PEAKLIFE

By Abhya Adlakha

Amidst the uncertainty of the pandemic, while the world braced for a recession, the super luxury market thrived at unprecedented levels, leading analysts to boldly declare luxury handbags as recession-proof.

Hermès saw an impressive 23 per cent growth in 2022 compared to the previous year, followed by another remarkable 16 per cent increase in 2023. The Bernard Arnault LVMH conglomerate mirrored this success, boasting a revenue of 86.2 billion euros in 2022—a staggering 13 per cent growth compared to 2021. Meanwhile, Chanel shattered record profits in 2022, with sales soaring by at least 17 per cent to exceed US$17 billion, marking a 23 per cent rise from pre-pandemic levels.

Spotting a trend in the making, Christie’s, the British auction house renowned for its art sales, boldly ventured into the realm of handbags and accessories with the launch of a dedicated department in 2014. With undeniable success, they broke record sales in 2014, and then subsequently for the next three years. In a triumphant moment in 2021, Christie’s sold a Hermès Matte White Himalaya Niloticus Crocodile Diamond Retourné Kelly 28 with 18K white gold and diamond hardware for approximately US$5,15,000, becoming the most valuable handbag ever sold at auction.

Further affirming the allure, Credit Suisse’s 2022 report named handbags one of the best collectible investments for 2023—outranking event art and jewelry in resale value. Analysts found that the average value of designer purses had increased by 92 per cent in the last decade, whereas art increased by 84 per cent and jewelry by 53 per cent.

It’s true that luxury handbags, such as the iconic Hermès Birkin, are riding the wave as savvy financial investments. Nearly 23 years have passed since “Sex and the City” immortalized the line, “It’s not a bag; It’s a Birkin!”— and its resonance feels stronger than ever today.

The allure of these handbags today lie not only in their exclusivity or their craftsmanship, but also in their potential for investment. Unlike many other goods that have depreciated over time, luxury handbags have appreciated in value. But the question begs to ask itself—are luxury bags an investment or an indulgence? Where exactly do you draw the line and what factors do you consider?

Rare is the Game

Well, it’s a nuanced matter. Experts agree that the value of a luxury handbag is derived from its brand name, craftsmanship, exclusivity, materials, and timelessness. Each luxury bag is a work of art, but some hold greater investment potential than others. Like any investment, staying informed and connected is crucial— rare items, especially in pristine condition, will go up in value. Limited editions are always a safe bet.

Consider the iconic Birkin bag, for instance.

The Birkin commands high prices because it is revered as a piece of art within the industry. Artisans undergo years of training before they’re entrusted with crafting a Birkin, and each bag requires expert hands and a minimum of 18 hours to create. Another factor contributing to the bag’s lofty price is its limited availability. The precise number of Birkin bags produced annually by Hermès remains a well-guarded secret. Boutiques are allocated a select number of Birkins each year, with the specific styles rarely disclosed in advance. Moreover, customers must have a longstanding relationship with the brand before they can buy a Birkin directly from Hermès.

These factors contribute to the Birkin’s status as the most sought-after of all Hermès bags and they remain a hot commodity in the luxury resale market.

According to luxury reseller, RealReal, the resale value of a Birkin can be as high as 80–90 per cent of its original price. This makes owning a Birkin bag a profitable investment piece over time. However, prices can vary depending on factors such as the leather type, color, size, and overall condition.

Time is Money

Timelessness of a bag or a brand is also a very important factor to consider before purchasing a bag as an investment piece. The idea is to never invest in a trending bag on a whim as trends go in and out of fashion. Investing is a long-term game, so it’s hard to predict whether a trendy bag will come to fruition in the long-term or not. What’s fashionable today might not be fashionable tomorrow. However, iconic brands such as Louis Vuitton, Chanel, and Hermès have still managed to stay strong over the years. For instance, the Chanel classic double-flap bag in caviar leather with gold hardware is one of the best investment pieces to buy from Chanel. In the last ten years, the bag has gone from approximately US$4,400 to more than US$10,000 — a 131 per cent increase.

A Colour-less Affair

Colours and durability are two other factors to consider when buying a handbag as a collectible item. Colours come in and out of fashion all the time. For instance, hot pink recently came back in fashion in 2023 with the launch of the Barbie movie, but who knows whether it’s here to stay? The idea is to stay away from trendy colours and stick to neutral, darker tones. And lastly, condition is extremely important when it comes to resale value. The bags need to be maintained extremely carefully.

Who knew that Cinderella’s glass slipper would be replaced by a Birkin bag as the ultimate symbol of a happily ever after?