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The number of Birkin and Kelly bags on the secondary market has increased, while the resale premium for the Birkin 25 has fallen. How the Hermès market is changing.
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The Birkin market is changing: the resale premium for Hermès bags is declining
The gap between the price of Birkin models in Hermès boutiques and their resale value is narrowing on the secondary luxury handbag market. Meanwhile, the number of Birkin and Kelly bags on the secondary market has increased significantly compared to the pre-pandemic period.
Just a few years ago, acquiring a Birkin often involved substantial spending in the brand's boutiques. Customers could purchase Hermès clothing, footwear, accessories and other goods worth tens of thousands of dollars to gain the opportunity to buy their desired bag model.
At the same time, Birkins were sold at a significant markup on the secondary market. For example, in 2022, the Birkin 25 model could cost almost three times its boutique price at auctions.
The situation has changed. Currently, the difference between the boutique price of a Birkin 25 and its resale price is approximately 1.5 to 2 times.
Changes are also occurring in supply volume. According to UBS estimates, there are now 6 to 7 times more Birkin and Kelly bags on the secondary market than before the pandemic.
The increase in supply is affecting resale prices and reducing the gap between the primary and secondary markets.
Against this backdrop, buyer behaviour is also changing. If additional purchases in boutiques were previously part of a strategy to gain access to Birkins, the economic viability of this approach has become less obvious today due to the decline in the secondary market premium.
The decline in demand also extends to Hermès clothing and accessories. Some customers are cutting back on spending on brand items that they previously purchased before buying a Birkin.
Changes in the handbag market are also reflected in the company's valuation. According to the data provided, Hermès' market capitalisation has shrunk by approximately 40%. UBS has also revised its stance on the company's shares and recommended that investors reduce their positions in them.
Thus, the Birkin market is undergoing a shift in the balance between demand, supply and resale prices.
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