Read on because even if it could seem a joke…it is not!
As reported by Megan Friedman on Bazaar, the luxury handbags seller Baghunter – maybe not necessarily a disinterested source – reveals that invest in a Birkin bag is less risky than do it in gold or in stock market.
Let’s find out why.
The Baghunter’s research compared the S&P 500, Gold and Birkin bags changing values over the past 35 years – obviously assuming no-buy and no-sell within the time period. The results are the following:
- Stock market: nominal average return of 11.66%, with a real return average of 8.65 %
- Gold: average annual return of 1.9%, with a real return average of -1.5%
- Birkin bags: value increased by 14.2%
Given that the above figures seem to come from official sources, the question now is: how is it possible? Are we just talking about “Brand Power”?
Interestingly enough, another article by Brooke Unger on The Economist is providing some very reasonable explanations to understand why Birkin is always getting more valuable and which is the Hermès strategy behind.
Basically, The Economist perspective about the “Birkin miracle” can be summarized as follows:
- “Hermès starve the market for Birkins” saying that these bags are mined and not simply made – watch the video below to understand the level of handicraft required.
- The perception of ultra-exclusivity transforms the Birkin in a product “for ‘patritians’ (rich people who want to signal to each other but not to the masses) and not for ‘parvenus’ (rich people who want to associate themselves with other rich people and distinguish themselves from have-nots)”
- When it comes to pricing “Hermès is not rationing by standard market practice, but by queue”. And in fact Brooke Unger reminds us the epic “Sex and the City” episode from 2001, when Samantha jumps a 5-year queue by claiming she wants the bag for actress Lucy Liu. And 5-year queue is the time needed still today.
In few words purchasing a Birkin is better than investing in stock market because it’s scarce (more or less 1 million Birkins are in circulation in the entire world) and it is perceived as an absolutely exclusive product, crafted not for rich people but for…ultra-rich people!
All the above is perfectly working, for an “iconic product” like Birkin of course.
But what about the wider luxury sector (and not the Ultra-Luxury one) in times of economic turbulence and changing consumers behaviors?
What are the most prestigious luxury brands strategies to “get the machine on the road”?
It seems that very similar rules apply to the wider luxury sector as to gold, stock market or any other sector BUT, maybe not entirely and it can be interesting to detail further.
Are you curious on how the most prestigious luxury brands are facing these times of turbulence and changing consumers behaviors?
Stay tuned and do not miss the articles to come on this topic…
In the meantime, are you interested in discovering some other ultra-luxury iconic pieces?