No matter your brand of choice or accessories budget, I think all bag lovers can agree: Prices are too freakin’ high. Even if you’re willing to grudgingly pay them in exchange for quality, it still stings a little bit every time, doesn’t it? Get ready for it to sting a little bit more in the near future – it’s costing brands more to source leather from Italian tanneries than ever, according to Women’s Wear Daily.

The rise in prices is impacting contemporary brands with sensitive price structures more than anyone, and if you took any economics courses in college, you know that there are only a few ways to deal with this kind of problem. Brands can cut amount or quality of leather used, increase prices or source materials from alternate locations (in this case, mostly South America.) WWD spoke to four brands who have used these tactics with varying degrees of success. Which option do you prefer for the companies that you patronize?

But first, let’s examine the problem a little more closely. Almost all handbag companies buy their raw materials from third-party tanneries the world over. The finest leathers generally come from Europe, specifically Italy and France, with others coming from South America and India. Like anything else, brands have to pay a premium to get materials from the best tanneries, which increases their bottom lines and, in exchange, the prices that we pay for the end product.

Year-on-year, leather prices are up about 40%, and it doesn’t take a Harvard MBA to figure out that materials prices are one of the biggest expenditures that companies make when designing new accessories. To deal with that huge increase, different companies have used different strategies. Rebecca Minkoff spokesperson Uri Minkoff told WWD that the company has tried to cut back on the amount of unnecessary leather used in its bags (think hangtags and interior trim) and also taken the nonintuitive step of lowering prices.

The theory is that lower prices mean a wider customer base in the very fickle contemporary market, which will compensate for a lower margin percentage. Minkoff says that as a result, the company has grown 60%-75% since last fall and hasn’t had to decrease its leather quality, although I don’t own any Rebecca Minkoff bags personally and would defer to the opinions of the brand’s longtime customers on that point. And that’s something to keep in mind for all of the brands who spoke to WWD for this story – I don’t think any bag designer would ever go on the record with a huge industry publication and admit to dropping the quality of his or her leather.

Dooney & Bourke and Furla, on the other hand, have taken the more direct approach – they’ve raised prices. And despite the increased MSRPs, neither brand has reported a decline in sales. Furla is even taking a further step up the price ladder very soon by collaborating with Saks on a line of bags that will retail above $1,000 – a first for the mid-priced brand. Furla tends to do solid work within its price point, so I’ll be interested to see what Furla does when given the opportunity to go very high-end.

Meanwhile, Be&D has has decided to go the “little from column A, little from column B” route: The brand has raised prices by about 7% (less than Dooney, but in line with Furla’s increases) and is newly judicious in how it uses leather. Founder and creative director Steve Dumain told WWD that the brand still makes all of its bags in the US, but instead of using the finest materials for the entire bag, the body is made out of the highest quality leather while more mundane skins are used for the bag’s bottom, handles and trim. As long as those more functional parts are still durable, I could imagine that many consumers might not even notice if they’re not as soft as the rest of the bag.

Perhaps not surprisingly, none of the brands that WWD interviewed said that they’d be looking in to sourcing leather from markets that are (rightly or wrongly) considered “lesser,” and consumers do tend to get hung up on the idea of Italian leather, even though some South American countries, like Argentina, are known for their leather goods. A case of fashion’s Euro-centrism? Perhaps.

Would you be angry if your favorite brand looked into that market rather than Italy for its leather? When it comes down to finance, would you rather that brands raised prices and kept the materials and construction exactly the same, or are you ok with a few changes to thwart higher prices? If something has to give, what should it be? Or, like me, have you become a little bit cynical and are convinced that prices will continue to rise, no matter the actual cost of raw materials?

[via Women’s Wear Daily]

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