How to Get the Most Out of Your Next Investment

April 17, 2019

How to Get the Most Out of Your Next Investment

If you’re a well-informed fashionista, then you’ve definitely heard the term “investment bag” thrown around from time to time. Even if you are aware of this concept, you may not be familiar with the difference between the two types of “investment bags”. There are well-made designer handbags out there that will see many years of wear, but they’re just an investment in terms of how often you’ll wear them. On the other hand, there are bags that come in and out of demand on the resale market, which causes a higher return in investment from the initial purchase. Only when the resale price outweighs or matches your original purchase price is it truly an “investment bag”.

Today, we are going to be discussing the second type of investment bag mentioned; the one that has the potential to make you dolla dolla bills! So how does this work you may ask? Well, used luxury goods become investment commodities with fluctuating supply and demand and corresponding prices of certain one-of-a-kind or historically rare pieces [1]. This means some brands will even increase in value as they sit well-preserved over time in their dust bags. This is due to the waiting lists for new styles owing to the time and craft needed to produce a new one [2]. Other styles just never date (looking at you Chanel and Hermès).

So what does this mean for luxury brands themselves? Do they lose money when consumers rely heavily on the resale market? Generally speaking, consignors (those reselling their beloved designer goods) are typically devoted fans of luxury brands and most will use the commission from their resales to shop the new luxury market. As a result, consignment stores spur new luxury purchases and benefit luxury producers, making it a win-win for both consignment retailers and luxury brands themselves [1].

Everyone knows you have to spend money to make money, but are you getting the most out of your luxury investments? A well-timed purchase and resale could help you bring in the big bucks [4]. Many retailers and consignors alike will emphasize that research is the key to making a smart second-hand purchase [3]. So let’s dive into the important details!

 

Top Handbags to Invest In

So what performs better in the resale market over time? Classic bags or special, limited-edition bags? Speaking to Fashion Week Daily, Charles Gorra, CEO of the online consignment store, Rebag, explained, “We’ve found that classic bags perform better over time, although there are limited edition outliers that sell for well over retail, even years after they’ve been released. We’ve seen several instances recently where a particular handbag model is reproduced by the luxury brand multiple times over, accompanied by retail price increases, and these are the type of bags that continue to perform” [3]. Specifically, he mentions that when brands re-release old classics, it often results in demand for the vintage versions as well. For example, when Christian Dior re-released the Saddle Bag, although it was different from the vintage version, the vintage Saddle saw an increase in demand along with the new edition [3].

 

Christian Dior Saddle Bag

Many sources seem to note that the Dior Saddle Bag is having a major moment on the resale market right now. Last summer, the Saddle Bag became Lyst’s ‘Hottest Women’s Product’, when searches online spiked 957% in 48 hours. This was in part due to the fact that 100 Instagram influencers announced the bag’s relaunch from Dior, spiking interest in the vintage models as well [4]. This is a prime example of how a trendy bag can also come back around in fashion, increasing the price of your vintage piece, and as a result, increasing your investment profit.

 

Fendi Baguette Bag

Along with the Saddle Bag, Lyst reports that the Fendi Baguette Bag is another handbag of the moment. According to Elle UK, the Fendi Baguette is currently enjoying something of a second wave, generating a massive spike in searches globally; 174% since the beginning of 2019. Since January 2019, sales of the Fendi staple have increased 558%, with the average selling price increasing by 15% [4].

As mentioned in last month’s blog post, the passing of Karl Lagerfeld, a prominent creative collaborator at Fendi, generated a spiked interest in Fendi pieces, the Baguette Bag being one of notable mention. It may be beneficial for any serious collector to grab one of these resales while the inventory lasts as Lagerfeld era Baguette bags will almost certainly increase in value over time!

 

Louis Vuitton Neverfull

This classic and essential wardrobe staple, the Louis Vuitton Neverfull, gets its name because is just that: never full. Even better, it’s considered a “consistent performer” on the resale market and can recoup over 80% of the retail price, according to resale site Vestiaire Collective [2]. The resale price of the Neverfull has increased by 65% between 2012 and 2017 and looks to keep growing [4]. This is a good example of a piece that is both a personal investment given it’s practically and versatility, plus a financial investment due to its ability to perform well in the resale market.

 

Chanel Quilted Classic Flap

A quilted Chanel will always stand the test of time and are often best-sellers for most online consignment stores [2]. Chanel is a brand with undeniable staying power when considering investing in a designer piece. Charles Gorra, CEO of the online consignment store, Rebag, explains, “The Chanel Classic Flap sells well due to the constant increase in retail price that Chanel imposes on a regular basis. Due to this price increase, it makes the model that much more in demand in the resale market.”[3]

 

Hermès Birkin Bag

You can’t talk investment bags without mentioning the top investment piece that steadily increases in value year after year: the Birkin [2]. In 2016, Baghunter, an online consignment store for rare, high-end handbags, conducted a study and found that a Birkin bag was a better investment than gold or stocks [5]. In that same year, Hermès scaled back its production of the heavily sough-after bag, making it even harder for consumers to own one. As a result, second-hand Birkins have become even more valuable as many collectors have to turn to the resale market to get their hands on these prized possessions! [5]

Depending on the year, model, and condition of the Birkin, many have the ability to exceed their original retail value. Keeping your hands on a vintage Hermès while you wait for the demand to grow may be the best investment choice!

 

 

The luxury resale market is worth an estimated $6 billion and has no plans of slowing down [1]. Many believe this market has a golden future ahead of it as the purchasing power of younger, more tech-savvy consumers increases, the practice of online consignment will become more mainstream [1]. The life-cycle of luxury is: make well, buy well, resale [1] and if you do your research properly, you’ll learn when to buy and sell in that cycle. Companies like Lux Second Chance are always ready to assist customers with questions and information on our inventory. This way, we can assure our customers are well-informed and considering the investment value of their pieces in addition to their style. Happy shopping!

 

Sources:

1. Mary Bermingham, “FASHION: A Designer Handbag as an Investment Piece: RealReal and the Resale of Luxury”, The Cork, December 11, 2018. https://www.thecork.ie/2018/12/11/health-beauty-a-designer-handbag-as-an-investment-piece-realreal-and-the-resale-of-luxury/

2. Olivia Lidbury, “9 Bags That Will Actually Earn You Money Over Time”, Who What Wear, January 5, 2019. https://www.whowhatwear.co.uk/best-investment-bags

3. Charles Manning, “How to Get the Most Out of Reselling Your Designer Bags”, Fashion Week Daily, March 13, 2019. https://fashionweekdaily.com/rebag-charles-gorra/

4. Daisy Murray and Bibby Sowray, “ The Handbags You Won’t Regret Investing In”, ELLE UK, March 21, 2019. https://www.elle.com/uk/fashion/what-to-wear/a30859/best-investment-bags/

5. Claire Tourielle, “Collection of 25 Hermès bags - including a crocodile Birkin estimated to fetch £22,000 - is set to be auctioned off at Sotheby's”, Daily Mail, April 2, 2019. https://www.dailymail.co.uk/femail/article-6847165/Hermes-ICONIC-designer-handbags-auctioned-Sothebys.html




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