How websites are feeding frenzy for second-hand luxury bags

PARIS - Would you fork out $8,000 for an old handbag? For fashionistas who simply must get their hands on a rare model from an iconic brand, the answer is an emphatic yes.

Thanks in part to the economic downturn, some of the stigma of buying second-hand accessories has eased in recent years -- although many buyers still prefer to use euphemisms like "pre-owned".

The market for used luxury bags, watches and jewellery hit 16 billion euros ($17.5 billion) last year, according to a study by the consultancy Bain and Altagamma, an Italian body representing luxury goods manufacturers.

And while 80 percent of the sales are still in bricks-and-mortar shops, online sales are rocketing, their study found.

"If you add up the sales of all the big luxury groups for the past 20 years, you're talking about two to three trillion euros of merchandise sitting in people's closets," said Loic Bocher, co-founder of Collector Square, a website that touts itself as giving "another life" to luxury items.

The website, which launched just two years ago, did that for 5,000 luxury cast-offs last year.

A quilted blue Chanel, a Gucci made from python-skin, or a brown pony-hair Fendi Baguette: Collector Square has more than 1,600 bags on its site, including over a dozen Birkins, the legendary Hermes model that is by far its most sought-after.

"The Birkin is most difficult to get hold of and often sparks overbidding, but you need to be aware that it is not at all representative of the second-hand market," said Bocher.

The most highly prized second-hand Hermes models can command prices up to 20 percent higher than their brand-new equivalents, while other pre-owned brands sell at a discount of between 30 and 90 percent, according to a study by Exane-BNP Paribas published in March in colloboration with the website InstantLuxe.

For a Birkin, "the market goes crazy: a bag can be sold within a few hours and hit 10,000 or even 14,000 euros. It's the Rolls-Royce of handbags," said Yann Le Floc'h, the founder of InstantLuxe, which saw its business double between 2013 and 2014.

Carefully cultivating desire

Designed for actress and singer Jane Birkin in 1984, the bags are hand-made in France and come in a variety of sizes, colours and leathers. The bags are instantly recognisable by their flap fastener and padlock, with the classic 35-centimetre (10-inch) model in calfskin selling new for 7,400 euros.

It is not hard to see why Birkin fans are taking to the Internet: you can have one hanging off your arm in just a couple of days.

It could take months to find a new one in a Hermes store -- the brand carefully controls supply -- especially if you are set on a particular colour or leather.

"That's the key to luxury: carefully maintain a gap between supply and demand," said Bocher. "And the brands work so hard to cultivate desire."

For Le Floc'h, one explanation for the online second-hand rush is that people's views on luxury products have changed. Today, it is "the state of mind of using a luxury product" that is important, whereas "before it was owning and handing down".

Asian customers in particular are driving the Birkin buying spree, Le Floc'h added.

"It's the Chinese who have dictated the Birkin market," he said. "Two years ago the 35-centimetre model was the norm, but today it's the 30-centimetre model because there are more Asians on the market," and they prefer smaller bags.

Clamour for one particular Birkin led to it setting a record recently for the most expensive handbag ever sold at a Christie's auction.

The fuchsia-coloured crocodile-skin number, with a white gold clasp and padlock encrusted with diamonds, was snapped up by an Asian phone bidder for US$222,912 in an auction that saw "fast-paced bidding from start to finish", Christie's said in a statement.

Luca Solca, an analyst at Exane-BNP Paribas, said much of the European demand for second-hand luxury bags is suspected to be from 'daigou' -- Chinese middlemen who buy second-hand products in excellent condition in order to sell them in China as new.

In order to ensure the authenticity of the items sold on their websites, both Collector Square and InstantLuxe call upon experts, who also evaluate the condition of the bags.

But it remains unclear what impact the thriving online second-hand market will have on luxury brands that go to great lengths to control their sales.

"We give value to these products and prove that they're timeless," says Bocher in defence of websites like Collector Square.

"And for the brands, it's better to have a structured second-hand market with checks on authenticity."

source: www.abs-cbnnews.com

Why this handbag broke auction records

A fuchsia-colored crocodile-skin Hermes bag has broken the record for the most expensive handbag sold at auction, selling for US$222,912 at a Christie's auction in Hong Kong.

