EDITOR'S LETTERMerryn Somerset Webb
The economics of handbags
wonder if you have a Hermès Birkin handbag in your cupboard somewhere. If so, you might want to dig it out. Odds are it is one of the best investments you ever made.
Prices for new Birkins start at $4,200. Last year, says Barbara McMahon in The Times, bidding for a 2012 crocodile-skin Birkin hit $106,000.
A grey-blue and green leather 2013 model went for $32,500 and a 2010 “shiny electric blue” began at $30,000 and went for $81,250. This is no longer unusual.
What, you might wonder, is going on? It’s partly because some handbags (the Birkin being an obvious example) are really nice. But it is also down to scarcity.
Hermès “cultivates rarity by releasing the handbags in limited quantities and on unpredictable schedules” (this may sound familiar to those of you who remember the Beanie Babies craze).
The result? Most women who want one end up on an 18-million-strong waiting list for a custom-made version and “secondary handbag sales” have become a “global phenomenon”.
You will think this silly. Why would anyone be stupid enough to pay $100,000 for a handbag, let alone a second-hand handbag? It’s a fair point. But the handbag market is just another symptom of the way in which all markets are priced.
This week, the Bank for International Settlements warned that valuations in “euphoric” financial markets have “become detached from reality”.
All asset classes have been rising as one (gold, oil, wheat, stocks and bonds together), and it is hard to find an indicator that tells you that buying into many of them – even a handbag made from the single skin of a large ring lizard ($37,500) – is a good idea.
• Read the full editor’s letter here: The economics of handbags