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How handbag aficionados are ‘bagging’ a return


Jessica Tang

By

March 6th, 2019


What if the splurge on a designer handbag offers more than just a fashion statement? With designer handbags often multiplying in resale value, Jessica Tang explores the phenomenon that is handbag investment.


For those of us who can’t fathom the idea of spending more than $100 on a handbag, the mere thought of investing our hard-earned cash in handbags can be summed up in one word – bizarre. But for the modern handbag collector, it’s simply the latest fad. Lifestyle YouTubers are dedicating a truckload of videos to guiding their viewers through handbag investment tips while luxury fanatics anxiously await new releases to plan their investment ventures. Even celebrities are jumping on the bandwagon – in a YouTube video, self-made billionaire Kylie Jenner gives the camera a cheeky wink as she tells the audience that her Hermès Birkin collection is a great investment.[1]

Let’s talk prices

Before you scoff at the absurdity of a handbag investment as a viable alternative to the purchase of a house, here’s a quick guide to their true value.

Perhaps the product that best represents the world of handbag investment is the Birkin, the flagship handbag from French fashion house Hermès. Their retail prices range from US$12,000 to a whopping US$300,000.[2] But it doesn’t end there. It is notoriously difficult to get your hands on one even if you have the funds. Waitlists for the handbag can take up to 6 years and the purchase itself (as with most Hermès bags) is contingent on establishing a solid purchase history with the company. In other words, you are required to fork out tens of thousands of dollars on other Hermès products before you are eligible for a Birkin.[3] The pure exclusivity and difficult-to-obtain factor of the Hermès brand is the very reason its bags have a resale value far beyond their retail price. In 2017, a white Himalayan Birkin adorned with crocodile skin and diamonds auctioned in Hong Kong for nearly US$400,000.[4]

It appears the Birkin really is every bit as great an investment as Kylie Jenner claims. In even more shocking news, the return on investing in a Birkin was found to be higher than that of the S&P 500 measured by annual average return over 35 years.[5] That’s right – a piece of leather you sling over your shoulder is more lucrative than your average portfolio of stocks. And while we often find high average returns to be consistent with high volatility, the Birkin is an exception. It has only ever experienced positive fluctuations so it’s an attractive option for the risk averse too.[6] But the Birkin is not the only option for investors – the Chanel Classic Flap and the Louis Vuitton Neverfull are also popular choices for those looking to make bank on the investment trend.

A different kind of investment?

It’s not hard to see why handbag investment is becoming more appealing to those with extra cash to spend. Unlike houses, trading handbags doesn’t require a real estate agent and two moving vans. This is not to mention the emotional trauma of having to update your address everywhere. And unlike stocks, handbags are tangible. For the socially conscious, this means that they are easily flaunted as a symbol of social status. There is simply no equivalent for stocks – at least not until the act of whipping out your phone at the dinner table to show off your portfolio becomes socially acceptable.

But if we put the surface factors aside, it becomes increasingly clear that the handbag investment phenomenon is really no different to any other kind of investment – it is built entirely on expectations. Take stock investment, for example. With a plethora of stocks on the market and limited supply of funds, a stockholder’s portfolio is dependent on which companies the individual believes will be boast the highest future performance. The equivalent situation with handbags is that a handbag aficionado will speculate how the brand or product will be deemed ‘trendy’ in 5 or 10 years. And handbag investment is no less as much of a gamble than any other investment (in fact, most handbags’ values are notoriously and overwhelmingly volatile as demonstrated by studies – sans the Birkin as aforementioned).[7] A miscalculated prediction on the future trendiness of a handbag can have major financial repercussions. What will happen to the value of a highly coveted Birkin when the Kardashian clan gets bored of it? And more importantly, what fun is it sacrificing a home loan to invest in a handbag that won’t provide you with that snazzy return?

Before we know it, TEDx Talks will be replaced with handbag investment tips and ‘Handbag Investment Analyst’ will become a viable career path. While this doesn’t mean that aborting your dreams of saving up for a home loan deposit is the way to go, it does demonstrate the very extent to which the asset market is dynamic: from gold, to cryptocurrency, to handbags. What’s next?



[1] Jenner, K. (2018, August 14). Kylie Jenner: My Purse Closet Tour [Video file]. Retrieved from https://www.youtube.com/watch?v=7OH7Wxirxls

[2] Kane, C. (2015, June 23). Why a $223,000 Hermes Birkin Bag Might Actually Be a Good Investment. Fortune. Retrieved from http://fortune.com/2015/06/23/hermes-birkin-investment/

[3] Cooper, A. (2014, February 2). The Journey To Owning An Hermes Birkin Bag. The Richest. Retrieved from https://www.therichest.com/luxury/shoes-hand-bags/the-journey-to-own-an-hermes-birkin-bag/

[4] McCafferty, G. (2016, May 31). The most expensive handbag ever sold: Diamond-encrusted Hermes Birkin sells for over $300K. CNN. Retrieved from http://edition.cnn.com/style/article/diamond-encrusted-hermes-birkin-christies-auction-record/index.html

[5] Marsh, S. (2017, March 30). Why this Hermes handbag is a better investment than gold. Nine Finance. Retrieved from https://finance.nine.com.au/2017/03/30/15/22/why-this-hermes-bag-is-a-better-investment-than-gold

[6] Marsh, S. (2017, March 30). Why this Hermes handbag is a better investment than gold. Nine Finance. Retrieved from https://finance.nine.com.au/2017/03/30/15/22/why-this-hermes-bag-is-a-better-investment-than-gold

[7] Kohler, C. (2018, July 20). High-end handbag or property purchase: Here’s how the two investment strategies stack up. Domain. Retrieved from https://www.domain.com.au/money-markets/highend-handbag-or-property-purchase-heres-how-the-two-investment-strategies-stack-up-20180720-h12ku7-753152/

Image: Wen-Cheng Liu

The views expressed within this article are those of the author and do not represent the views of the ESSA Committee or the Society's sponsors. Use of any content from this article should clearly attribute the work to the author and not to ESSA or its sponsors.

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