Industry Overview The consumer retail market for luxury goods took a hit after the recession with a 0.6 percent annual decline in sales, however there has definitely been a revamp of the industry since then. Although there are many brands related to handbags and accessories for the female population, there are a select few that can consider themselves in the luxury market. In 2013, the market for handbags and accessories was roughly $93 billion, which was dominated by the United States and the Asia Pacific region (Appendix A). As economies have experienced growth and income levels have risen, the luxury accessories market has increased sales. The market is not only connected with the state of the economy but also the life style changes …show more content…
Most importantly is its brand name. Consumers in this market that are spending extra money for higher quality goods want the brand name to be known and trusted. Many times this turns in to a strong brand loyalty, which only benefits that firm (Appendix E). This industry is definitely attractive and friendly. The Five Forces Analysis shows that the most pressure comes from substitutes and rival sellers (Appendix C). As mentioned before, rival sellers become almost irrelevant once a customer has become loyal to a brand since many consumers buy off of habit. The supplier pressure depends mostly on what material is used for products. They have more influence on price when the quality is higher and the material is harder to …show more content…
As seen in the financial analysis, the profitability started declining from 2013 to 2014. It net profit margins have gone from 15 percent in 2010 to roughly 10 percent in 2014. When comparing to the industry trend, this becomes more of an issue.
Issue #3: Narrow geographic coverage compared to competitors. Many of the industries top brands are executing large expansion strategies to open locations internationally. Vera Bradley has only entered Japan with seven stores.
Issue #4: Minimal utilization of indirect retail partners. With only having 99 total stores open in 2014 (full price retail and outlet) and having roughly 3,100 indirect partners including department stores, there should be a heavy contribution of revenues from the indirect sales. However, only 39 percent of their revenues in 2014 came from indirect sales.
These issues combined have contributed to the decline in success as a brand. Focusing on implementing strategies to counteract these will redirect the brand to a better financial state. Options and Recommendations for Vera Bradley
There are a few routes that could be taken to redirect the brand and its growth, profitability, and sustainability. The following are the growth strategy options and ideas that should be taken into consideration when developing the new