A long time ago, I ranted a bit about why terming the purchase of a bag as an “investment” was probably a bit silly, not to mention inaccurate, and the kind of marketing terminology that encourages consumers to overspend on goods that depreciate even more rapidly than cars. It still is – at best, buying fashion is an investment in your own enjoyment, and the dividends it pays won’t be of the monetary variety. Hermes, it turns out, bucks that trend on two levels.
Last week, Hermes released its 2012 profit information and informed us all that it had been another banner year for the French powerhouse. Revenues were up 18.5%, making it Hermes’ most lucrative year ever, with jewelry the most quickly expanding sector, up 45%, according to Vogue UK. Bags, though, enjoyed an impressive 22% jump in growth, on top of a year of business that was already sprinting to keep up with seemingly endless demand for everything from canvas Garden Party totes to alligator Birkins. When compared to relatively flat leather goods growth across competitors like Louis Vuitton, the number is even more remarkable.
That means two things. First, if you can get your money around some Hermes stock, you probably won’t be sorry you did. (It might be a little more difficult than merely placing a call to your broker, though – Louis Vuitton has its guy on speed dial when it comes to Hermes.) Second, it means that the actual bags are more valuable than ever because demand still outpaces supply, despite some modest supply-side expansion from Hermes; if you have a specific bag in mind and aren’t an established VIP, you’ll likely have to wait. When you combine that with annual price increases that continue to raise the value of existing Hermes bags, you end up with a situation where well-kept used bags, especially Birkins, regularly sell for more from a third party than they do from an Hermes boutique. If you’re the kind of person who has $10,000 to spend on a brand new bag but are told you’ll need to wait, perhaps months, then maybe you’re also the kind of person who has an extra couple thousand dollars to skip the line and buy a new-looking bag from a third party.
The online sale marketplace seems to bear out that theory. Luxury sites like Moda Operandi and Rue La La routinely host sales where auction houses offer an assortment of pre-owned Hermes bags, the most desirable of which are marked above retail. Invariably, the bags fly off the virtual shelf, most within hours of launch. If you have the money and have been considering the purchase of a Birkin, it boils down to there being almost literally no risk involved – if you later decide it doesn’t suit you and you have the savvy to resell, you’ll likely recoup your costs. My advice, though, would be to buy some stock instead. You can flip it to Louis Vuitton later when they invariably call you.
[Image via Moda Operandi]