MarketLine Industry Profile

Luggage and Leather

Goods in the United
Kingdom
February 2013

Reference Code: 0183-0537

Publication Date: February 2013

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United Kingdom - Luggage and Leather Goods 0183 - 0537 - 2012

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EXECUTIVE SUMMARY
Market value
The United Kingdom luggage and leather goods market shrank by 0.8% in 2012 to reach a value of $1.8 billion.

Market value forecast

In 2017, the United Kingdom luggage and leather goods market is forecast to have a value of $2 billion, an increase of
11.1% since 2012.

Category segmentation
Luggage is the largest segment of the luggage and leather goods market in the United Kingdom, accounting for 61.7% of
the market's total value.

Geography segmentation
The United Kingdom accounts for 10.6% of the European luggage and leather goods market value.

Market rivalry
In this fragmented market, rivalry is eased for larger retailers, such as department stores which tend to sell a multitude of
products and, as such, are not solely reliant on revenues generated through the luggage & leather goods market.

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MARKET OVERVIEW
Market definition
The luggage and leather goods market values the total sales of bags, wallets & purses, and luggage. Bags, wallets &
purses include briefcases, handbags, wallets and purses. Luggage includes suitcases and travel bags.

The market is valued at retail selling price (RSP) and includes any applicable taxes. Any currency con versions used in
the report have been calculated using constant 2011 annual average exchange rates.

For the purposes of this report, Europe consists of Western Europe and Eastern Europe.

Western Europe comprises Belgium, Denmark, France, Germany, Greece, Italy, the Netherlands, Norway, Spain,
Sweden, Switzerland, Turkey, and the United Kingdom.

Eastern Europe comprises the Czech Republic, Hungary, Poland, Romania, Russia, and Ukraine.

Market analysis
The UK luggage and leather goods market has experienced poor growth in recent years. The market declined further in
2011 and 2012 by -1.5% and -0.8% respectively. However, the market is expected to grow at a slow rate du ring forecast
period.

The UK luggage and leather goods market is forecast to generate total revenues of $1,798.2 billion in 2012, representing
a compound annual rate of change (CARC) of -0.7% between 2008 and 2012. In comparison, the French and German
markets will grow with compound annual growth rate (CAGRs) of 2.4% and 7.7% respectively, over the same period, to
reach respective values of $2,223.4 billion and $3,916.1 billion in 2012.

The Luggage segment is expected to be the market's most lucrative in 20 12, with total revenues of $1,109 billion,
equivalent to 61.7% of the market's overall value. The Bags, wallets and purses segment will contribute revenues of
$689.3 billion in 2012, equating to 38.3% of the market's aggregate value.

The performance of the market is forecast to accelerate, with an anticipated CAGR of 2% for the five -year period 2012 -
2017, which is expected to drive the market to a value of $1,985.3 billion by the end of 2017. Comparatively, the French
and German markets will grow with CAGRs of 4.9% and 7.6% respectively, o ver the same period, to reach respective
values of $2,822 billion and $5,655.2 billion in 2017.

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MARKET DATA
Market value
The United Kingdom luggage and leather goods market shrank by 0.8% in 2012 to reach a value of $1.8 billion.

The compound annual rate of change of the market in the period 2008 –12 was -0.7%.

Table 1: United Kingdom luggage and leather goods market value: $ billion, 2008–12

Year $ billion £ billion € billion % Growth

2008 1.9 1.2 1.3
2009 1.9 1.2 1.3 0.9%
2010 1.8 1.1 1.3 (1.4%)
2011 1.8 1.1 1.3 (1.5%)
2012 1.8 1.1 1.3 (0.8%)

CAGR: 2008–12 (0.7%)

SOURCE: MARKETLINE M AR KE TL IN E

Figure 1: United Kingdom luggage and leather goods market value: $ billion, 2008–12

SOURCE: MARKETLINE M AR KE TL IN E

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MARKET SEGMENTATION
Category segmentation
Luggage is the largest segment of the luggage and leather goods market in the United Kingdom, accounting for 61.7% of
the market's total value.

The Bags, wallets and purses segment accounts for the remaining 38.3% of the market.

Table 2: United Kingdom luggage and leather goods market category segmentation: $ billion, 2012

Category 2012 %
Luggage 1.1 61.7%
Bags, wallets and purses 0.7 38.3%

Total 1.8 100%

SOURCE: MARKETLINE M AR KE TL IN E

Figure 2: United Kingdom luggage and leather goods market category segmentation: % share, by
value, 2012

SOURCE: MARKETLINE M AR KE TL IN E

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Market distribution
Department stores form the leading distribution channel in the United Kingdom luggage and leather goods market,
accounting for a 37.5% share of the total market's value.

Clothing, sportswear & accessories retailers accounts for a further 17.1% of the market.

Table 4: United Kingdom luggage and leather goods market distribution: % share, by value, 2012

Channel % Share
Department stores 37.5%
Clothing, sportswear & accessories retailers 17.1%
Discount, variety & general merchandise retailers 17.1%
Hypermarket, supermarket & discounters 9.2%
Other 19.1%

Total 100%

SOURCE: MARKETLINE M AR KE TL IN E

Figure 4: United Kingdom luggage and leather goods market distribution: % share, by value, 2012

SOURCE: MARKETLINE M AR KE TL IN E

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MARKET OUTLOOK
Market value forecast
In 2017, the United Kingdom luggage and leather goods market is forecast to have a value of $2 billion, an increase of
11.1% since 2012.

The compound annual growth rate of the market in the period 2012–17 is predicted to be 2%.

