Ultra-high-net-worth individuals have a soft spot for luxury bags and are turning consumer behavior into investment and asset allocation. More and more consumers have become investors, turning the purchase of Hermes into a high-quality asset allocation, giving it financial attributes and adding the consideration of the secondary market to preserve value, the market sees not only Hermes is redefining investment and financial management, but also the cultural value of luxury goods is being revalued, fashion is no longer just a materialized commodity, but a value consensus and optimistic, desirable investment targets.
The low-key luxury Hermès made a high-profile appearance with an absolutely outstanding market performance.
On February 17, Hermès Group announced its 2022 financial report, with consolidated revenue increasing by 29% year-on-year to 11.6 billion euros, the highest in a decade. Among them, the Asia-Pacific region generated sales of 6.657 billion euros in 2022, contributing 57% of the Group's revenue and becoming Hermès' largest market. When most brands were affected by the epidemic, Axel Dumas, chief group executive of Hermès, said, "The footfall of our Chinese stores has not declined, and we have seen strong momentum in China. Regardless of the quarter, including the fourth quarter, the attractiveness of the product was great, which contributed to China's performance recovery. ”
Further analysis of the data shows that the growth was driven by the recovery of the travel retail industry, with Hermès stores growing by 23% and distribution by 26%. Online sales are also on the rise globally.
On the other hand, Liu Luanxiong, a world-class collector of Hermès and a well-known rich person on the Forbes Rich List and the Hurun Report, took out his collection of 76 Hermès limited edition bags and 1 Chanel bag to auction at Sotheby's, which is also the largest single collector's designer bag auction in Asian history. On February 9, after 11 days of bidding, the "Way of Collecting: Liu Luanxiong's Treasured Handbags" was hammered, and all the lots were successfully sold, with a total price of 21 million.
For ultra-high-net-worth people, buying Hermès is not only a wealth and status symbol, but also a high-quality asset investment and hard currency collection.
In the unstable economic environment, people also give Hermès the demand for investment preservation, "luxury investors", like art collectors, can summarize the most investment-worthy package from multi-dimensional and auction market and secondary market data analysis.
The "2020 Global Wealth Report" released by Knight Frank, an internationally renowned investment consulting firm, shows that in the investment field, the investment index of luxury bags increased by 108%. According to the 2020 Luxury Handbag Report released by Art Market Research (AMR), the investment potential of luxury bags has also surpassed that of art, classic cars and rare whiskies.
Sotheby's official also summarized the market trends of Hermès bags in 2022 to help Hermès collectors conduct collection auctions:
• The Himalayan series is still firmly in the crown, whether it is the Himalayan Birkin bag or the Himalayan Kelly bag, the market demand is also hot;
• Faubourg's main store limited edition Birkin bag and 20cm mini Kylie bag are also hard to find, and second-hand prices continue to be high;
• Better-looking Kelly clutches made of cow and sheepskin are sold for more money;
• Sellier bikkin bags are becoming more and more popular in the market, with the 25cm bikkin bag being the most sought-after, and the condition, size and material of the bag continue to be an important indicator of second-hand market price.
It is worth noting that different colors, leather fabrics, and whether they are color-blocking represent different levels and values in Hermès' bag world, and also determine its value-preserving attributes in the auction market.
For example, Hermès elephant gray is undoubtedly the most recognizable one, it is between gray and brown, is one of Hermès "three diamond colors", just as popular as black and golden brown. It is also the most common gray tone in the second-hand market of Hermès bags, accounting for 2% of Hermès bags that have historically been on auction, and the value preservation property of elephant gray bags has great potential, and the price is steadily increasing by about 4% every year.
Hermès elephant gray with a thousand faces
Hermès grey bag proportions on the auction floor
Hermès is synonymous with top luxury in many people's minds, and there is even a memoir of Christian Blanckaert when he was CEO of the Hermès Group from 1996 to 2009, called LUXE - Luxe.
Last year, when the metaverse swept through major luxury groups, Axel Dumas, executive chairman of French luxury group Hermès, said at its annual shareholders' meeting on April 20 that although the group will still focus on handicraft inheritance, it will also consider testing the "metaverse" to strengthen brand communication.
But more famous is the "MetaBirkins" NFT work that closed on February 8 this year, which infringed the trademark right of the well-known product "Birkin (Platinum Bag)" produced by Hermes, and Hermès won the case.
MetaBirkins
Hermès Group believes that artist Rothschild "steals" Hermès' Birkin trademark by adding the prefix "Meta" and its design trademark, which is too similar to its most brand-worthy trademark platinum bag Birkin in terms of naming, styling, website domain name and promotion, and is strongly misleading to consumers. The artist was suspected of trademark infringement, brand dilution and cybersquatting, and ultimately sentenced artist Rothschild to pay $133,000 in damages to Hermès Group.
The origin of the Birkins bag and the kelly bag is derived from the two famous actresses Jane Platinum and Grace Kelly.
Robert Dumas designed the bag in the thirties as a tribute to the Princess of Monaco. In 1956, when a photograph of Princess Grace Kelly of Monaco holding the bag was made public, its classic story began. Later, in honor of the princess, Hermès named the bag Kelly.
In Hermès' brand story and archival history, royalty and celebrities are loyal fans of Hermès.
Their value and symbolism have been rendered in many films, television, literary works and real life. For example, in the book "I'm a Mom, I Need a Platinum Bag", the author Vinisty Martin, a Yale doctor of anthropology, exposes the chain of contempt for New York's top noblewomen with a series of wealth symbols such as "platinum bag".
Hermès is the standard for ladies and wives in Chinese film and television themes. From the group photo of the wife group in "Thirty Only", Mrs. Li standing in the C position with a Himalayan platinum bag, to the hit drama "Crazy", the main female characters in the play are all carrying Hermes bags.
In real life, Hermès has also always been a symbol of top luxury living and a representative of top luxury. Hermès' distribution principle seems to have become a well-versed "consensus mechanism" for its users. Being able to buy different levels of Hermès bags also represents a hierarchy symbol of wealth and status.
From a business point of view, this kind of business rules and strong pricing logic is not difficult to explain why Hermès can still increase prices and grow steadily and maintain value despite the impact of the epidemic and economic downturn. It is reported that at the end of last year, Hermes just increased the price of its products by 5%-10%, of which, in Hermes Chinese stores, the latest price of "Kelly to Go" increased by 10,000 to 47,900 yuan from the previous 37,300 yuan, an increase of more than 28%.
While all luxury goods focus on ultra-high-net-worth users, Axel Dumas, Chairman of the Executive Board of French luxury group Hermès, said: "Around the world, especially in Asia and the United States, the middle class is growing, and this group is younger and wealthier. New middle-class customers don't necessarily buy the most expensive products, they consume to please themselves. ”
Such customers spend more on Hermès ready-to-wear, jewelry and lifestyle goods including tableware. In all the competition in the luxury market, different products leave different market space for Hermès.
Perhaps not all Hermès consumers can consume Birkins bags and kelly bags, and not all Hermès products have investment preservation properties, but its shrewd distribution logic and luxury brand image assets continue to attract and cultivate new consumer groups to become their customers, perhaps, this way is replacing the financial logic of people depositing money in the bank in the past.
Content Planning Huayi Tomorrow Fashion Content Center
Written by Wen Jun
Edit Li Jun
Image source Internet, brand courtesy