It is no secret that a handbag can make or break an outfit. After all, different occasions, whether a cosy dinner date for two or a night at the opera, require bags of different sizes and silhouettes. Plus, if you are a true handbag connoisseur, classics such as a Birkin or Kelly from Hermès, the Chanel Flap bags, Lady Dior or the Louis Vuitton Speedy or Neverfull would have been on your wishlist at one point.
But while handbags have long been a staple in a woman’s wardrobe, they now seem to be making their way into another essential: her investment portfolio.
According to a report from Bain & Co, the global secondhand luxury goods market rose to EUR45 billion ($64.02 billion) in 2023, although sales growth eased to 4%–6%. “[This is] in line with the 4% gain posted by luxury goods — a confirmation of the normalisation of ‘preloved’ items already observed last year,” the report adds.
A Business Research Insights report also said that the global secondhand luxury goods market stood at US$26.17 billion in 2023 and is expected to reach US$69.59 billion ($34.44 billion) by 2032, representing a CAGR of 11.48%.
A report by KPMG noted that luxury brands have chosen to invest in or acquire secondhand platforms. “For example, Kering financed Vestiaire Collective, a leading global platform for desirable secondhand luxury products, allowing Kering to have control over and approve the items being sold,” the report notes.
Secondhand marketplace Carousell also acquired the business of LuxLexicon, Singapore’s leading luxury bag reseller, in April after the company saw more luxury bag listings, which grew by 71% monthly over the past two years.
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While preloved goods tend to sell at lower prices compared to retail, the luxury bag market is a different ballgame. “The resale value of luxury bags has generally increased over the past few years, particularly for timeless and sought-after pieces,” says Mavis Toh, retail and marketing director of Singapore-listed Maxi-Cash 5UF . The pawnbroker, a part of the Aspial group, also sells gold, jewellery and preloved branded goods.
To Toh, this is due to luxury brands increasing their prices “significantly” year after year, which has “naturally influenced” the resale value of their goods. To keep their brand perception intact, luxury players, especially those at the top of the luxury pyramid, rarely issue discounts, if any.
“Excessive discounting and outlet presence can be damaging to brand perception,” notes Morningstar equity research analyst Jelena Sokolova, pointing out that good inventory management is increasingly key for luxury players. Should there be a glut in supply, destroying unsold goods is “increasingly frowned upon or even banned from a sustainability point of view”.
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With this, Toh sees luxury bags as popular investment items, especially for iconic models such as the Chanel Classic Flap and Hermès Birkin. “As more people view these bags as assets with the potential for appreciation, resale prices for such coveted models have increased.”
Certain bags, such as Hermès’ “holy trinity”, the Birkin, Kelly and Constance, have consistently held their value. Toh says these bags are difficult to purchase directly from Hermès boutiques, which makes them highly sought after in the resale market. “Since demand far outstrips supply, these collections continue to hold their value or even increase in value on the resale market,” she adds.
Hermès bags, particularly these three models, are notoriously difficult to purchase firsthand. One does not simply walk into a Hermès boutique to buy them. One Hermès customer says there is no waitlist now, but there is a 2:1 spend for Birkin, Kelly and Constance bags and even higher for rarer models. This means customers must spend $40,000 at the boutique to buy a $20,000 bag. “It also depends on your relationship with your sales assistant and whether they like you or not,” says the buyer, who prefers to remain anonymous.
According to several news sources, a Birkin bag, which debuted in 1984, cost around US$2,000 in the 1980s. Danish vintage bag store Collector’s Cage says a new Hermès Birkin bag can cost around US$8,500, based on its March 6 article. Another secondhand luxury bag store, Baghunter, adds that a Birkin cost about US$2,750 in 1990 and US$4,000 in 2000. In 2014, the same bag cost around US$11,000 to US$12,000. Based on a Sotheby’s article dated Aug 20, a leather Birkin bag purchased from the boutique starts at US$9,000. The article adds that the same bag can sell for over US$30,000 depending on the size, colour, material and condition it is in. The Hermès Singapore website only lists the different sizes of the Birkin but not its price.
At Maxi-Cash, the store’s professional valuers look out for three factors that may influence the resale value of a luxury bag: condition, availability and material.
According to Toh, bags in excellent or mint condition and come in their original packaging with documents command higher prices. Limited edition bags fetch higher prices as well. For instance, bag collaborations with a celebrity or artist or limited-edition releases tend to increase in value over time due to scarcity. Finally, bags made from exotic leathers or rarer materials often appreciate in value compared to those made from standard leathers, she adds.
Even during economic downturns, Toh sees a potential increase in demand for preowned luxury bags as consumers cut back on luxury spending, preferring to purchase high-end items at more affordable prices.
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“Economic challenges may also lead to more consumers selling luxury bags to raise cash. When supply in the resale market increases, the resale value of luxury bags may experience a dip in prices, especially for less iconic or trend-driven pieces,” she says. “As for fashion trends, the rising popularity of vintage fashion has boosted the resale value of popular older models. The vintage Chanel Flap bags, Louis Vuitton trunks, or Hermès Kelly bags from previous decades do see increases in value as these items become rarer and more desirable.”
In Singapore, Toh sees the pricing for secondhand luxury bags to be “fairly stable” and rarely impacted by seasonal changes. However, pieces that are likely to appreciate or hold their value over time are models that are iconic and deemed timeless. Buyers will also need to take better care of their bags, while neutral colours have broader appeal and better resale value compared to seasonal shades.
With luxury stocks recently under pressure due to concerns about a prolonged downturn, investing in these brands’ bags may prove to be the wiser choice. However, if you have some extra cash, consider indulging in both. Although stocks can enhance your wealth, a timeless bag can make you the focus of attention and may even win you new friends or that lucrative business deal.
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