The shiny pink bag was sold to an Asian phone bidder in an auction that saw "fast-paced bidding from start to finish", Christie's said in a statement late Monday.

The final price realized at the Monday auction was around 15 percent more than the auction house's estimate.

"With its 18k white gold and diamond hardware, Hermès Shiny Fuchsia Porosus Crocodile Diamond Birkin 35 dazzled the crowds, achieving a HK$1.72 million record," Christie's said in the statement.

The bag, part of the "Birkin" series named after actress and singer Jane Birkin, who was born in Britain and is based in France, features a gold and diamond-encrusted clasp and padlock and is 35 centimeters in width and 25 centimeters in height.

At the same auction that saw some 300 designer handbags going under the hammer, a shiny black crocodile "Kelly" bag was sold for US$145,000, breaking the record for the most expensive "Kelly" bag sold at auction.

The "Kelly" product line is named after the late Princess Grace of Monaco.

The auction house's Handbags and Accessories sale achieved $5.99 million in sales.

Designer handbags are the latest craze for collectors, taking global auction houses by storm and fetching record prices.

The previous record was set at the sale of another Hermes Birkin by an American auction house valued at around $203,000 in 2011.

source: www.abs-cbnnews.com

How Pinay's love for bags led to DIY business

MANILA -- A businesswoman's fondness for bags led her to establish her own bag business.

Sharon Co of Mix and Much bags explained how she started her do-it-yourself (DIY) bag company.

A self-confessed bag lover, Co said she always dreamed of owning expensive bags. She used to work in the corporate world, and for her, a woman's bag is part of her everyday outfit.

However, she was one of the employees who were affected when her company went on retrenchment.

Having a bachelor's degree in management, Co decided to establish her own business, especially since she is aware of how difficult it is to work for other people.

"Noong nagtatrabaho na po kasi ako, siyempre mahirap po talaga ‘yung nangangamuhan. So it came to a point na gusto mo rin naman mag-run ng sarili mong business. And since management grad naman po ako, so napag-aralan naman po ‘yan. May thesis naman po. So why not naman i-try," she told dzMM's "Radyo Negosyo."

It took her a while to conceive her business, especially since she had to learn more about her market.

With the help of a friend, who helps her in designing bags, Co established her DIY bag business.

"'Yung bag po kasi ay by component, hindi po siya kagaya ng traditional bag na you will buy a bag na isang buo po. With us kasi you will assemble the bag. It’s a DIY po kasi," Co explained.

Her bags are composed of four components: the bag bottom, the bag body, the handle and studs. Customers can choose from different designs and colors, and they can even mix and match different components to create different bags.

Co added that although the materials are imported, all of the bag components are locally made.

source: www.abs-cbnnews.com

LVMH and Hermes call truce in 'handbag war'

PARIS - A long and bitter battle that has gripped the luxury goods industry and pitted two of France's richest families against each other came to an unexpected end on Wednesday when LVMH and Hermes agreed to a truce.

Under the deal, LVMH - the world's No.1 luxury group, controlled by France's wealthiest man Bernard Arnault - agreed to relinquish most of its 23.2 percent stake in Hermes and not acquire any shares in its smaller rival for five years.

It effectively buried the possibility LVMH could make a full takeover bid for the 177-year-old maker of Birkin and Kelly handbags. Such a prospect had boosted Hermes's stock, which has been trading at a price-to-earnings ratios of about 30 times in recent years, a 70 percent premium to the industry average.

Shares in Hermes fell nearly 10 percent to 236.5 euros in early trading on Wednesday, wiping out 2.8 billion euros ($3.7 billion) off its market value - equivalent to around 350,000 Birkin handbags based on an average price of 8,000 euros . By market close, they were down 3.5 percent.

"The speculative premium has disappeared," said Barclays France director Franklin Pichard.

The deal, under which LVMH agreed to redistribute its stake in Hermes to its shareholders, ends four years of legal warfare between the luxury titans, dubbed the "handbag war" by the press.

In 2010 LVMH - whose brands include fashion labels Christian Dior and Louis Vuitton, Hennessy cognac and Dom Perignon champagne - revealed it had built up a 17 percent stake in Hermes. It made the investment through a series of equity derivatives instead of straightforward share purchases, which prevented it from having to declaring them.

