That's how Terry Lundgren, chairman, president and chief executive officer of Federated Department Stores, describes what Bloomingdale's customers are willing to pay these days for their luxury handbags.
Designer handbag prices have been on a steep climb for several years, ranging from $1,000 up to a whopping $148,000, and many retailers and designers said they weren't even close to reaching the proverbial glass ceiling.
"It's been astonishing how high a price point we are being able to sell, and not a few but a lot of handbags at these prices," said Lundgren. "I don't know that there's a specific limit [as to how much a consumer will spend]. It needs to have a uniqueness and specialness to it"
Executives give a variety of reasons for consumers' new sky's-the-limit attitude to handbag prices. First, average price points have risen over the last 18 months as component costs have increased. The trend to using exotic skins has obviously contributed, as well. Most important, though, brands see price as a differentiator in an increasingly crowded market. Seemingly every fashion company now has a handbag — but not one that costs $10,000.
"In the world of luxury, it becomes natural to offer a product that needs to be increasingly of top quality and innovative, bearing in mind the high level of competition between the brands," said Diego Della Valle, chairman and ceo of Tod's SpA.
As for who is buying these exorbitantly priced bags, many executives noted that it was Europeans who take advantage of the weak dollar, namely consumers from England, Germany, Italy and Russia. Industry sources added that U.S. business from Japanese tourists was down.
"When I first got here a couple of years ago, the average price point for a bag was $500," Jim Gold, president and ceo of Bergdorf Goodman, told WWD in October. "Now, it's $1,000. That's significant"
In addition, the luxury customer has upped the ante. She doesn't buy one bag a season, but builds a wardrobe of bags: satchels for day, clutches for night and oversize hobos for the weekend. Industry insiders credit the insatiable thirst for bags to variety and inventiveness of product.Even Coach is getting in on the luxury game with its new Coach Legacy stores, to house the product line of the same name, which is 45 percent higher in price than standard Coach bags, with an average price point of $425.
While consumers are spending more on bags, the "It" bag phenomenon seems to have run its course.
"We are seeing the era of the '' bag ease off," said Ed Burstell, Bergdorf Goodman's senior vice president and general merchandise manager of beauty, jewelry and accessories, "Clients want a bag that's more than $5,000, but prices need to stabilize. [With exotic skins] there's definitely a perceived value there....[Companies] need to stabilize a business, not live or die on a bag"
Robert Duffy, president of Marc Jacobs, said even though the firm showed a plethora of ostrich and alligator bags on the runway, only one style arrives in each of Jacobs' stores.
"Most of them have been reserved already for magazines to be shot," said Duffy of what was shown on the runway last Monday. "Usually, by the time they get to the store, they've already been sold"
Marc Jacobs' most expensive bag for fall is a crocodile style for $8,000, significantly lower than the $22,500 crocodile patchwork bag he showed for spring. Duffy noted that there was recently a client in Los Angeles who custom-ordered a $20,000 Venetia bag in crocodile.
"It doesn't happen very often, but I know these customers," Duffy said.
Ikram Goldman, owner of Ikram specialty stores in Chicago, said, "When my customers come in my store and see an Azzedine Alaïa bag, they will buy it regardless of price," noting the Alaïa bags retail from $2,500 to $20,000.
"I think people want to have bags that are really special," Goldman said. "They are really careful, but don't care how much they spend"
Similarly, Lambertson Truex is rolling out its first signature stores starting this spring, replete with bespoke concessions offering custom-made bags with options of skin, hardware and precious stones, which start at $3,000.
"We have customers in Chicago and Boston and some of these areas who alone will purchase $200,000 worth of our product in a year," David Lamer, the brand's president of sales, marketing and merchandising, told WWD.Hermès' New York flagship recently received a shipment of two of its prized limited-edition 35-cm. Birkin crocodile bags with pavé diamonds priced at $148,000. They are wait-listed.
"What we're sensing is that people want some very special, exclusive types of unique product," said Robert Chavez, president and ceo of Hermès USA, when the bags hit the store. "We're always looking to push the envelope"
Often, seeing the exotic skin versions of bags in stores, like Ralph Lauren's Ricky and Voyager styles, inspires customers with lower budgets to opt for a leather version of the style.
"Everybody is trading up," said John Idol, chief executive officer of Michael Kors, which offered envelope clutches and top-handle bags in chocolate and orange alligator on its fall runway. "'s not just luxury price points, either. The customer that has been spending $100 on a bag is now spending $300 and the customer who was spending $2,000 is now spending $4,000"
Bottega Veneta's most costly bag for spring is the $78,000 Limo Washed Croco Large Cabat that requires 30 crocodile skins and takes two artisans several days to braid by hand.
"Our bags are an investment and our customers that buy them are always happy when they return each season and see that they never go on sale, and the styles are still on display and relevant," said creative director Tomas Maier.
A spokeswoman for Prada concurred: "Besides the growing demand for fine leather goods, there is also the complexity of several models, continuous design innovation and, last but not least, an increase in certain costs that cannot be reduced if you want to preserve the level of quality and satisfy the expectations of an international consumer"
Paris fashion houses confirmed prices for luxury bags were on the rise, contributing to the strong profit and sales growth seen last year at companies such as LVMH Moët Hennessy Louis Vuitton and PPR, parent of Gucci Group.
"The luxury sector has become democratized over the last few years, so in order to stay on top, you need to go up and up and up," said a spokeswoman for Louis Vuitton, adding the essence of luxury today is "to be even more luxurious," with products attaining more sophisticated and "couture-like" heights each season.A case in point is the house's Tribute Patchwork bag for spring, which is a patchwork of iconic Vuitton bags. It also comes with a price tag of $42,000, as the most expensive bag in the current collection. Vuitton also has a made-to-order business. "If a customer asks for a trunk lined with gold and we can do it, we will," the spokeswoman said.
At Dior, made-to-measure bags were introduced for VIP couture clients in Paris, in tandem with the launch of the house's iconic Lady Dior bag in 1996, and the service has been developed as an option in all Dior's stores over the last six years. The brand's most expensive bag to date, the Rebel shopper in crocodile, costs around $25,000 retail, while exotic skin bags, such as the classic Gaucho in crocodile, cost $20,000 to $25,000.
"Customizing a bag with a set choice of colors, hardware or skins means it still falls within the house's codes that Galliano closely monitors," said a spokeswoman for the brand.
Of course, for the consumer, customization — from a made-to-order Birkin to initials on a Goyard — is a way to guarantee she has a bag none of her friends possesses. As the "It" bag phenomenon fades, such services are another way luxury brands can keep their devotees eager for more.
In the end, as one ceo said of the handbag hunger, "'s a disease, and [women] all have it"
— With contributions from Katya Foreman, Paris, and Alessandra Ilari, Milan
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