people had more savings, which then gave a boost to the market.

Chinese consumers had more “discretionary spending capacity thatthey can dedicate to personal luxury goods,” he says. A case in point is the Sicilian handbag brand Studio Sarta.

The brand’s founders, siblings Fabio and Giorgia Gaeta, were surprised whentheir sales increased by 50 per cent over the summer. Established in 2017,Studio Sarta in Palermo creates chic, contemporary handbags made from rattan and Italian leather.

“It is a strangestory. We expected our sales to decrease during lockdown, but people did not stop buying [online] and our sales remained stable,” says Fabio, who manages the business while Giorgia designs the products.

“Over the summer people bought our entire stock in three weeks.” Fabio believes that sales were driven by the many hours people spent online during lockdown and a desire for escapism.

“In order to escape the fear of coronavirus, people started buying products online,” he says. Studio Sarta was in a strong position when the pandemic struck due to its established online presence.

The company has always sold its products online, directly to customers around the world. By bypassing the reseller, the company is able to significantly cut costs and lower prices. “Ninety percent of our sales are through the internet which lets us keep the price slow. Our bags are at the cheaper end of the market. For €150 everyone can have a little luxury,” says Giorgia.

Instagram lies at the heart of Studio Sarta’s marketing strategy. The company’s Instagram page features models carrying the bags as they wander through Italy’s sun-kissed countryside.

“In May we had some publicity from an influencer and it was incredible: one influencer photo can sell 100 bags in three days,” says Fabio.

Luxury brands have been slow to embrace e-commerce in the past due to reluctance among consumers to buy expensive, high-end products online.

But the pandemic has accelerated the industry’s shift to online channels. Bulgari has expanded its e-commerce division to seven new markets over the summer in an attempt to boost sales. But many small artisans will struggle to switch to an e-commerce model. “The investment to start e-commerce is expensive. In many small companies the owners are quite old and not used to working with technology,” says Mipel’s Gabbrielli.

According to Studio Sarta, it is worth the investment. “With the internet you can produce high-quality products locally and sell worldwide. It was quite easy [for us] to survive this period,” says Fabio.

“It’s incredible how a small, crafted, locally-sourced company can be resilient, can survive and be very flexible in a global world.”

 

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