Hermes, one of France's last major independent luxury group still controlled by the founding family, vehemently protested at having its arch-rival as its biggest external shareholder.

FAMILY FORTUNES
According to French magazine Challenge, the Hermes family is Frances's fourth richest with a fortune estimated at nearly 19 billion euros, behind LVMH's Arnaults - estimated at 27 billion euros, L'Oreal's Bettencourts and Auchan's Mulliez. They come just ahead of Chanel's Wertheimer brothers.

Arnault had long set his sights on Hermes as it is considered one of the luxury brands that best resists downturns, with its products increasingly regarded as investments and benefiting from a thriving second-hand market.

While the sales growth of rival mega-brands such as Gucci and Louis Vuitton have ground to a halt in the past year, Hermes has continued to enjoy an annual revenue rise of more than 10 percent, consistently higher than the industry average.

The deal marks the first time Arnault - whose LVMH group has gobbled up more than 60 brands in the past two decades, including sizeable ones such as Roman jeweller Bulgari - abandons the pursuit of a prized target.

But the truce nevertheless offers a profitable solution for LVMH, which began building up its stake in Hermes in 2007 and 2008. It stands to make a theoretical gain on its holding of around 3 billion euros, analysts estimated.

"This clears up the situation and it is one of the few divorces in which both the partners are winners," said Mario Ortelli, luxury goods analyst at Bernstein.

Groupe Arnault, the family holding company of LVMH, will own 8.5 percent of Hermes after the share distribution.

ELEGANT

Arnault is a proven master at exploiting family tensions when trying to buy a company. When the dispute started in 2010, industry observers thought the billionaire would seek to apply the same technique to Hermes' more than 100 family shareholders, divided between the Puech, Dumas and Guerrands.

A year later, most key family members except Nicolas Puech, who owned just under 6 percent of Hermes' shareholder capital, agreed to join a holding that controlled the company and bound them for two decades, making a takeover virtually impossible.

"LVMH has found an elegant way out of what was a deadlock," JP Morgan Cazenove said of the peace deal.

LVMH shares, flat since Jan. 1, rose about 3 percent on Wednesday. LVMH stock has underperformed the luxury goods industry in the past year over concerns about declining cognac sales in China and slower sales growth at its main profit generator Louis Vuitton.

The French stock market regulator fined LVMH last year for failing to properly disclose the stakebuilding and Hermes launched legal action against LVMH on allegations of insider trading and stock price manipulation.

LVMH fought back with proceedings against Hermes for libel.

The agreement signed on Tuesday night ended all legal proceedings between the two companies, they said in a joint statement issued on Wednesday.

For 21 LVMH shares, shareholders will receive 1 Hermes share, sources close to LVMH said. The distribution of Hermes shares will be completed no later than Dec. 20. (Additional reporting by Andy Callus, Pascale Denis, Alexandre Boksenbaum-Granier and Blaise Robinson; Editing by Pravin Char)

source: www.abs-cbnnews.com

Before you buy a luxury bag, read this

MANILA, Philippines - It may be mind-boggling for some to discover a Chanel classic flap bag may cost around P150,000, or an Hermes Birkin bag is sold for more than P500,000.

Some women justify spending that much on a luxury bag, saying it's a "good" investment. But is it really?

On ANC's On The Money, blogger Ingrid Chua Go (thebaghagdiaries.com) said when buying luxury items such as designer bags you should buy it because you love it, not because you think it is an "investment."

"Just like in any investment, there's always a risk. When it comes to luxury items, these are things you buy because you like it," she said.

The risks include how often you use the item and how well you care for it.

If you consider it as an investment, Go said you should consider supply and demand. "A lot of people like Hermes Kelly, Birkin bags. They think 10 years down the road, I might be able to sell it for at least more than half of what I paid for," she said.

Go pointed out a classic Chanel flap bag cost about P27,000 back in the 1990s.

"With the peso devaluation and the increase in the cost of production, now it's about P150,000 for one Chanel bag," she said.

Depending on the condition of the bag, Go said one might be able to re-sell a 1990s Chanel bag for about P70,000 today.

Tips for buying 'investment' bags

Go shared some tips for women who are looking to buy "investment" bags.

 1. Find out how much money you have.

"Make sure the money you have is not for school or a necessity. Luxury versus necessity are two different things," she noted.

