Under the impact of continuous market fluctuations, wealthy consumers around the world have begun to tighten their wallets, and Hermes platinum bags have a hard currency position among luxury handbags.
According to fashion business news, Christie's auction house held a spring auction of handbags and accessories in Hong Kong on May 23. The total transaction volume of 189 products was HK$52.5974 million. The three most expensive handbags in this round of auction are Himalayan Nile Crocodile Leather Platinum Hermès Platinum Bag and Kelly Handbag, as well as a custom matte black crocodile leather Kelly Doll handbag, with a transaction price of between HK$1.6 million and HK$1.7 million, both of which are less than RMB 1.5 million.
Christie's auction house held a spring auction of handbags and accessories in Hong Kong on May 23. The picture shows the three most expensive handbags in this round of auctions
It is worth noting that Hermes Himalayan Nile crocodile leather handbags have always been the most popular product in fashion auctions. Last year, a Himalayan Kelly 28 handbag inlaid with 18k white gold and diamonds set a world record for HK$4 million in Hong Kong, and another Himalayan Kelly 25 handbag without diamonds was sold for HK$3.3 million in 2020. This means that the auction value of Hermes' most valuable handbag products has shrunk by nearly 50% in just two years.
Hermes limited-edition small house platinum bag and a hard-to-find Kelly woven handbag in this auction also shrank to 840,000 and 1.01 million yuan, and the transaction price of Hermes high-quality platinum and diamond watch, which was originally priced at 5 million yuan, dropped sharply to 140,000 yuan.
In addition, the average transaction price of Hermes ordinary platinum bags is around 150,000 yuan, while the transaction price of rare platinum bags such as ostrich skin and lizard skin is between 200,000 and 500,000 yuan. One of the sets covers 6 limited edition Hermes Kelly 28 handbags and 6 letter hangers sold for RMB 500,000, with an average price of RMB 80,000. Another matte alligator leather platinum bag with a valuation of between 300,000 and 400,000 yuan was not offered.
In sharp contrast to this, the two spring auctions held by Christie's Hong Kong Famous Watch Department recorded a total transaction volume of nearly HK$300 million, setting the highest transaction volume of Asian Famous Watch Department. The first "Zhenji Series (Part 3): Craftsmanship and Art" achieved a good result in white gloves, with 73 lots sold, with a total of HK$156 million.
Christie's "Rare Jewelry and Jade Jewelry" spring auction also attracted buyers from 13 countries and regions on four continents to bid for. A necklace of 33 top imperial green jade beads was auctioned by a collector who bid for about HK$69.0375 million. The total auction transaction amount was HK$450 million.
As one of the world's major auction houses, Christie's has gathered the world's most consumer-friendly group. Hermes's sharp price drop in this auction quickly attracted widespread attention.
Some industry insiders pointed out that although the transaction price of the above-mentioned Hermes handbags is still higher than the market price, the transaction price of some products is almost the same as the cost of consumers going to the store to distribute goods to buy brand new handbags. The signal sent is that wealthy consumers' recognition of the value of luxury handbags is weakening.
Earlier, some analysts believed that Hermes' main buyer is "rich wives", who are less sensitive to changes in the social situation, and female consumers have more social occasions. But according to the latest data from Bloomberg, as global market uncertainties surge, the world's top 50 richest people have lost more than $500 billion this year, and the wealthy will naturally invest their funds in more stable top-level jewelry and high-end watches.
Hermes iconic platinum bag was originally a logo-free bag made of high-end calfskin. It originated from a chance encounter between French actress Jane Birkin and Hermes chairman Jean-Louis Dumas on a plane in 1984. Because it is difficult to buy, platinum bags have been at the high level of the value of handbags for more than 30 years and have become the target of investment appreciation.
Baghunter data shows that the S&P 500 index and gold have different ups and downs each year, but the value of Hermes platinum bags has never fallen, and the average annual value of platinum bags has increased by 14.2%. There are even data that even in recession and difficult times, the value of platinum bags has not fallen and is considered the least volatile asset.
luxury goods online retail platform Baghunter once released a data that surprised the market. By comparing the return on investment of gold, stocks and platinum bags in the past 35 years, it was found that the Hermes platinum bag has the highest return rate and its value increase is even as high as more than 500%. This feature is infinitely magnified during special periods.
However, since 2017, Hermes has continuously increased production by adding factories to meet the rising demand of Chinese consumers. The situation of difficulty in finding a bag has been alleviated. The number of platinum bags on the global market exceeded 1 million, and the transaction premium has narrowed.
