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Inside the red-hot market for adult backpacks

The backpack is back. Sales of backpacks grew 9% in the past 12 months to $1.6 billion, according to data collected for Yahoo Finance by the consumer tracking service NPD Group. Sales of backpacks for use by adults (ages 18 and up) grew even more – 16% – and it was adult purchases that accounted for 69% of the overall market. In other words: the adult backpack is very hot right now.

The category is so popular that in 2014, backpack sales growth (up 18% that year among adult men and adult women) kept the $12 billion US bag market steady in a year when women’s handbags, the largest category, declined. In the face of the purse drop, backpacks gained popularity among women that year, and are still gaining.

This kind of market upswing creates new room for small, scrappy entrants. And indeed, smaller backpack players are carving out strong corners of an industry in which one giant, VF Corporation (VFC), enjoys more than 50% market share thanks to owning Timberland, The North Face, and Eastpak.

The dominance of VF “isn’t scary or intimidating,” says Beryl Solomon, CEO of State Bags, a Manhattan-based backpack brand launched in 2013. “It means people are ready for something new. People enjoy the sense of discovery. They want to know the new cool player in town.”

Upstart brands look for a way in

Scot and Jacqueline Tatelman, the husband-and-wife cofounders of State, say they took the one-for-one model popularized by TOMS and Warby Parker and applied it to backpacks: For every bag sold, State gives one to a student in under-served parts of the country. The mission to help American schoolkids dates back to 2009, when the couple opened up a nonprofit, one-week summer camp in the Poconos, Camp Power, for kids from Brooklyn’s poorest neighborhoods. State’s bags are all named for streets or neighborhoods in Brooklyn, like the Bedford, the Kent, and the Kane.

“We’re trying to be the company that took the incredible one-for-one model and brought it back to kids that could really use some help,” says Scot Tatelman. “But our mission is to do so in a way that doesn’t just provide material goods for kids. We know that just giving them stuff doesn’t get them very far. So we go into schools and put on bag-drop events, led by our ‘pack men,’ who have grown up in really tough situations and have successfully risen from them. And we give these kids a mind-blowing experience… It ends with them getting a bag, but it’s also packaged with positive role models and messaging and getting them thinking about beating the odds that are often stacked against them.”

It’s a warm sentiment, and for-profit companies with a social conscience are on the rise. But even within the pool of smaller backpack brands, State has its own giant to face: Herschel Supply, founded in Canada in 2009 by brothers Jamie and Lyndon Cormack. Herschel has offices in L.A. and China, and more than 100 full-time employees. State has eight.

Herschel bags are sold everywhere from Urban Outfitters to Nordstrom. In a story last year, Bloomberg described the brand’s image as “manufactured nostalgia.” But it has worked; the Herschel logo, designed to look vintage, is instantly familiar, and the company has scaled extremely fast, though there is ample chatter within the industry about quality issues. (Herschel did not reply to interview requests.)

Another established competitor for a new backpack brand like State is Fjallraven, the 55-year-old Scandinavian outdoor company whose small, colorful rucksack, the Kanken, is ubiquitous in Europe and, of course, in certain parts of Brooklyn. Fjallraven (pronounced “fee-yall-raven”) is headquartered in Stockholm but opened a US base in Boulder, Colo., three years ago.

Fjallraven’s Kanken bag.

As Fjallraven brand VP Joe Prebich says, the company’s bags are “relatively new in the North American market, but honestly, we’ve carved out a fantastic little corner.” The Kanken bag, which is the biggest seller among its packs, “is evocative of our outdoor brand, but also has that uniquely Scandinavian touch, that simplified functionality that both looks cool and really works as an outdoor pack,” Prebich says. Fjallraven wouldn’t share sales numbers, but says it sees about equal sales for its three categories: hiking pants; parkas; and packs.

The Kanken retails for $75. Most of State’s backpacks, and Herschel’s, sell for between $60 and $85.

Backpacks that carry a message

If State’s brand image is about charity and helping children, Fjallraven’s is focused on the outdoors and sustainability. The company has a new bag launching next month, the Re-Kanken, made entirely from recycled plastic water bottles. Each bag contains 11 bottles. And don’t toss Fjallraven in with Herschel, or with a certain category of young fashionable urbanites, Prebich says: “I think it’s right to think of Herschel, but I think they talk to a little bit different consumer. I think we speak to a somewhat older, more mature consumer—someone who knows themselves and knows what they like. The backpack market can feel a little bit young at times, and we make packs that are functional and adult. We also sometimes get looped into the term ‘hipster’ but we really don’t talk about hipsters as a thing or a customer, we just talk about our brand as a sustainable, outdoor brand.”

State Bags can’t compete on its social mission alone. And it can’t compete using a “Made in America” spin, because its bags are (for now) manufactured in China. (Jacqueline Tatelman says the price point would have to be much higher if the bags were made in the States, which would bring its own criticism.) Instead, it has a secret weapon it has gradually honed: celebrity partnerships and endorsements. In its short existence, State has managed to get its pack in the hands (or on the backs) of Jessica Alba (through a partnership with her Honest Company), Beyonce and her BeyGOOD foundation, Roc Nation (Jay Z’s sports agency), Twitter employees, and SoulCycle riders. This summer, it joined President Obama’s mentorship initiative My Brother’s Keeper. As part of the partnership with MBK, State will donate 30,000 backpacks to children in the MKB program nationwide.

Kevin Durant checks out a State bag with the Tatelmans at the White House.

Still, in the social media era, when celebrities hawk hip products on Instagram every day, a famous face giving their thumbs-up to a brand isn’t the instant boost it used to be. “When we partner with a Jessica Alba, or with Beyonce, I guess in traditional terms you would think there’d be this pop, like suddenly overnight everyone knows who you are,” says Jacqueline Tatelman. “It doesn’t necessarily work that way anymore, it takes more to grab people’s attention.” When Alba posted about State, Tatelman says, the company saw some buzz, but it was fleeting, like an Instagram photo with Kevin Durant at the White House. At the end of the day, “It’s our charitable mission that most distinguishes us from the Herschels and Fjallravens of the world,” says State CEO Solomon.

The rise of all these pack brands raises the question: Why now? What’s causing young professionals to ditch the briefcase for the backpack?

Backpacks have shown up on the runways of major fashion houses like Prada and Fendi for years, as Jacqueline Tatelman, who has held business roles at Henri Bendel and Saks Fifth Avenue, points out. What has changed, perhaps, is the attitude and tone of corporate America. “I think there’s been a shift in work-life balance, and the backpack is the epitome of what you can use for work and for play,” says Fjallraven’s Prebich. “The backpack has become ingrained in work culture because it’s also part of the play culture. So few people are wearing a suit and tie to work now, and I think the backpack is part of that. The briefcase has a bit of a stigma to it, it’s a little bit square.”

In a similar sign, JPMorgan recently opened a pop-up Vineyard Vines shop for employees at its headquarters. And many a column has declared the death of the necktie in the last few years.

There’s also the sea change brought on by smartphones. We reach for them constantly. We hold them as we walk down the street. We want them to be easily accessible. Because of that, people want both hands to be free.

Besides, you need to be able to reach out in front of you and take a Snapchat or Instagram photo of your cool backpack.

Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology. Follow him on Twitter at @readDanwrite.

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