The $7 billion handbag market is the fastest-growing segment of the fashion industry. And there's a potential goldmine for a firm with a luxury bag that becomes a big hit.

Norwalk-based Dooney & Bourke has been working on its brand image in an attempt to capture a bigger piece of this lucrative pie.

The firm has been known for more than 30 years as a leather goods maker that offers well-made bags combining superior materials and craftsmanship. Until recently, it was best-known for classic and traditional design.

Dooney & Bourke is one of the most successful handbag brands in the U.S., second only to Coach.

Since 2003, the company has taken on a challenge - it's making an effort to capture a piece of the teen and young adult market. Competition is fierce, particularly as consumer spending slows, even in the luxury brand sector.

Said a highly placed industry source who requested anonymity, "Retail numbers came out on Jan. 10, and they were really horrible. Creating a winning handbag is a marketing exercise for a company. The competition is very steep in this area. Women have gravitated to expensive status handbags.

"Like anything though, it's cyclical, like this whole designer jean brand phenomenon, which has seen its peak a few years ago. Everyone's trying to slice and dice a different way. The reason why fashion companies love handbags is because you don't have to worry about sizes and seasonal styles. If a style gets some traction, they can keep rolling

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it out."

These days, however, having a good product is not enough. Buzz and glamour are needed to get to the next level with your brand.

"I was impressed by their spring 2008 line," said Richard Spiegel, editorial director at thefashiontribune.com. "They are following their competition like never before, and they are right on trend. Current styles are metallic. They have gold and silver lines, a patent leather line, which is a huge (trend) and should perform well."

The company has a good understanding of its customer and offers more reasonable prices, he said.

Peter Dooney and Delta Bourke founded their handbag business in 1975. From the start, the company prided itself on producing what it calls "affordable luxury," meaning its products are priced within the reach of a modest budget.

In 1981, the duo opened The Company Store in Norwalk. They became known for their collection of well-made, functional women's handbags with the easily identifiable whimsical brass duck nameplate.

Their all-weather pebbled leather satchels and totes were their most popular designs, making them a staple for working women throughout the 1980s.

Coach comparison

Like Coach, Dooney & Bourke is known for its mass availability and signature style. It also is closely related to Coach in its pricing structure. Most D&B; bags range from $100 to $600, with most from $200 to $400.

According to research from New York-based Coach, it's the U.S. leader with 31 percent market share in the "B+" handbag/leather goods league. Although Dooney & Bourke runs second to Coach in profits, it's rumored that it's not by much, and it appears to be closing in on the accessories giant.

Coach expects its total revenue from worldwide sales to increase 21 percent this year through June 28.

That D&B; is profiting almost as much as Coach, which has been in the business nearly 30 years longer, is making observers wonder where D&B; will stand in the next decade.

In Dooney & Bourke's case, a stronger, brand image could result in catching and surpassing Coach. There would be some trade-off for trading up, though.

There are advantages to the consumer in buying a "B+" rather than A handbag. Similar to Coach, Dooney & Bourke bags are available, with no waiting lists to contend with as at Louis Vuitton and Hermes, big players in the A leagues.

D&B; bags are available at department stores such as Lord & Taylor, Macy's, Nordstrom's and Saks 5th Avenue. The higher-priced D&B; designs are available in its free-standing stores.

The reward for graduating to the "A" leagues is huge and worth taking on a branding shift. In an article on Feb. 15, 2007, on www.fashionunited.co.uk, LVMH Moet Hennessy Louis Vuitton reported a 30 percent surge in 2006 profits to $1.88 billion. Revenue jumped 10 percent to $15.31 billion.

"The excellent performance in 2006 illustrates the vitality of our major brands, which continue to strengthen and gain market share," Chairman Bernard Arnault said in a statement. "The year also confirmed the strong potential of our high growth rising star brands and the group's leading position in emerging markets."

Young Hollywood

D&B;'s success has been most recently driven by its celebrity endeavors, beginning with a successful bid for inclusion in the elite group of products selected for the "goodie bags" given to the presenters and performers at the 75th annual Academy Awards in 2003.

Peter Dooney created a hand-stitched mini tassel bag, which got the company noticed in Hollywood, and added some sparkle to the previously "classic" brand.

In 2003, Dooney built on his success at the Oscars, and took the next step - to launch the "It" Collection of purses that range from $65 to $225 and are aimed at teens.

