You are here: Home » Beyond Business » News
Business Standard

You too can play the handbag stock market

Scarcity in the bag market, as in the sneaker market, is a large component of value

Vanessa Friedman | NYT 

Earlier this year Kylie Jenner, the beauty mogul and Kardashian-Jenner family member, gave one of her patented home tours to Architectural Digest. It featured her collection of Pop Art, arcade games and her “purse closet,” a special room that includes a reported 400 bags (or more), encompassing many Hermès Birkins, Chanels and Diors.

“I have been collecting these bags for a minute,” Jenner said enthusiastically in another tour. “They’re also a great investment.”

That’s the kind of statement that can make viewers roll their eyes and cringe, except that she is not exactly wrong. Hermès handbags have spawned a singular secondary market and have sold for jaw-droppingly high prices at auction. (One of those apocryphal sayings has it that an Hermès bag is a better investment these days than gold.)

But lately it seems that Hermès is no longer alone. High-end handbags, like high-end sneakers, may be turning into an asset class of their own. Which implies it may be time to stop thinking of that purse closet — or shelf, or wicker storage bin — as part of your wardrobe and to start thinking of it as part of an investment portfolio, complete with blue-chip stocks, the opportunity to short some names, and to make more money while doing so.

That’s what Charles Gorra thinks, anyway. He is the founder of Rebag, a luxury handbag resale site, and on October 24 he introduced Clair, aka the “Comprehensive Luxury Appraisal Index for Resale”. It is an algorithmic tool that shows bag owners the resale spot prices of their bags if they were to liquidate them immediately by selling to Rebag. Over the next few months, Gorra will introduce tracking features that allow you to see the rise and fall of those prices, the better to calculate the future value of a bag — and make a buying or selling decision in the moment. “The information is: What per cent of retail am I recouping?” he said during a demonstration of the tool. “I can see a time when people will buy bags differently based on that. The true value of a luxury brand is in its stickiness: its percent of retained value.”

The pioneer of the accessory index is StockX, the resale site that was valued at over $1 billion in June after its series C fund-raising, and which treats products like commodities to be bought and traded. Though it is most famous for sneakers, StockX expanded into watches and luxury bags in 2017. And the fact that there are now at least two such exchanges reflects a shift in the way we buy handbags: a move away from the It-bag engine of aspiration and social signalling that once powered the luxury market and into more tempered, calculated purchase patterns.

Gorra started Rebag in 2014 with the idea that it could serve as a means to “instant liquidity” through bags, and has since raised $52 million and opened nine stores in the United States, with plans for an additional 20. He said he always had Clair in mind; Rebag has been building it for five years. At the moment, there are 10,000 Clair codes, and the number is growing. Bag owners, who do not have to be Rebag customers, can bookmark their bags and track their value. Clair can tell you, for example, that the Louis Vuitton Pochette Metis would sell for almost 100 per cent of its original price, for example, but the LV Papillon, a more common style, is closer to 40 per cent.

Every quarter, Rebag will publish Clair’s Picks, a list of bags it recommends that people buy or sell, the same way an analyst shares stock picks. To wit: The Fendi Mama bag has gone up 44 per cent in resale price since 2018; the logo book tote is up 26 per cent.

According to Gorra, the ultimate safe bet in the bag market is Hermès (which retains an average of over 80 per cent of value at resale), followed by Chanel, Vuitton, Gucci and YSL (all over 60 per cent on average). Goyard is also in the top quadrant. On the other hand, if you wanted to go long on a bag stock, it turns out that Bottega Veneta is hovering at around 30 per cent of its full price (Prada, Fendi and Valentino are close to 40 per cent).

If you wanted to play the market, thus, you could buy a few vintage BV bags cheaply, betting that other people would see they weren’t selling for much and stop bringing them to market, which would make them relatively rare, which would raise the price — which would mean you could sell high.

Indeed, scarcity in the bag market, as in the sneaker market, is a large component of value. (Obviously, as with sneakers, the less used the better.) This is part of the reason that Hermès, which keeps its supply below demand and often creates limited-edition pieces, is so dominant. Which is where the Kardashians come back in.

Kylie is not, after all, the only family member with a purse closet. Kim has one, too, and their mother, Kris Jenner, has a Birkin closet. Given that she and her progeny have proven to be, like it or not, the defining family business of the last decade, it should not be a surprise that when it comes to bags, they were ahead of the investment curve.


First Published: Fri, October 25 2019. 21:38 IST