This Week's Obsession: Women's Designer Bags as Investments
Many people might justify purchasing women's designer bags as an investment, but is it a good investment?
According to Forbes Magazine, Women's designer bags are now a better investment than art. In a landscape of stocks, bonds, property and more, women's designer bags may not seem like the most obvious way to diversify your investments, but they’re certainly worth taking a look at. According to Art Market Research (AMR), they now outperform art, classic cars and rare whiskies in terms of investment potential. Some women's designer bags, from the likes of Hermès, Chanel and Louis Vuitton, have even experienced a valuation spike of an average of 83% in the last ten years.
Whether it's a good investment depends upon the bag, its rarity/scarcity, the condition and the investment time horizon. For those who want to invest in bags purely to reap financial gain, then there are some guidelines you should follow
Guidelines for Investing in Women's Designer Bags
1. CHOOSE A BAG THAT IS DIFFICULT TO BUY
The harder a bag is to buy—While people invest for different reasons, those with collateral to burn often buy women's designer bags for a fairly fast return of investment. The harder a bag is to buy—whether that’s because it is part of a limited release or simply more expensive than its patented peers—the more coveted it becomes.
The most coveted? The crocodile skin Himalayan Birkin by Hermès, of course, which has long been considered the most collectible handbag in the world. The record-breaker, a white gold and diamond hardwared Birkin, actually fetched 2.8 million Hong Kong Dollars (roughly $372,600) back in 2016.
2. CHOOSE BRAND NAMES THAT ARE POPULAR IN THE SECONDARY MARKET
According to Business of Fashion, Among the three most popular women's designer bags— Hermès as well as Louis Vuitton and Chanel — prices have increased as much as 55 percent. In the case of Chanel, a pristine condition classic medium double flap bag can sell for above current retail value, according to the resale site. Even with signs of wear, the style commands on average 74 percent of its current retail price. If you purchased the bag 10 years ago, you could close to double your money depending on the condition.
The resale price of Dior increased 40 percent last year compared with 2019, according to Bernstein analysis of data from luxury bag resale platform Rebag.
At luxury resale site HEWI, average selling prices for Prada and Fendi bags this year are up 48 percent and 78 percent respectively compared with 2019 levels.
3. MAINTAIN THE BAG IN NEW OR PRISTINE CONDITION
A women's designer bag that has never been worn, has the box, all the documents, and with the protected hardware and wrappings is referred to as BNIB or brand new in box. These women's designer bags will fetch the most money.
Pre-loved handbags sometimes sell for up to 40% over the retail price based on how rare they are and how good the condition is.
Depending on the materials of these bags, they have a lot of potential to last almost a lifetime, which is why so many people purchase women's designer bags. Chanel, for example, uses leather for their classic flap bags which is very durable and can withstand a lot without much damage to its hardware. With the right preservation and care, these bags can last for years and can be passed down to your children or friends like an heirloom. You can even purchase leather cleaning supplies and go to bag specialists to repair your luxury handbags and help preserve their condition.
Break, touted as The UK's No. 1 Money and Mindset Space For Women looks at the pros and cons of investing in women's designer bags. According to the author, no matter what kind of investment you make, an investment is fundamentally just the process of buying anything that will increase in value over time and will give you a return. What this means is that you spend money to generate more money, the goal is to earn more than your initial investment to make profit and not just break even. Some people are turning to buying shares in bags as an investment, this way you can limit the amount of capital at risk.
Pros of Investing in Women's Designer Bags
1. POTENTIAL FOR PROFIT THROUGH RESALE
When buying a women's designer bag, depending on the rarity, the designer and market value, there is potential to resell the bag for much more than you bought it for. The resale market only favours particular designers, like Hermès, Chanel and Louis Vuitton. Handbags there sometimes sell for 40% over the retail price based on how rare they are and how good the condition is. Auctions are also great places to resell, research shows that over 3,500 designer handbags were sold at auction in 2019 alone, raking in a huge £26.4 million ($32.9 million)
2. PURCHASING A PIECE OF HISTORY
Depending on the rarity of the handbag, you can become one of the few owners of rare pieces of fashion history. If you’re someone that adores fashion and fashion history, purchasing women's designer bags that are vintage or one-off exclusives means you become one of the few owners in the world. Hermes for example, only made a handful of Himalayan Birkins which very few people own, one of which is even exhibited at Sothebys.
