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Can Luxury Bags Be Smart Investments?

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When Meg Randell started her career as an auctioneer a decade ago, many of the clients she met were used to selling traditional assets like antique paintings or antique porcelain, and never thought the bags in their closets could be of value.

However, today the auction house regularly sells Chanel and Louis Vuitton bags for thousands of pounds at auction. Rare editions can bring in even more: In July, Bonhams sold a well-used Hermès Birkin 35 that once owned Jane Birkin herself for £119,000 ($143,334), nearly eight times Bonhams’ original estimate of £15,000.

“I’d see couples coming in, and the guy would say, ‘Well, she thinks her handbag is worth something,'” said Randell, who is now head of handbags and fashion at Bonhams Auctions in London.

“What’s interesting is that I don’t almost have these conversations anymore,” Randell said. Almost everyone knows that these bags have value. While it may not be the intrinsic value of jewelry… they are finally appreciated because they have a kind of long life for really beautiful things.”

In years past, luxury bags from brands other than Hermès were not seen as something that could increase in value over time, or even an asset class at all. This generally remains the case: With the exception of Perkins and Kelly stores, which have fueled their short supply of prices in the secondary market for so long, most bags continue to fall after purchase. However, as primary market prices rise and the distribution of luxury brands tightens, bags gain higher prices on resale, with some styles of sought-after brands retaining a significant portion of their retail value both at auction and on online resale sites.

At luxury shipping site The RealReal, average prices for designer bags are up 26 percent year-to-date compared to 2019, roughly reflecting broader increases in the primary market. (In the United States, the average price of a designer bag has increased 27 percent since 2019, according to research from BoF Insights.) However, among the three most popular brands — Hermès as well as Louis Vuitton and Chanel — prices are up just as much 55 percent. . In the case of Chanel, the original Classic Double Flap Bag can sell for more than its current retail value, according to the resale website. Even with signs of wear, the pattern commands an average of 74 percent of the current retail price.

price rush

Much of this shift is related to a broader price escalation in the primary market. For example, Chanel’s classic medium flap bag, which sold for $4,400 in 2012, costs nearly $9,000 in stores today.

“This kind of appreciation is mostly faster than inflation, and faster than some other assets,” said Cynthia Holton, global head of fashion and accessories at Sotheby’s.

The most exclusive brands have helped push designer bags into a category for auction houses, with the likes of Sotheby’s and Christie selling such bags for big bucks. The increase in popularity prompted the research arm of real estate firm Knight Frank to introduce portfolios as a tracked investment category in its annual Luxury Investment Index in 2020, joining watches and vintage wine, among other categories.

Hermès bags have always commanded the highest prices in the secondary market, but other huge brands are increasingly catching up.

“Although you may buy a Hermès bag and sell it after a few years and make a profit, there are other brands like Chanel and Louis Vuitton, where you may not turn a profit, but you’ve actually owned the bag for years and you still realize 80 percent of the time,” said Randell of Bonhams. Of the original value in the secondary market, which is kind of unbelievable – especially for people who probably bought the bag 10 years ago without thinking that one day they could sell it for a real amount of money.”

Resale websites have seen similar changes. Before the Covid-19 pandemic, the online resale market was growing rapidly, thanks to the emergence of specialized luxury resale sites like RealReal, Hardly Ever Worn It (HEWI), and Rebag, while shopping for second-hand luxury goods. He began to get rid of the stigma of underestimating the quality or specificity of the purchase.

During the pandemic, demand for the most exclusive brands increased in the resale market as many shoppers redirected their discretionary spending from restaurants and vacations toward items such as designer bags, prioritizing top luxury brands and classic styles that they felt would remain culturally relevant over a period of time. long time.

With access and availability in the primary market disrupted by supply chain restrictions, shipping delays, travel bans and store closures, the influx of new customers has turned to the resale market to repair their handbags. For brands that already…

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