“The Rising Cost of Luxury & How to Capitalize On It”
There have been a lot of unfortunate side effects of COVID. So many that it’s really impossible to wrap into a sentence or two. (I’ll spare you a feeble attempt at what mainstream media outlets are already thoroughly achieving.)
We’re here to talk about fashion, and that much I can do. One aspect of the last few months that has affected fashion clearly: the abrupt halt of supply chains, manufacturing, and the ability to source raw materials.
As a result, prices are going to go up even more, and it’s not necessarily because the quality is. Precious materials — including calfskin, lambskin, and the like —simply aren’t available at the rate or scale they once were. Shipping is slower. Careful decisions have to be made as to how to address a market that is still, nevertheless, aching for some whimsy, some newness, some exquisite escape from the strangeness of what has become the year 2020.
Italy’s misfortune has hit fashion particularly hard
As most of us are likely aware, Italy was hit particularly hard during the pandemic, making her raw materials, manufacturing, and shipping another situational casualty. According to McKinsey, “more than 40 percent of global luxury-goods production happens in Italy—and all the Italian factories, including small, family-based façonniers, have temporarily shut down.”
This threatens more than pricing, I’m afraid, but the very fabric and lineage of luxury craftsmanship itself. Italy’s façonniers, that rare breed whose duty it is to protect the heritage of excellence and apprenticeship-style skill learning, the very essence of what “Made in Italy” means to us today, could be terminally compromised.
Chanel has said their prices have increased due to a lack of access to certain raw materials. To give you a sense of what that really means, a new $6,400 (2019) Chanel Jumbo Double Flap has increased in price to $7,100. When you see it in numbers, that’s a fairly significant hike. See the full list of increases here.
Louis Vuitton’s prices have been steadily increasing since October of last year, and it appears the rise is likely to only accelerate due to supply chain restraints and lower sales overall, particularly in the U.S. and in Europe. (Despite these factors, spending has accelerated in some Asian countries, including China.)
The good news (re: what you can do about it)
Even as the new-product market looks a bit pricey, your existing closet, as well as existing pieces, are becoming more valuable by the moment. That’s right: any bag you buy (or currently own) will likely continue to appreciate. In that sense, a luxury handbag is a better investment than it’s ever been.
(You got it — pre-owned!) If you’re looking for superior quality and a more attractive price, I highly recommend considering pre-owned pieces.
Another perspective on the “shop, sell, repeat” motto: experiential luxury.
Speaking of growing trends emerging to meet the times…one of the fast-growing segments of luxury living, even prior to this year, has been the shift from ownership to experience-based living and ‘having’.
Style and enticement are so equally momentary, this practice makes sense. Fancy AirBNB getaways (remember those days?) and rent-the-runway options produce social media moments that suit their fleeting nature.
This phenomenon shouldn’t turn us away from ownership entirely — not when there are good investments to be made and a readily available way to resale them.
Much of FASHIONPHILE’s clientele has caught on to this, with their closet transforming into a quietly revolving door the latest must-have bag. When they’re ready for a new one, they sell another. The savings is undeniable, and in fact, they often make out in the green because of price appreciation. In that sense, buying is a smart move, because it doesn’t imply permanent ownership — but a stake in a worthy (did I mention simply fun?) game.
The big takeaways
In a compromised market, buying pre-owned is likely to get you the best luxury items at the best price. (Nevertheless, it’s advisable to buy soon — as brand costs increase, the resale value will, too.)
If you need to make fast cash, selling your bag now will get you more than it would have previously. On the other hand, it’s likely to continue to appreciate, so don’t worry about a cash loss in the near future.