Melania Trump and Nita Ambani’s beloved Hermès Birkins hold their value ‘better than gold’ during Covid-19 – here’s why
The number of Birkins that appear on the resale market during a recession usually goes up, as trading a high-value item for cash flow is common during a market downturn. But what is surprising about the Birkin bag is how its price remains strong, even in times of oversupply – the basic economic principle of supply and demand doesn’t seem to apply when it comes to the price of this bag.
According to the financial publication Nikkei one of the oldest second-hand luxury shops in Hong Kong, Milan Station, reported a 30 per cent increase in transactions involving Hermès Birkins over the past two months.
As Covid-19 has shown, owning a Birkin bag is not just a token of status, but it has also become an investment that holds its value during the economic downturn. So how has the Birkin managed to not just stay afloat, but act as currency during this world-shaking crisis?
Exclusivity: the discreet allure of Birkin bags
In the past, Birkins were more comparable to a Rolex watch. Despite being no less of a status symbol, the average unit price of a Rolex isn’t as high as that of a Birkin. However, it usually isn’t as difficult to purchase a Rolex because there’s no comparable waiting list. Therefore, the bargaining room for a Rolex watch-owner is limited.
The target audiences for Birkin bags and Rolex watches are also quite different. Traditionally speaking, the male group purchasing Rolexes is often described as the “successful elite”. By contrast, fans of Birkin bags are stereotypically dominated by older females whose decision-making powers aren’t as affected by price changes.
Over the past few years, however, affluent millennials and successful, professional females have gradually taken up a larger share of Birkin purchases. And, at the same time, more male luxury buyers see Birkin bags as good investments and have also entered the market. Because of this, the gender labels placed upon different consumer groups have been rethought in recent years.
Birkin bags as hard currency
Birkin bags are the backbone of Hermès’ overall sales, bringing in over 50 per cent of the brand’s revenue. The online marketplace Baghunter reported that the average value of a resale Birkin has increased by 14 per cent over the past 35 years, suggesting that Birkin bag investments could offer more stability than gold. Baghunter also noted that they’re now even considered the asset that experiences the least amount of volatility.
According to a 2020 report from WWD, an online platform named Rally Road has started securitising and splitting high-value assets into shares, IPO-style. Categories include luxury collectibles, wines and whiskeys, rare cars and vintage Rolex watches. In an appeal to women, Rally teamed up with the Florida-based handbag reseller Privé Porter to source 20 rare and valuable new Hermès Birkin handbags, which they will offer as investments among the 150 assets overall on the platform.
This initiative is similar to how the stock market works, allowing Rally Road members to purchase shares in an appreciating item, so they can profit from that appreciation. In this way, people who can’t afford the luxury item outright can still profit from its value growth. It’s further indication that there’s a growing perception of the Birkin as a financial tool similar to stocks or securities.
China is leading Asia’s appreciation for Birkins
Year after year, the Asian market continues to be the most lucrative one for Hermès. While the world struggles to recover from the ongoing Covid-19 crisis, China’s retail traffic continues to rebound, and all 11 Birkin stores in China have reopened. In several neighbouring countries – notably Singapore, Australia and Thailand – a second wave of store closures has come due to extended government restrictions.
But the remarkable sales Hermès generated on Guangzhou’s reopening probably couldn’t have happened if it weren’t for the company’s strategic market planning. Since it entered the China market in 1996, the brand has created a luxury vision that reaffirms the ideals of craftsmanship and exclusivity. These concepts have been reinforced by opulent store fit-outs, excellent service, high prices and long waiting lists.
What Hermès has also grasped is that a smart marketing strategy is key to brand success. Every campaign message must convey the brand’s core values. But Hermès is also particularly innovative when it comes to digital marketing, and it uses multiple creative digital strategies in the social media sector.
One example of how Hermès has harnessed the marketing power of social media was through its Twilly d’Hermès launch at Shanghai’s Cha House. In 2019, the brand hosted a two-day pop-up flash sale at the historical building, which was transformed into a quaint event space for reintroducing the brand’s newest perfume. Two days before the event, Hermès created a digital campaign on WeChat for followers to make online reservations – an ideal way to redirect online traffic to offline activities.
This article originally appeared on Jing Daily.
While luxury items like Rolex watches may lose value in uncertain times, a Hermès Birkin continues to grow in price even during Covid-19 – online platforms like Rally Road and Privé Porter are even selling them as investments, not accessories