Much like real estate, stocks, and gold, handbags are an asset class that will fluctuate in value over time. Like other markets, there is a risk in investment, but if you’re willing to take it, the outcome can be beneficial. If you wish to invest, you must be willing to do your research before purchase, and it doesn’t just end there – care and maintenance of your handbag is crucial.
Determining A Bag’s Return On Investment
A handbag typically falls into one of three categories. These categories are one of the aspects that will determine the bag’s return on investment.
Standard – The first cycle is the typical pattern most handbag styles follow. After a handbag’s launch, there is a period of three to six months where the initial popularity is heightened to the point where the bag can be hard to find. During this period, brands generally increase their supply to catch up to the demand, making it less exclusive. At six to twelve months, new collections are released, and the handbag will begin to lose popularity, making its way onto the resale market and making it less necessary to buy at the retail level. At the eighteen-month mark, the popularity of a handbag begins to decline steadily until it retains less than ten percent or less of its original retail value.
Classic or Staple – The second cycle is that of a classic or a staple piece, often called heirloom, a safe investment category. These bags tend to err on caution regarding their structure and aesthetic. Often, they are simplistic and practical in design and appeal to a wide range of ages, meaning they are versatile and can be passed down. When these bags are released, it is not always apparent they will become a staple. Only this bag’s ability to remain popular over the ensuing years will prove it is a staple. It is not abnormal for a staple to follow the typical cycle until the eighteen-month mark. However, rather than steadily declining, the demand plateaus but may fluctuate slightly over time, generally increasing on the resale market to account for retail price increases. Rarely do these items fall out of style, and they retain a majority of their original retail value (ORV) (typically 50-70%) on the resale market.
Limited or Rare – The third cycle is the most interesting, as the result can go two ways and is an aggressive but unpredictable investment category. Handbags that follow this type of cycle either have a build-up to their release before their debut or are unveiled and immediately gain traction with public figures, making them popular amongst the masses. Bags that are presently popular sell out online and in-store, making them impossible to find, allowing resellers to immediately list these items for well above their retail price even long after their release, often surpassing a 100% markup. These items are often limited edition pieces or sought-after collaborations, so there is little chance that a retailer will restock them. Sometimes, a bag will continue to be produced but in such limited quantities that it can be sold over retail on the resale market. However, this is where the cycle can diverge into two paths. The first is that these bags will remain on the resale market above their retail and, due to their “collectibility,” will most likely not fall below retail unless there are issues with the bag's condition. The second path, which one wants to avoid but is not certain, is the chance that even after the initial hype and following popularity, it will lose value over time and fall below retail but retain most of its value overall. In this cycle, with the divergence of each path, handbags in this category keep approximately 80-150% of their retail.
It comes down to whether you’re willing to take a risk for a short-term payout or if you are ready to wait for your classic staple piece to appreciate. To make an educated decision, you will need to do your research. We recommend starting here if you aren’t sure what you’re looking for.
Below is our Clair Report on the value of watches and jewelry.