The must-have phenomenon can be traced to 1997, when Fendi created the Baguette bag and found itself with a runaway success and huge waiting lists across the globe. Fendi had a hit on its hands especially after Sarah Jessica Parker carried the bag on television's "Sex and the City" and spurred sales. Successes such as these have followed at Louis Vuitton, Christian Dior and Chloe.

Dooney set about putting together a collection of handbags with the young female demographic in mind. He collaborated with Teen Vogue to create an "It" Team. Teen Vogue chose four "It" girls and teamed them with four senior accessory students from the Fashion Institute of Technology.

The teams were sent to Milan, Italy, to attend accessory trade shows, visit leather factories and have design meetings.

Their mission: To create a hot "It" bag collection that would make magic at retail. Dooney's project is an ambitious one, most accessory houses content themselves with one must-have bag per season, if they're lucky.

Guest designers

Dooney then enlisted a collection of "It Girls," including actresses Mischa Barton, Lindsay Lohan, Emma Roberts and, most recently, Hayden Panettiere, to co-design bags that would be featured that season. Each starlet also starred in the season's ad campaign to promote her bag.

With these efforts, the company hopes to raise brand level awareness.

D&B;'s current "It Girl," Panettiere stars in NBC's hit show, "Heroes," and her bag is called "the Hayden." For spring 2008, Panettiere created her dream handbag with Dooney & Bourke.

After several revisions and with input from Panettiere, the limited edition Hayden Bag was finalized and is available for $500 at freestanding Dooney & Bourke boutiques, as well as department stores such as Lord & Taylor and on www.dooney.com.

Advertisements showing Panettiere and her bag are featured in the winter and spring issues of fashion glossies, from Teen Vogue to Vogue.

"The strategy of teaming with young starlets has helped to bring new customers to the Dooney line," said Lavelle Olexa, senior vice president of advertising, sales promotion and public relations for Lord & Taylor. "Miley Cyrus (aka 'Hannah Montana') would be a great candidate for a future Dooney partnership because she encompasses classic style with a young freshness that is reflective of the Dooney line for spring."

The Hayden bag was presold, meaning there was a waiting list for it from the beginning. Its pricetag is a fraction of that of a limited edition Louis Vuitton Patchwork bag, which retails for $42,000, according to www.styledash.com.

"Dooney's kind of like a sleeping giant that has woken up," said Paula Correri, accessories editor at Tobe. "They've built a strong core business; their business is much broader than just the teen market. The entire collection has evolved, and they've moved forward and pushed the fashion quotient, in a good way. The quality speaks for itself; the design is now catching up with the quality.

"D&B;'s just below Coach, they're both core brands for a lot of the major department stores," Correri said. "For the last three or four years, Dooney's partnered each season with that in-tween celebrity, going after the younger demographic. Thus far they've chosen the right person, but it's tricky. Lindsay Lohan (former Dooney It Girl) just had the Jill Stuart handbag ad, but it blew up when she went into rehab."

But Marilyn Kirschner, editor-in-chief at thelookonline.com and former longtime fashion market editor at Harper's Bazaar, questioned the company's decision to use young starlets.

"I don't know who they're trying to get (as a consumer), it's not like getting Angelina Jolie or Gwyneth Paltrow, and it's kind of getting the third-tier starlet," she said.

Industry perception

In the luxury sector, perception is huge.

Dooney & Bourke differentiates itself from other leather goods companies by offering high quality leathers and a well-respected brand recognition, Olexa said.

"This has developed brand loyalty," she said. "Dooney's target ranges from 12-to-20 year olds with their novelty prints to 25 to 55-plus with their classic signature and leather bodies."

These middle- to upper-middle-class women understand and follow fashion, Spiegel said, and are willing to pay $400 to $600 for a well-constructed, stylish bag.

"They capitalize on the 'luxe' market, but D&B;'s not intimidating," Kirschner said. "It's for the Greenwich, Darien and Upper East (Side) crowd that are not overly adventurous and want the security of something that is acceptable but not too fashion forward."

The company has a store at tony Westchester Mall in White Plains, N.Y. For lower Fairfield County, the shopping trip will soon be shortened with a Dooney & Bourke store set to open later this year at 250 Greenwich Ave. in Greenwich.

"While the glamorous element eludes them at the department stores, the numbers they're making seem good, and the company is helping itself by putting more dollars into celebrity guest to help create more fashion forward designs and a more fashion forward image," Correri said.

- Vivian G. Kelly is the owner of the fashion blog, www.lyramag.com, and is an online instructor for San Francisco's Academy of Art Fashion Department.