Luxury as an Investment?

Like so many luxury items, the Birkin has recently been reborn everywhere from magazine editorials to the fashion blogosphere as the emblem of “good value for money.” But how good an “investment” in the literal sense is the Birkin?

Let’s say that you are in possession of one of these mythical creatures—a relatively modest one: a blue, 30-centimeter one made from togo leather with silver hardware—that you purchased for about $7,000 in 2007.

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You decide to sell it via an elite designer resale boutique—such as New York City’s Fisch for the Hip, which currently has 15 secondhand Birkins for sale—which then decides to retail it for $8,300. (The uptick in price is because would-be buyers are circumventing the notorious Hermès Birkin bag waiting list, the fashionista’s version of cutting the lunch line.) It sells after five months on the high shelf, and the store takes a 25 percent cut, leaving you with around $6,000—a 15 percent loss.

That’s not so bad, you might say—but remember that the Birkin is the gold standard of luxury goods; other more easily obtained luxury “investment” items being touted today would take a much greater hit. For example, Celine’s Boogie bag, which retails for around $700, hovers on the secondhand market for about $300. Try selling that $995 Burberry Ivybridge trench at Fisch for the Hip. It might go for $500, and with a 50 percent commission for apparel, your “investment” has dwindled down a staggering 75 percent in value.

Not even jewelry can be considered a reliable investment. As Danziger points out, “Even if you melt down the gold and sell the emerald, you’re still not getting back what you paid for it, because there was the initial design element that you paid for.”

And yet, at a time when the word investment conjures up images of a flattened cake—or the gates of Mordor—maybe the luxury marketers have a point. After all, for people who’ve been beaten within an inch of their lives by stocks, a five-figure bag that loses a mere 20 percent of its value might look like the golden ticket.

© 2012 Slate.com

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