November 9th 2023.
The world's richest man, Bernard Arnault, takes the luxury fashion industry to a new level. Currently worth an estimated $210 billion, he has built his fortune over the last 35 years by creating LVMH - a luxury brand conglomerate that consists of Louis Vuitton, Christian Dior and Moët & Chandon champagne.
One of his investments is a 20% stake in Hermes, a brand that sells the most expensive handbag in the world - the Hermes Rose Gold Kelly bag, which features 1,160 diamonds and sold for $2 million.
This handbag is a piece of art. It is designed to maximize its price potential and minimize the sniggering. To appreciate the difference between tacky and stylish, it requires some training.
This leads to the question - what is the appeal of a $2 million handbag? Well, for some people it is an essential fashion item. In fact, the estimated worldwide market for luxury handbags was $63.8 billion in 2023 and is growing at nearly 5% a year.
So who should we blame for this handbag craze? Charles Gross is a TikToker with 1.3 million followers on TikTok. He bought his first Hermes Birkin bag for $300 and later sold it on for $5,000. Charles's channel focuses on comparing luxury handbag brands and talking about "quiet luxury".
Jamie Chua is the star of the movie “Crazy Rich Asians” and has 200 Hermes bags in her collection and has 1.3 million followers on Instagram.
But why do people pay such high prices for luxury handbags? There are a few explanations. Firstly, because they can. They are wealthy and like to have a bit of attention. Secondly, it is art that is portable and beautiful. Thirdly, it is an investment opportunity. Finally, some people just have a plain love of fashion.
The rich and famous have something to say about fashion too. Carrie Bradshaw said “I like my money right where I can see it…hanging in my closet” and Ralph Lauren said “I don’t design clothes. I design dreams”.
So, can we blame social media influencers for the rise of the $2 million luxury handbag? I think the answer is no. Let’s blame it on the rich, who have way too much money.
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[Generative AI is experimental.]
