Hermes bags. Why are they so expensive
The first luxury item for young people is often a bag. After all, you can’t wear a $20,000 dress every day, but you can carry a $20,000 handbag every day if you want. Handbags are the most popular luxury category, outselling clothing and footwear. While Louis Vuitton, Gucci and Prada are becoming more accessible and fashionable, Hermes, especially the Hermes Birkin bag, is still the legend of the Shanghai ladies’ circle in TV dramas.
Hermes started in 1837 as a luxury leather harness, and later transformed into wallets and handbags. Leather goods are to Hermes what Tieling is to northeast China. In 2020, leather goods accounted for almost half of Hermes’ revenue, more than double that of ready-to-wear and jewelry. Other big names are similar. In 2020, Gucci generated more than half of its revenue from leather goods, and for YSL, the figure is even higher.
Handbags have become a luxury brand’s secret code of wealth, placed in the foreground. Many brands have developed product lines for different demographics; Money can be made more eclectic.
Prada’s cheapest nylon shoulder bag, only 4000 yuan. Just graduated from work, you eat dirt, can also have. Really not, still can choose Gucci, canvas satchel price 6000 yuan, intimate ground support installment. But Hermes isn’t interested in your skinny wallet.
The cheapest bag on the website is a strap, which costs more than 11,000 yuan. The second is the handbag of more than 30,000 yuan. For flagship items like the Birkin bag, the price is in another dimension. In 2017, a white crocodile birkin bag sold for more than 2.4 million yuan at auction. High prices, direct retreat of the young, can be called consumerism magic tender moment.
Why is a birkin so expensive? There are many explanations on the market.
The birkin is made of top – and even rare leather and is made with the utmost luxury. This record-breaking Birkin bag, for example, features 18 carats of platinum and diamonds. It has also been claimed that every birkin maker has been trained for more than five years. Behind the birkin, there’s human luxury craftsmanship.
But it was born for the simplest of purposes: practicality.
On a flight from Paris to London in 1984, The British actress Jane Birkin happened to be sitting next to the then chairman of Hermes and complained to him that there was no practical handbag on the market for a young mother like herself to carry her groceries. The Hermes chairman sketched, and the Birkin saga began.
The fundamental reason why birkins, designed for utility, have become expensive luxuries is that they are rare. Shipments of birkins are tiny, with only about 200,000 on the market globally. If you want to buy it, you will have to wait for years. Birkin bags, which are in short supply, have become a gold mine for Hermes. Hermes, let the poor lie flat and the rich roll up. At Hermes in China, there is an unwritten rule: “distribute goods”. You need to spend half or even two birkins to qualify for the birkin queue. On social networking sites, you can also find a variety of “walkthroughs”.
The Wall Street Journal cited estimates that the Birkin and Kelly bags, two of hermes’s most popular products, contributed more than 1.7 billion euros in 2019. That’s about a quarter of its revenue that year. And the recent upsurge in the market for used birkins, a controversial but direct way to get the bag you want, has made them a popular investment. Most handbags lose value rapidly within a year of going on sale; The birkin does not. Resell them and maybe make a profit.
In 2019, handbags became the most profitable art investment of the year, according to the agency. One second-hand handbag website even tried to prove that birkins were a more stable and higher yielding investment than gold or stocks between 1980 and 2015. Others use the birkin to develop investment products: if they can’t afford the whole bag, they can choose to be part owner.
The birkin bag has become the ultimate desire, and Hermes is happy to see it. Expensive, luxurious, rare and precious, this is the image the brand wants to create.
In digital media, Hermes’s marketing stands out as much as its products. In 2020, when luxury spending has taken an unprecedented hit, Hermes’s sales will fall only 6%; In the fourth quarter, sales recovered even faster. As a result, Hermes pays “sales, marketing and administration” expenses that drive up the cost of sales. For him, it was money well spent. For someone who can afford hermes, the money… It was probably worth it.