Luxury resale: will the gold rush last?
A recent visit to a suburb just outside Southampton, Hampshire, in an aged, 1990s-looking shopping centre, revealed an independent family jewellers full of gold bangles and diamond rings glittering under the intense lighting. Further along the large shop window is an extensive collection of bags; an unusual addition to a traditional jewellers’ display.
Moving closer, the bags are from major mames such as Chanel and Louis Vuitton. Knowing these labels only sell through their own store networks, it is instantly clear this is resale.
Prices range from £4,850 for a Chanel ‘Burgundy Calfskin Quilted Mini Perfect Fit Flap Bag’ to £4,595 for a ‘LOUIS VUITTON X FIFA World Cup Keepall Bandouliere 50’. These prices are far greater than those of much of the new jewellery being sold and are quite a leap from a corresponding retail environment that includes stores from Poundland, Clarks, Robert Dyas and H&M. The jeweller is also selling pre-owned watches and jewellery from brands like Rolex and Tiffany alongside the designer bags.
By placing these bags together with gold and diamonds the store is cementing the idea that luxury resale is an asset class of its own in consumers’ minds and just as constant and stable. Luxury resale or preowned has got to a peak where it is being promoted as safe an investment as gold. Is this sustainable or could we witness a market crash?
Arguably, the luxury preowned market for designer bags was driven by luxury watches. The boom in the resale luxury watch market rippled out to other products and brands. But things have changed. According to Bloomberg, since the high in the secondary watch market last April, prices have dipped by 42%. Rolex and Patek Philippe prices have fallen 27% and 47%, respectively to two-year lows. The Bloomberg Subdial Watch Index, which tracks prices of the 50 most traded watches on the secondary market, dropped 1.8% in October to around $34,000. It is at its lowest level since 2021, and down from a near $60,000 peak in April 2022.
The market has also seen an increase of pre-owned watches available on the secondary market, rising by 5% since August. The average number of days that a timepiece will take to sell has gone up by 8%.
Distressed collectors could be selling knowing the market has peaked and buyers could be fewer and farther between because of the luxury slowdown affecting the entire market due to the increased costs of living.
A family jewellery shop in Southampton has entered the luxury bag resale market (Marcus Jaye)
Unlike most jewellery, designer bags have no value in the raw materials. You can’t melt a quilted lambskin flap bag down and turn it into something else. It also has to be in perfect condition in order to maintain its value. If it needs to remain immaculate, can you really use or enjoy it? If not, what is the point? A diamond is far less maintenance.
None of the bags in the aforementioned jeweller’s window were special or particularly limited. Many looked tired and well-used and these ubiquitous brands are being pushed purely on the label.
Investing in this type of asset is difficult and risky. You have to look for limited and highly desirable pieces like the new Frank Gehry collection for Louis Vuitton. More art pieces than wardrobe items, the average punter will have no chance of securing a brand new one, no matter how deep their pockets, due the limited numbers and preferential treatment for VIP customers by these brands.
The pre-owned designer bag market has been overhyped in the last few years and will be difficult to sustain. You often see a lot of special editions and collabs on resale, potentially a poor investment when the hype has passed.
While Louis Vuitton, Chanel and Hermès are safer names, it will depend on the product and its desirability. A Chanel 2.55 has become an icon to the mass consumer, much like a Rolex, but there are more variables and pitfalls when it comes to investment. There are also a lot out there and bag popularity is more vulnerable to the whims of fashion than a watch.
While a branded item will always have some value, don’t be surprised to wake up one day and see the market value halved, or worse. These prices are heady and reflect many resellers entering the market and competing for product over recent years. As demand falters or availability increases, then prices will fall. The resale gold rush could then be over.
Main image: Vintage Chanel on sale. Alamy.