2. Look for iconic or classic bags.
"Although Chanel has produced a lot of different styles, the iconic bags of these brand houses, they've been there for quite some time. The Hermes Kelly has been there since the 1950s and nothing has changed with the style. A lot of the brands bank on the fact that the style has transcended trends," Go said.

She advised against spending too much on "trendy" bags, which would go out of style next year.

"Make sure it's a classic... Not a graffiti backpack. Go for something that is classy and feminine. Something you will use over time. At the end of the day, you have to know that the bag will travel with you," she said.

3. Do research on the bag you are interested in.

"When buying an expensive luxury bag, I recommend going through the history, the tradition of the brand and knowing it thoroughly before investing in it," Go said.

4. Beware of fraud.

Go noted there are many online scammers who would try to sell you fake bags.

5. Buy from the luxury brand's boutique.

"Don't scrimp. It's an investment," she added.

Reselling your bag

In the last few years, the resale market in the Philippines has grown significantly. Many Filipinas have started reselling their designer goods online.

"There is an over saturation in the market," Go noted.

Stiff competition in the resale market is driving down prices.

Go also said some bags, depending on the condition and market, cannot be resold.

source: www.abs-cbnnews.com

Handbags for big bucks: the latest global auction craze

NEW YORK - The bargains start below $150 and the most expensive go for more than $100,000: designer handbags are the latest craze taking global auction houses by storm and fetching record prices.

Texas-based Heritage Auctions, which calls itself the market leader in luxury accessories, holds its New York spring sale on Monday -- and is more than upbeat about how well it's going to go.

"I expect to break into the top 10, but I don't believe any will break the world record," its 26-year-old director of luxury accessories, Matthew Rubinger, told AFP.

Of the 800 lots going under the hammer, the most expensive is an Hermes "Birkin" in shiny black crocodile, complete with a padlock and diamond and white gold clasp, valued between $80,000 and $100,000.

The second costliest is another "Birkin" in crocodile red with violet trim, gold clasp and special horseshoe ornament prominently placed in the $70,000 to $90,000 price tag range.

In the luxury auction market, Hermes bags are by far the most prized, especially those named after British actress Jane Birkin and the "Kelly" line that channels the late Princess Grace of Monaco.

In the luxury accessories category, which Heritage created in 2010, Hermes is followed by Chanel and Louis Vuitton, ahead of Gucci, Prada and Celine, says Rubinger.

- World record is $203,150 -

In 2010, Heritage sold 200 lots for $708,200, with gross sales reaching a staggering $14.5 million in 2013, he said.

The auction house has sold eight of the 10 world records, including the reigning record of $203,150 for a red crocodile "Birkin" measuring a mere 30 centimeters (12 inches) sold in Dallas, Texas, on December 6, 2011.

"This is such a new market," said Rubinger. "That's why it is so much fun."

Buyers and sellers are often the same, with top clients concentrated in the United States, South America, Europe, the Middle East, Russia and Asia.

"What is interesting, for the most part -- there is not that much variance in what people are looking for," he said.

Heritage is not the only auction house to take advantage of the new boom. Bonhams in Los Angeles, Christie's of London and Artcurial based in Paris all offer luxury accessories.

The competition does not worry Rubinger, who bought and sold his first handbag on the Internet for his mother when he was just 12 years old.

"As these players grow, it helps us," he said. "The more and more people are in this industry, it's expanding our market."

The day after Heritage's New York sale, Artcurial, which holds two of the 10 record sales, follows suit with a "Vintage Hermes" auction offering hundreds of handbags from the famous Parisian brand.

Among the most expensive is a 35 centimeter (14 inch) Birkin in matte brown crocodile valued at 30,000 to 35,000 euros ($41,520 to $48,440) and a 30 centimeter (12 inch) Birkin in black matte crocodile estimated at 14,000 to 16,000 euros.

"Every sale rose on the last," Rubinger said.

The market for the big bucks designer handbag is on the rise -- so much so that even men are becoming keen.

"Husbands of clients I had for years are more interested now that the dollar figures have gotten higher, we are talking real money here," he said.

"That's a reason why men got more interested. You can make a really dumb purchase at $50 and you can make a smart purchase at $50,000," he added.

source: www.abs-cbnnews.com