Second-hand luxury: handbag resale market tests pricing power

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Luxury handbags are not just for Christmas. They can be something of an investment piece, too. Some hold much of their value in the second-hand market. A few even exceed it.

That is surely a worthwhile consideration for anyone browsing for that adorable basket bag on Bond Street. For those browsing a basket of luxury stocks instead, a bag’s performance on the secondary market offers useful insight into the pricing power of the company that sells it. That is another worthwhile consideration given slowing demand in the luxury sector.  

The bags that best hold their value tend to be those that were more expensive to start with, according to data from broker Bernstein, based on Rebag’s Clair report. That makes intuitive sense. After all, the price consumers are willing to pay for a smattering of finely stitched hide has very little to do with the cost of making it. It is solely a reflection of that brand’s desirability. 

In the broad scheme of things, bag makers that can charge more today should also be able to charge more tomorrow. Unsurprisingly, Hermès — whose primary sales are typically constrained by capacity — is off to the races in this situation. It looks a good bet both for consumers wishing to preserve the value of their arm candy and for investors wanting to benefit from a slowing 2024. 

Sometimes, however, successive price rises may leave a bag looking expensive relative to its desirability. One early way of spotting bags that may be pushing against the limits of their pricing power is to see whether the second-hand market is keeping up with the primary one.

Of course, resale prices are not the only data point investors in luxury stocks should use when looking at where to shelter in 2024. But the amount of bucks that customers are willing to shell out for a bag surely provides some indication.