In 2020, the second-hand luxury trading website Vestiaire Collective found a list of 10 most valuable handbags based on the 75,000 handbag transactions that occurred on its platform. Hermes platinum bag ranking fell to third, with Chanel's classic Timeless handbags ranked first, followed by Louis Vuitton's Speedy.
With the rise of the concept of metaverse, the platinum bags created by artists in the virtual world are also competing for share with Hermes. Hermes officially launched a legal lawsuit against digital artist Mason Rothschild earlier this year because Mason Rothschild sold about 100 virtual handbags called "MetaBirkins" in the virtual market Basic Sapce. The image of this series of handbags is exactly the same as the platinum bags launched by Hermes in the 1980s, and the single price is 250,000 yuan, far exceeding the official price of the platinum bag.
To avoid similar situations from happening again, Hermes not only demanded compensation, but also issued an injunction on Mason Rothschild's NFT, deleted all product examples, and handed over the domain name of the MetaBirkin website to Hermes.
Although Basic.Space has removed the relevant information about MetaBirkin, MetaBirkin's Instagram account has more than 20,000 followers, and it can still be linked to the address of the purchase series of NFT products. Mason Rothschild also publicly stated that he did not manufacture or sell fake platinum bags, but only sold art works he created.
To make matters worse, in addition to the decline in prices in the auction and resale markets, Hermes, which still maintains the price increase once a year, has also underperformed its competitors in the successive price increase trend of luxury brands after the outbreak of the epidemic. At the end of last year, the Chanel classic flip handbag, which had a 60% increase in three years, sold in Europe by more than the Hermes platinum bags.
According to Chanel's latest fiscal year 2021 performance data, its sales rose 49.6% year-on-year to US$15.6 billion, a record high, surpassing Hermes. Although Hermes' overall revenue rose 42% to 8.982 billion euros last year, sales of the leather goods and harness division where the platinum bags were located unexpectedly fell 5.4% to 1.015 billion euros in the fourth quarter.
Various signs may sound a wake-up call for Hermes, and the brand's strategic layout is developing in a more balanced direction. Following the appointment of Gregoris Pyrpylis as creative director of beauty in January, Hermes announced in early March that Clémande Burgevin Blachman was the creative director of the brand's fashion accessories department.
Cléman de Burgevin Blachman was once Vice President of Design at Calvin Klein Home, responsible for the creative design of all furniture series, and is also a creative consultant to Alaïa, a luxury brand under Richemont Group, with rich experience. Some analysts expect that under the leadership of Cléman de Burgevin Blachman, Hermes' fashion accessories business will achieve greater improvement.
Given that jewelry and watches have become highly concentrated concerns for wealthy people, Hermes is also accelerating its layout in the high-end jewelry field. It held a high-end jewelry series exhibition in Singapore at the beginning of this year, releasing the brand's newly launched Kellymorphose high-end jewelry series, which is inspired by the brand's iconic Kelly handbags. Pierre Hardy, creative director of Hermes Jewelry, redesigned the buckles, padlocks and keys on the Kelly handbags into high-end jewelry.
At the 2022 "Watches and Miracle" high-end watch exhibition, Hermes released 7 new watch works in one go, namely Hermes Wandering Time Watch, Kelly Watch, H08 Watch, Heure H Watch, Seven Question Tourbillon Watch, Punk Horse Pocket Watch and Soaring Sky Dream Watch.
Thanks to the effectiveness of the balance strategy, in the first quarter ended March, Hermes' core source of revenue, handbags and leather goods department, which ushered in a recovery, up 21% year-on-year to 1.197 billion euros, followed by ready-to-wear and accessories products, up 50.1% year-on-year to 710 million euros. Other Hermes departments where home products are located also recorded a strong increase of 44.4% to 330 million euros, becoming Hermes' third largest business.
During the reporting period, Hermes perfume and beauty revenue rose 20% to 119 million euros, the silk and textile sector revenue rose 33.3% to 198 million euros, and the watch sector revenue rose 71.5% to 134 million euros, making it the fastest growing business.
Hermes CEO Axel Dumas said that the performance in the first quarter reflected the strong demand for Hermes products in the market, and consumers are still confident in the quality and craftsmanship of the brand. He further revealed that despite the uncertainty of the overall environment, the group is accelerating the process of strategic investment, recruitment and training.
What is certain is that after setting its best results in 185 years last year, Hermes is starting to review the entire value chain from the source, exploring a more sustainable development model to consolidate its irreplaceable advantages in the industry. After all, consumers are no longer in an economy that values uncontrollable creation above everything else.
(ladymax)
