For decades, luxury handbags have been the “workhorse” of performance numbers and the ultimate calling card of luxury brands. Yet, in 2025, with consumer sentiment shifting sharply and preferences changing almost overnight, the once-booming handbag market finds itself torn between extremes.

The mythology of the “It Bag” is fading fast. Homogenized designs, accelerated trend cycles, and consumer fatigue are splitting the market in two: on one end, ultra-premium names like Hermès and Goyard, whose scarcity and resale value keep them untouchable; on the other, rising slow-fashion labels like Verafied and The Horse, appealing through emotional resonance, storytelling, and accessible quality. In contrast, the “middle ground” of luxury bags—neither exclusive enough at the top nor emotionally compelling at the bottom—is steadily collapsing.

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1. A Market of Extremes

In Q2 2025, the Lyst Index reported—for the first time in eight years—that no handbag ranked in the global top 10 hottest products. The message was clear: the “It Bag” era is over.

Sales data echo the sentiment. LVMH announced that its largest division—fashion and leather goods—fell 9% in Q2 2025, underperforming analysts’ expectations of a 7.8% decline. Kepler Cheuvreux’s head of luxury research, Charles-Louis Scotti, noted that the gap between jewelry and leather goods is widening: while jewelry continues to thrive across Richemont, LVMH, Kering, and even Hermès, handbags have struggled, with only a handful of brands such as Hermès, Miu Miu, and Loewe maintaining growth.

At the same time, consumer appetite for slow fashion bags—often crafted with sustainable materials and narrative-driven design—is gaining momentum. Vera C Wang, founder of Hawkes and Verafied, observed:

“As luxury fatigue deepens, slow-fashion handbags are rising. Consumers—especially women—are no longer seeking logos alone. They want understated confidence, personality, and meaningful values.”

This explains the growing success of Coach’s Brooklyn bag, Alaïa’s Le Teckel, and Lemaire’s Croissant bag. Even emerging Chinese names like Yousi, positioning themselves at the intersection of sustainability, art, and lifestyle, are beginning to carve out space against long-dominant Western houses.

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2. Homogenization and the Rebuilding of Consumer Faith

The polarization is no accident. Reports show Gen Z prioritizing “meaning” over “uniqueness”, while middle-class spending power weakens. The luxury handbag market—long fueled by logo-driven hype—is facing an inevitable correction.

Handbag design has suffered from oversaturation: slight tweaks to monograms, strap adjustments, and endless iterations of the same silhouettes flood the market, leaving consumers uninspired. Few designs achieve the cultural impact of archive-worthy classics like Chanel’s 2.55 or Fendi’s Baguette.

By contrast, brands investing in structural innovation and emotional connection are emerging stronger. Loewe’s Puzzle and Coach’s Brooklyn stand out because they avoid chasing fleeting trends and instead focus on craftsmanship, relevance, and long-term identity.

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3. What the Handbag Business Reveals About the Luxury Industry

Looking ahead, two strategies are emerging as survival formulas in a slowing luxury market:

1. Emotional Resonance & Timeless Craftsmanship
   Hermès remains the ultimate case study—balancing scarcity, craftsmanship, and emotional equity rather than pursuing aggressive growth. Its Birkin and Kelly bags remain stable anchors, while spin-offs like jewelry and lifestyle accessories extend brand DNA without overexposure. Similarly, Valextra maintains its niche by prioritizing leather innovation and architectural minimalism, never chasing trends for their own sake.
2. Disciplined Expansion & Market Focus
   Analysts like Luca Solca highlight Hermès’ selective retail investments—especially in China—as a key factor in its resilience. Goyard, likewise, thrives through low-profile strategies: no public financials, no mass marketing, but exceptional per-store revenues in Asia, sometimes surpassing top-tier rivals.

Meanwhile, cultural collaborations remain essential, but the type of collaborations matters. Loewe’s partnerships with Studio Ghibli (Spirited Away, My Neighbor Totoro) brought fresh relevance with younger audiences. Valextra’s “Journey of Craft” project, collaborating with artisans across China, France, and India, deepened its cultural authenticity.

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4. The Next Era of Handbags

With Bain reporting the slowest luxury growth in 15 years, the future of handbags is clear:

• The middle ground—brands relying on logo-heavy design and recycled trends—will fade.
• Success will belong to two poles:
  • Craft-driven exclusivity (Hermès, Goyard, Valextra)
  • Value-driven slow fashion (Verafied, The Horse, Yousi)

As Maria Adele Tremolada of Valextra concludes:

“In this polarized market, purity is the hardest to achieve. Yet purity—in craft, in vision, in storytelling—is the only true passport to the future.”