Coach, Louis Vuitton, Tory Burch, Michael Kors, Gucci, Chanel, Hermes, Dooney & Burke, Fendi and other designer handbag companies must now use new marketing strategies to capture the millennial handbag customer according to a new report by The NPD Group, a marketing research firm. NPD findings show that women 18 and over spent a total of $11.5 billion on handbags in the U.S. in 2015.
The New Handbag Customer Revealed 2016 Study conducted on the millennial handbag customer revealed that millennials are increasingly more focused on the details, quality and uniqueness of their handbags — more than the brand itself across most price points and styles. This makes this customer much more open to trying emerging or lesser-known brands, which has implications for both established brands and newcomers.
Marshal Cohen, chief industry analyst for the NPD Group, clarifies why the millennials are doing things much different from the older generation when it comes to shopping for new handbags.
Give 5 reasons that show how and why millennials shop for handbags differently from customers of the past.
Number one: The millennials don't have the discretionary income that the preceding generation had. What we find is having to be able to find a way to get the Millennial to part with their very limited discretionary spending power. It's a challenge. The handbag business has done a good job of creating an environment where it's kind of viewed as a necessity, but also viewed as a luxury and an investment. The millennial consumer would rather invest in the handbag than in the jewelry business. The reason for that is "affordability" and "usage." The millennial is spending money on handbags. When we asked them why, we basically got a simple answer: "I wear an outfit at the most once a week. I wear my handbag five, six, seven days a week. So I'm getting more bang for my buck!"
Number two: It's what I call a signature item. It (handbag) enters the room even before your outfit does and before your personality does. It is kind of like a guy with his basketball shoes or it used to be an older guy when he wore his tie. It's the statement piece! It says who you are, the mood you're in, where you're going and where you're coming from. When you look at that...the millennial recognizes the handbag as a signature item, and they are willing to invest in that.
Number three: When you go to buy an outfit, it used to be that you bought the clothing and then accessorized the clothing. You would buy the bag. You would buy the jewelry. You would buy the belt. You would buy the bracelet. You complimented. You started with the wardrobe. Millennials start with the handbag and buy the outfit to compliment the handbag. It isn't just millennials, but millennials started this. They basically said that it is not about the outfit anymore — it's more important that I get the accessory item, the bag, right. It starts with the bag. They are willing to spend $150-$300 on the bag.
Number four: This is the kicker. Basically what we have now is an environment where the consumer today is much more athletic-inspired apparel dressing. In other words, we are so casual that we are wearing our workout clothes. Women are telling us that I want to get dressed in the morning and wear the same outfit that I could wear to work — I can go from work to the gym and workout. So they are going from the start to the finish of the day in the same outfit. Therefore, what does that mean? That means now that they have to have one outfit and one bag that carries them through the entire day. So they need a bigger, more convenient bag that allows them to put in all the essentials that they need for the day. Could be a pair of running shoes, it could be electronic equipment. The handbag becomes the essential part of their ability to be able to navigate the day. If you think about it, they are no longer carrying gym bags — they are now carrying handbags that kind of cross over as a gym bag and a statement piece.
Number five: When you really think about who we are today, millennials in particular, we have all kinds of essential items we carry such as the cell phone, the tablet, the chargers and the portable charger battery. Women need their handbags to be more diverse. They need to be able to be utilitarian. They need to be functional. The younger millennial consumer is buying handbags with a different set of features then just image alone. They have to buy a bag that keeps pace with their lifestyle. That's why they are buying handbags over other products. So when you put all five of the reasons together it spells huge opportunity for the millennial consumer to drive the handbag business. It even tells us that other industries need to look at the handbag business and figure out how to mirror that lifestyle and that shift to be able to keep pace with this ever-changing consumer.
Are the millennials doing most of their handbag searching online or in-store?
It's a combination of both. The younger generation does have a propensity to go online more often. The millennials were practically born on a computer. They are very comfortable shopping for the bag online. They want to go into the store and touch and feel it too, but they will end up buying it wherever it is that is most convenient for them.
Do you think that the millennials even care about the appearance of the bag today?
It's just like buying a car. It's like buying an SUV. If you have kids you want the function of the minivan. But you still want to make sure that it looks good. That's the secret to a successful product, in that it gives you the utilitarianism with the right look.
What exactly does The NPD Group do?
NPD is a market research firm that collects consumer data from the consumer on an online panel — and we also collect data directly from the retailers' point-of-sale system. Retailers send us their sales information that we collect and put together so they can see how they perform against the competition. We conduct 12 million consumer interviews each year. We track more than a trillion dollars in consumer spending a year in the Americas and more overseas.
How long has NPD been in existence?
It will be our 50th anniversary come September 2016. It started out as a paper diary. Housewives used to fill out a 16-page paper diary report that would say all the things that they had bought during the course of the month. Then they would send it in to us, and we would add it all up together. That's how it all got started. We started out with things like laundry detergent and men's underwear.