Table 5: United Kingdom luggage and leather goods market value forecast: $ billion, 2012 –17

Year $ billion £ billion € billion % Growth

2012 1.8 1.1 1.3 (0.8%)
2013 1.8 1.1 1.3 1.2%
2014 1.9 1.2 1.4 3.4%
2015 1.9 1.2 1.4 2.0%
2016 2.0 1.2 1.4 2.1%
2017 2.0 1.2 1.4 1.3%

CAGR: 2012–17 2.0%

SOURCE: MARKETLINE M AR KE TL IN E

Figure 5: United Kingdom luggage and leather goods market value forecast: $ billion, 2012–17

SOURCE: MARKETLINE M AR KE TL IN E

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New entrants
Figure 9: Factors influencing the likelihood of new entrants in the luggage and leather goods
market in the United Kingdom, 2012

SOURCE: MARKETLINE M AR KE TL IN E

One way in which a new entrant may enter the market on a small scale is by setting up a single, independent retail store
specializing in one or more segments of the market, such as handbags. The switching cos ts here are not significant and
buyers are prone to switch to new retailers if they cater to consumers’ needs and tastes. The effect of brand loyalty on
how much investment is put into marketing campaigns depends on which segment a player is entering and t hus who
their competitors are. For example, luggage retailers may invest more in order to compete with department stores which
have strong, recognizable names and reputations. Furthermore, large market players such as department stores benefit
from scale economies and may exert stronger bargaining power with suppliers. Retaliation by existing players, such as
the launch of a price war, is a possibility, especially when a new entrant moves into a more concentrated segment. The
emerging brand strength of the major ‘discount’ chains is considerable, and may negate some of the effect of low
switching costs for buyers between discount retailers. In a number of countries most notably in Western Europe, the
current Eurozone crisis, is resulting in slower growth of discretionary disposable income, further reducing the likelihood
of new entrants. Overall, there is a moderate likelihood of new entrants to this market.

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Threat of substitutes
Figure 10: Factors influencing the threat of substitute s in the luggage and leather goods market in
the United Kingdom, 2012

SOURCE: MARKETLINE M AR KE TL IN E

Substitutes to buying from third-party retailers, such as department stores, can include buying directly from
manufacturers through their websites or own retail shops. Another significant threat comes from counterfeit products,
particularly handbags, which also attract buyers. Indeed, the EU has recognized this and has vowed to stop the influx of
counterfeit goods from Asia by gifting anybody found bringing them into the EU with hefty fines. Second -hand products,
which are more likely stocked by second hand stores or sold by consumers themselves, pose another threat. Their lower
cost, coupled with low switching costs for buyers, puts the overal l threat of substitutes as moderate.

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Degree of rivalry
Figure 11: Drivers of degree of rivalry in the luggage and leather goods market in the United
Kingdom, 2012

SOURCE: MARKETLINE M AR KE TL IN E

The UK luggage and leather goods market is highly fragmented: retailers range from department stores to more
specialized clothing and accessories retailers. Larger players, such as department stores, benefit from scale economies
that allow them to negotiate better deals with suppliers and compete more heavily on price. Furthermore, larger retailers
tend to sell a multitude of products and, as such, are not solely reliant on revenues generated through the luggage &
leather goods market, whereas less diverse retailers face greater competition to obtain and retain buyers. The low-cost
switching for buyers and the relative ease of expansion further intensify rivalry. In addition, the market faces competition
from other markets, such as clothing, for consumers’ discretionary spending. Exit barriers are low as retail space can
often be offered to other businesses and inventory could be sold to other market players. Storage costs are higher in the
UK given that luggage, which takes up more space, accounts for 61.8% of the market. Rivalry is increased to a certain
extent b y poor market growth in recent years. Overall, the degree of rivalry is assessed as moderate in this market.

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APPENDIX
Methodology
MarketLine Industry Profiles draw on extensive primary and secondary research, all aggregated, analyzed, cross -
checked and presented in a consistent and accessible style.

Review of in-house databases – Created using 250,000+ industry interviews and consumer surveys and supported by
analysis from industry experts using highly complex modeling & forecasting tools, MarketLine’s in -house databases
provide the foundation for all related industry profiles

Preparatory research – We also maintain extensive in-house databases of news, analyst commentary, company
profiles and macroeconomic & demographic information, which enable our researchers to build an accurate market
overview

Definitions – Market definitions are standardized to allow comparison from country to country. The parameters of each
definition are carefully reviewed at the start of the research process to ensure they match the requirements of both the
market and our clients

Extensive secondary research activities ensure we are always fully up-to-date with the latest industry events and
trends

MarketLine aggregates and analyzes a number of secondary information sources, including:

- National/Governmental statistics

- International data (official international sources)

- National and International trade associations

- Broker and analyst reports

- Company Annual Reports

- Business information libraries and databases

Modeling & forecasting tools – MarketLine has developed powerful tools that allow quantitative and qualitative data to
be combined with related macroeconomic and demographic drivers to create market models and forecasts, which can
then be refined according to specific competitive, regulatory and demand -related factors

Continuous quality control ensures that our processes and profiles remain focused, accurate and up-to-date

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Industry associations
British Travelgoods and Accessories Association (BTAA)
Federation House, 10 Vyse St, Hockley, Birmingham, B18 6LT, UK
Tel.: 44 121 237 1107
Fax: 44 121 236 3921
www.btaa.org.uk
European Leather Association (CELA)
3 Rue Belliard, Bruxelles, B-1040 Belgium
Tel.: 32 2 512 77 03
Fax: 32 2 512 91 57
www.cotance.com

Related MarketLine research

Industry Profile
Global Luggage & Leather Goods

Luggage & Leather Goods in France

Luggage & Leather Goods in Europe

Luggage & Leather Goods in Germany

Luggage & Leather Goods in the United States

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