Priorities Prevail as Consumers Focus on Must-Haves

As we enter the 2023 holiday season, the theme of the year so far has been “prioritization.” This is not surprising given that consumers’ wallets have been put under pressure by rising prices on just about everything they purchase regularly, the termination of government assistance programs, rising credit card debt, and the impending student loan repayments.

Here’s what the successes and challenges at retail tell us about the consumer mindset and how that’s likely to impact the accessories categories during the holiday season and into 2024:

New Lifestyles, New Priorities: By now it has become clear that the pandemic has had a lasting impact on consumers’ lifestyles. The way many Americans work and play has changed. These behaviors are no longer at the extreme level that we saw during the peak-pandemic year, but as some pre-pandemic behaviors have returned, others have held on for at least part of the time, such as working from home. In March, almost one-quarter of U.S. consumers and almost one-third of those with household incomes above $100,000 report having a hybrid work routine, and 85% of those with a hybrid work routine say this structure has made it easier for them to travel for leisure, fueling the growing “bleisure” movement. More meals are being eaten at home (and in other people’s homes) than they were before the pandemic. These lifestyle shifts impact what people buy and how much of it. Some categories like sneakers, hands-free bags, backpacks, and luggage have benefited, while others, like fashion footwear and traditional handbags, have suffered. As an industry, we need to recognize these new lifestyle patterns and determine how we can best support them with great products and experiences.

The Experiential and Tangible Tradeoff: Speaking of experiences, in 2022 the accessories industry capitalized on the return to travel, dining out, events, and social occasions, as people revamped their wardrobes to go out again. This year, this experiential aspect is still going strong (look no further than Taylor Swift concerts and the Barbie phenomenon), but we’ve hit a crossroads. The added pressure on consumers’ wallets coupled with all of the fashion product replenishment that has already taken place, has led to tradeoffs now being made between spending on experiences versus tangible goods, and experiential spending is winning. Therefore, for the balance of this year and into next, the industry can no longer rely on experiences to naturally drive accessories sales at retail. It will take innovative product, merchandising, and messaging to entice consumers to supplement their experiential spending with fashion.

Lessons Learned: In addition to experiences, consumers under 35 years old are allocating more of their spending to beauty and select home improvement categories at the expense of fashion. This demonstrates the importance of small luxuries, the increased interest in self-care and wellness, how life stages impact priorities, and the power of social media in terms of product demos, testimonials, and creating viral trends. These are concepts that accessories brands and retailers should be leaning into to ignite demand in the industry.

A New Digital Baseline: The way consumers shop has evolved. The percentage of sales generated online for both footwear and accessories has remained relatively stable since the second half of 2020, at about eight to 10 points higher than pre-pandemic levels. This signals that while there is still opportunity for physical stores to gain back some share, a new baseline has likely been set. But it’s important to note that it’s not one way or the other — consumers are increasingly shopping both in-store and digitally, and recovery in the industry has come from both areas. When asked about their reasons for shopping online, consumers cite convenience as number one. For shopping in-store, the top reasons are the ability to try on, and touching and feeling the product. Therefore, accessories brands and retailers should continue working to marry the benefits of both sales channels, within reason, to create a seamless experience that will help both formats move forward.

After recovering from its 2020 low, the accessories industry softened in 2023, and overall growth is not expected this holiday season or in 2024. This doesn’t mean that there won’t be opportunity for individual players to excel. Market share is up for grabs for those who are most innovative and best align their products and messaging to the lifestyles and priorities of their consumers — those who turn the “nice-to-haves” into “must-haves.” 

The accessories industry, as defined here, includes the following product categories: bags, small personal accessories, luggage, jewelry, watches, sunglasses, footwear, headwear, socks, hosiery, scarves, and mufflers.