Chanel to Birkin: Luxury bags are outperforming equity and gold – What makes luxury indulgence a ‘style investment’? – Lifestyle News

Luxury handbags have been a long-standing status symbol among the rich. However, they are not just viewed as a style statement these days, but also as an investment, sharing the closet space with your jewellery. As per a CNBC report, the Hermes Birkin grew 14.2% annually in value between 1980 and 2015, surpassing the S&P 500 index, which gave an average return of 10%.

Contrary to the rapid fluctuations in the stock market, the valuation of luxury bags only seems to be rising. Labels like Hermes, Chanel, and Louis Vuitton, known for their pristine craftsmanship with rare materials, retail for much less than they are resold. The CNBC report also mentioned that bags, which normally have a price tag of $9,000 (Rs 7.8 lakh), can resell up to $30,000 (Rs 26.27 lakh), showing a 200% increase in value over time. But what makes them the next blue-chip investment?

What drives the price tag?

A bag which takes between 18 to 40 hours to complete is made by a skilled artisan who has mastered every detail from leather cutting to stitching. The limited annual production and exclusivity are controlled by Hermes with restricted shipments per month.

There is no public waiting list, but surely an informal priority list determined by the customer’s relationship and spending controls. Those who wish to own a Birkin can customise leather types and finishing, making it an aspirational fashion item to have. However, one cannot segregate the status symbol attached to the possession of such items. From Bollywood stars to industry moguls, brands have a large attached worth to their customers, thus fueling the need for exclusivity beyond buying power alone.

Fostering creative collaborations, Louis Vuitton has created an exclusive customer base that values French craftsmanship. Relying heavily on limited edition frenzy and one of the highest resale values has held LV among the holy grail of luxury handbags.

Similarly, rare Chanel designs consistently appreciate. With waiting lists and VIP allocation policies, Chanel, too, is loved for its most sought-after collections. Unlike stocks, a dividend is not applicable. However, the condition, model, collection, and even colour matter to determine the resale price of the luxury bag. Driven by brand prestige and an aspirational agenda, haute couture brands refrain from discussing the price upfront; instead, they segment based on exclusivity.

Is it justified to call purchases ‘investments’?

On the flip side of this argument, experts oppose the aspirational value attached to ownership of labels and grooming. Jasmine Tucker, the National Women’s Law Center’s vice president of research, was quoted by HT, who noted that the cost of grooming can be higher for women, who may be doing on lower pay. Pointing towards the poor financial decision, Carolyn McClanahan affirmed her claims and told CNBC that it was wrong to position purchases as investments.

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