Luxury handbags — the phrase means different things to different people, but there are a few common attributes that come to mind: European, artisanal, and expensive. However, this is not always the case when it comes to our favorite accessory. Here’s why everything you thought you knew about handbags is wrong:
Myth: Most designer handbags are European
While it seems obvious who the ruler of the handbag world is to some, studies have found that the most searched brand globally is, in fact, Coach, a native brand to the United States, with Louis Vuitton coming in second. Chanel, Gucci, Longchamp, Prada, Hermès, Mulberry, Marc Jacobs, and Michael Kors round out the top 10 list, two of which are also American brands.
Out of Stylitics’ users top 10 brands, only 3 were based in Europe, while the rest were of American origin.
But even handbags from European designers aren’t necessarily made in Europe. Prada Group, which owns Prada, Miu Miu, Church’s Shoes, and Car Shoe, famously admitted that they outsource about 20% of their manufacturing to China and other locations abroad. They are still able to claim that these products were made in Italy, though, because in order to get a “Made In Italy” tag, only a majority of the cost of the product must be purchased within Italian borders. Miuccia Prada, chief designer for Prada and Miu Miu, said in an interview, “sooner or later, it will happen to everyone because [Chinese manufacturing] is so good.”
Coach also openly admits to outsourcing production, with 60 manufacturing plants in 14 countries around the U.S., Europe, and Asia. Longchamp and Mulberry are also known to have manufacturing centers located abroad, mainly in Asia.
Louis Vuitton, Chanel, Hermès, and Gucci have yet to outsource to other countries in order “to perpetuate and renew our tradition of excellence and refinement,” as Louis Vuitton states on their website. Gucci also writes on the subject: “Gucci’s Made In Italy production ensures that 100% of its leather goods, shoes and ready to wear are still produced in its Florence workshops.”
Myth: Designer handbags are handmade
As far as handcrafting goes, it’s true that most companies still employ craftsmen who have undergone 2-5 years of training. Bottega Veneta even opened a school for their leather artisans in Vicenza, Italy in 2006 to teach the interlocking leather weaveintrecciato that is attributable solely to Bottega Veneta. However, many brands still use sewing machines and other modern techniques in production, and it is hard to tell exactly how much work is done by hand.
When Louis Vuitton was questioned about their practices after running an ad campaign that focused on their handmade, artisanal qualities of production, they responded by “explaining that the images were a[n] homage to the craftsmanship of its 200 artisans,” even though sewing machines were used for many aspects of production because they are “more secure and necessary for strength, accuracy and durability.”
In a video posted by Marc Jacobs following the production of a Stam bag in Italy, craftsmen are clearly shown using sewing machines, but they are also shown hand stitching, leather covering, and metallic manufacturing. So while there are handmade elements, there are also some steps that are industrialized.
Myth: You get what you pay for
Demand in the luxury world has been relatively consistent, partially due to the exclusivity of leathergoods, jewelry, and apparel. But more expensive doesn’t ensure higher quality.
In fact, the luxury handbag industry enjoys some of the highest profit margins in the fashion world, with Hermès earning margins of over 20% in 2012, and Louis Vuitton, with the highest profit margins of any handbag brand, over 40%. Compare this to the apparel industry, where the average margin for textiles is closer to 7%.
So how do these companies make such a high return for a product that is arguably no different than any other handbag? The answer is luxury branding. With a focus on quality and upholding brand integrity, the highest margins go to the companies that don’t compromise on price. Instead, they sell the idea of exclusivity.
Robert Chavez, CEO and U.S. President of Hermès, said, “We are consistent. We don’t do drastic styles or make sudden changes. There are no markdowns.” Their success can be greatly attributed to the incredibly famous Birkin bag, which in the retail market has a waiting list of about a year and a price tag of at least $10,000. It takes a single craftsman about 48 hours to produce each bag, and textiles range from calfskin to crocodile, altering the price of production depending on the rarity of the material.
More contemporary designers are expanding production as they see necessary. Some companies, including Rebecca Minkoff and Rafe New York, have already moved into the Chinese manufacturing market, while others, like The Row, have committed to keeping their production in the U.S.
Recent scrutiny of factory conditions has brought a whole new set of challenges to manufacturers. Alexander Wang rocked the boat last spring by settling a lawsuit in which 30 employees accused him of running a sweatshop in New York’s Chinatown, accusations that he denied.
It seems that the future of luxury handbags is up in the air as brands straddle the line of profitability versus craftsmanship. As these companies continue to modernize, will we see a greater move towards outsourcing, globalization, lower price points, and assembly lines? Tell us what you think in the comments below!
Written by Elizabeth Wigley, Marketing Intern for Stylitics. Elizabeth is a big fan of Minneapolis, iced coffee, Marc Jacobs, and Northwestern University.