3. LONGEVITY
Depending on the materials of these bags, they have a lot of potential to last almost a lifetime, which is why so many people purchase luxury handbags. Chanel, for example, uses leather for their classic flap bags which is very durable and can withstand a lot without much damage to its hardware. With the right preservation and care, these bags can last for years and can be passed down to your children or friends like an heirloom. You can even purchase leather cleaning supplies and go to bag specialists to repair your luxury handbags and help preserve their condition.
Cons of Investing in Women's Designer Bags
1. DEPENDING ON THE BAG, YOU'RE NOT ALWAYS GUARANTEED A RETURN
The key to any good investment is managing your expectations. When it comes to getting a return on a luxury purchase, finding a buyer can be very challenging as the luxury resale market is not only niche but also has its obstacles. You have to prove authenticity and go through extensive checks to ensure your bag meets the resale standards, even after then, finding a buyer can take years.
Luxury handbags as investments are unique in and of the fact that they differ from the usual business investment. With business investments, you can develop strategies and techniques to increase your sales like marketing or product development. With luxury handbags however, the chances of your profit are external, meaning there isn't much you can do to increase your chances of profit. Depending on what bag you’ve invested in, its condition, the marketing of that bag, the brand's reputation, the market value and rarity all contribute to how likely you are to resell for a profit.
Fashion trends change all the time, which is why the resale market is tumultuous. One day your bag could be on everyone’s wishlist and the next day it’s replaced by a different women's designer bag.This goes without saying, luxury handbags and any luxury investment for that matter, requires you to have collateral. This means you need to have enough money to withstand a loss and be able to sustain yourself after that purchase.
2. OBTAINING THE BAGS ARE DIFFICULT
If you have your eyes set on a rare or exclusive handbag, you have to be prepared to wait a while before you can purchase it. Depending on the exclusivity of the item, there is usually a waiting list for the bag, these waiting lists can span up to 4-10 years. To increase your chances of getting ahead of the waiting list, you need some kind of celebrity status or some nepotistic clout to get ahead. Hermès Birkins are notorious for having waiting lists as long as 10 years, even celebrities find it difficult to get ahead of these lists too.
3. PRESERVATION AND MAINTENANCE
If you’re one of the lucky few that gets to purchase a rare luxury handbag, then the hard work has only just begun. If you’re looking to resell the bag in the future, you have to ensure the bag is very well preserved, any hardware damage or weakening of the structure can drastically affect its resale value by thousands. This is why places like Sothebys and handbag collectors store their bags in safes and vaults to prevent any damage and theft. This does mean however, that you won’t be able to use the bag for its intended purpose, you won't be able to use it every day or even use it as a bag, instead it’ll become like a piece of visual art to be observed and not used.
Can’t Afford a Birkin Bag or a Racehorse? You Can Invest in One
According to the New York Times, The market for investing in fractions of items otherwise seen as collectibles — and largely reserved for the wealthiest people — has seen an uptick in interest during the pandemic as people spend more time at home.A app called Rally Rd. began by selling shares in exotic cars several years ago but has expanded to art, books, wine and whiskey, memorabilia and Birkin bags.
Below: A Grey Himalayan Hermès Birkin, which Rally Rd.(see below) is selling shares in, current value at offering, $140,000.
The upside it the bag is never used, so it will fetch the highest price on the secondary market. The downside is you never get to actually touch, hold or use the bag. You also don't have any control of when the asset is sold.
"As with other alternative investments, buyers are restricted from the selling of these fractions until after the lockup period ends. But when the asset itself — the bag or the horse — is sold is determined by the platform, not the individual investors."
Here's an idea, invest in a share you can wear!
That's what our collaboration with Front Row is all about. We want to bring the joy of ownership of these fabulous women's designer handbags to those who want to wear and enjoy them but in the financially savvy way of co-ownership. We insure, maintain and clean the bag to make sure it's in pristine condition throughout its life, therefore preserving its value. You have less capital at risk but you can still enjoy the upside of selling your share on our platform.
We offer shares in the top three sellers: Hermès, Louis Vuitton and Chanel. As well as other popular women's designer bags, such as Prada, Fendi, Dior and Bottega Veneta. You share this bag with a small community of 4 other like-minded women who will all take care of the bag as you do. All co-owners are vetted by our team and can be removed from the platform for abusing any co-own items. To learn more visit our How it Works page.
