What Makes an Investment Bag?
One of my favourite sites dedicated to bags, PurseBop, recently published the article ‘Saving to Splurge’. The author talks about how detrimental impulse purchases can be – on our wallets and otherwise.
What I took from the piece was the importance of creating a timeless, co-ordinated wardrobe. This means staying away from items that will only be fashionable for a couple of seasons, and focus on classic purchases that’ll remain part of our closest for months, or even years.
This also means that we’ll be less likely to throw out clothes before heading out to buy more – making the whole process a lot kinder on our bank account too.
This got me thinking about timeless bags, ones that stay on-trend, season after season. You could also think of them as ‘investment bags’, simply because of the excellent value for money you can reap from them.
So what is an investment bag?
An investment bag is a piece where you can maximise your value for money. This is done in two ways: your price per wear, and the resale value after you’re finished with it.
Just to clarify, I don’t mean ‘investment’ in the same way as investing in property, classic cars, stocks or shares. An investment bag simply means maximising the amount you’ve spent on it through wear, enjoyment and (potentially) resale. With the exception of a few bags, it’s unlikely that you’ll make a profit.
Let’s start with price per wear. Obviously the more you use the bag, the better your value for money. This is truer for timeless bags that remain in style year after year, because you’re more likely to wear them for longer, say, than the latest ‘bag of the moment.’
Also, investment bags will hold a higher proportion of their retail price than seasonally fashionable bags – providing you’ve looked after it, that is.
What bags are we talking about?
Chanel’s Classic Flap and the 2.55, the Hermès Birkin, Kelly and Constance and most Goyard bags, like the Saint Louis tote, all hold their value very well. To a lesser extent, while bags such as Louis Vuitton’s Speedy and Neverfull suffer some value loss, their popularity means that they do well on the resale market too.
According to Racked, Hermès bags retain an average of 72% of their retail price when resold. Yet bags crafted from precious skins and limited colour combinations can earn 1.3x their original value.
For Goyard as well, sellers can earn 1.3x the retail price. For Chanel, vendors can reap 86% of retail value – but if the bag’s crafted from an exotic skin, it can sell for above the original retail price.
So what makes an investment bag?
There are many factors at play that keep the value of the bag consistently high. Here are some reasons why these bags are considered investments.
#1 Brand Provenance
Every investment bag comes from a brand that has a long history of using highly skilled craftsmen to create bags of impeccable quality. They use the highest quality leathers and fabrics. Knowing that they don’t scrimp on quality conveys to customers a sense of superiority against other brands, which helps to justify their inflated prices.
#2 A Past
Closely related to provenance is the brand’s past. Every fashion lover knows the history of Gabrielle “Coco” Chanel, the orphan who catapulted through French high society to become a celebrated dressmaker, pioneering easy-to-wear fashion.
It’s easy to see why brands with an endearing history and a story of humble beginnings are popular among customers, and this increases the desirability of their products.
#3 Timeless Design
When a bag is released, no one can predict if it will become a classic. However all investment bags have these design features in common: simplicity, functionality and style. These elements ensure that it remains practical, stylish and relevant for years to come.
On the other hand, bags like the Chloé Paddington or Chanel’s Mademoiselle range have a very low resale value, and this is because these styles have not aged well.
The timeless bag however, becomes synonymous with the brand. When I think of Hermès, I immediately picture the Birkin; when I think of Chanel, the first thing I think of is the Classic Flap. The bags become the figureheads of the brand, and when you see one in the street, you’re immediately led to the think of the design house it came from. This is a clever piece of marketing, as it means that the bags essentially become brand ambassadors.
#4 Constant Renewal
All investment bags have been around for many years. Hermès, Dior and Chanel keep their bags in constant supply, year after year (albeit sometimes elusively), and this is due to their consistent popularity among consumers.
However, price increases are typical of luxury design houses, and you can expect these investment bags to get more expensive each year at a rate well above inflation.
#5 Celebrity Endorsement and Publicity
Whether we like to admit it or not, celebrities have an incredible influence on our fashion and lifestyle choices. Celebrities held in high regard by the general public, and who are spotted wearing a Classic Flap or Kelly, will improve brand recognition and exposure.
Similarly, celebrities as namesakes – Jane Birkin and Princess Grace Kelly – serve to reinforce the brand’s history and the story of how the affiliation came to be.
#6 The Illusion of elusiveness
Constant price increases don’t put consumers off. If anything, it helps demand. This is because a higher price increases the bag’s perceived exclusiveness and superiority.
This is called – and I promise this is a real economics term – the ‘Snob Effect’. It means that the higher the price, the higher we perceive the quality and rarity of the item.
This links to Hermès, who create the illusion of scarcity with their Birkin and Kelly bags. You’ll rarely see them on display in store and waiting lists for them no longer exist. Unless you have a well-established relationship with your nearest store, acquiring a Birkin in your desired leather and colour is a very tall order.
Similarly, Louis Vuitton never have sales and destroy all unsold bags, again to keep their prices high and to create the illusion of scarcity.
These techniques are part and parcel of the level of exclusivity that the brands want to create: the more exclusive, the higher we perceive the quality to be, and the more we justify their increasing prices. This only helps the value of timeless bags because it keeps them in high esteem.
What are your thoughts on investment bags? A waste of time, or a wise choice?
Featured image credit: elle_and_i