For more than a decade, ‘It’ handbags, towering heels, luxe baubles and small leather goods dominated the retail scene — and warmed the hearts of women, brands and stores across America.
But like most other fashion sectors, accessories’ runaway success came to a screeching halt in 2008 when the economy took a dramatic hit. Consumers stopped digging into their crocodile pocketbooks and spending at retail, and merchants and vendors, faced with decreased demand and excess inventory levels, started slashing their prices and eradicating margins.
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Two years on, the economy is slowly climbing out of recession and makers of accessories said they are beginning to see some light through the clouds. Many feel the category is ready to lead the retail industry out of the doldrums.
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While there is still a long way to go before designers can utter the term “recovery” with confidence, there were indications of a possible turnaround in the first quarter of this year. According to The NPD Group Inc., the Port Washington, N.Y.-based market research firm, the accessories market has started to pick up in the first three months of this year, after declining by 10 percent in 2009. The women’s area drove the business with an increase of 20 percent, driven particularly by solid sales in handbags with an average price of $100, which account for about 46 percent of the total dollar sales in handbags. Small leather goods — particularly wallets, mobile-phone cases and wristlets — are also continuing to be a top performer in both men’s and women’s, with sales increasing by 9 percent in the first quarter of this year.
Marshal Cohen, NPD’s chief industry analyst, said accessories are “poised for opportunistic growth.”
“It will be one of the leading categories to take us out of the recession,” Cohen said. “It offers consumers the ability to create what I call ‘individual conformity.’ It’s the ability to fit in within the realm of what’s accessible, while giving it your own, personal touch. Accessories have always had the ability to do that, but now this important aspect is really on top of consumers’ minds.”
Cohen pointed to small leather goods, sunglasses and “anything on the wrist” as key trend drivers in the current accessories field.
“The next area is going to be the smaller-bag business,” he said. “The big growth opportunity will also be multifunctional items, whether it be backpacks, small leather goods, any kind of travel gear that does more than one thing or electronics accessories.”
Cynthia O’Connor, who heads the Cynthia O’Connor + Company multiline showroom in New York, noted that there has been growth in recent months, driven by key items.
“Costume jewelry is having a moment,” she said. “The big necklace and jewelry trend has been important to bring newness to the wardrobe. The belt category has also come back tremendously, from a brown wrap belt to [B-low the Belt’s] ‘Rock N Row’ studded black belt.”
While conspicuous consumption may be on hiatus for the time being, O’Connor said consumers are still spending and it’s not always about going for mass price points, either. When they shop, they are looking for a strong price-value relationship, she noted.
“Last year, some retailers overreacted and had to have inexpensive things, but now they’re coming back and saying that not everything has to be in the $495 and $595 range in handbags,” she said. “[It can be more expensive] as long as it’s special and there is a price-value relationship.”
Abe Chehebar, president and chief executive officer at Accessory Network Group in New York, said there has been a renewed sense of interest and expectation in accessories and the sentiment is particularly noticeable in the handbags area.
“Overall, we have been seeing positive reactions by the consumer, more so than the past couple of years,” said Chehebar, whose roster of accessories offerings includes LeSportsac, Ghurka, Bebe, Izod and Karl Lagerfeld. “We are also seeing a lot of newness in the market that customers are responding to nicely.”
Since so many retailers had been keeping their inventories lean, they are often searching for immediate deliveries to keep up with the unexpected flurry of activity at the retail level.
“Seven or eight months ago, [stores] had bought their season based on the sales history from the year before, and they weren’t prepared when sales picked up this year,” Chehebar said. “The good news is that stores are being more opportunistic. We are seeing a renewed interest in trying out new things, including new display techniques. There is a nice tempo in the market.”
Handbag designer Rebecca Minkoff said, “Last year was all about being cautious and practical. However, our company’s strategy has remained constant. I think now there’s a positive feeling from our customers that they still want more product and the worst is over. We’re driving the business forward full steam, debuting new lines and an enhanced e-commerce that provides the consumers with more data and knowledge. Economics are a big key and the price-value ratio is becoming critical.”
Minkoff said various factors are key to maintaining a healthy business in this new reality.
“We were fortunate in the sense that we have a smaller internal team and cutbacks were not as severe as most companies,” she said. “Over the past year, we’ve been able to expand our retail presence [nationally] and worldwide, which has been remarkable. While doing so, we’ve made it a point to increase personal appearances to create a more intimate one-on-one approach with the customers. It’s important to hear their feedback in order to create a stronger, more efficient brand. We’ve also lowered our best-selling products by 15 percent as a thank you for their customer loyalty.”
Steven Roberts, president and chief executive officer of Echo Design Group, said regardless of the economy, the consumer has an emotional connection with accessories.
“The consumer is much more sophisticated today,” Roberts said. “They use accessories to enhance their outfits, express themselves and play with fashion more. They are also more affordable compared to a full wardrobe.”
As for top items, Roberts pointed to innovations such as the Echo Touch Glove, which allows wearers to use touch-sensitive devices such as iPhones and iPod Touches without taking off their gloves.
He acknowledged there are still challenges during this tough economic period and said, “You have to be even more focused and better at what you do. The notion of providing perceived value is that much more intense. I think it’s very critical for products and for brands that you provide more, and the consumer is looking for more.”