Buying guide: Which Hermès bags will go up in value?

In particular, as those who live in large cities like New York, London or Tokyo increasingly rely on walking or cycling for their commute to avoid packed and potentially virus-laden public transport, a bag seemingly needs to perform rather than look good.

Almost all previously handbag-focused luxury brands have reacted and launched bags that combine practical and stylish elements. Bottega Veneta stirred up the market with the launch of the Squash Tote, priced at US$5,090. Louis Vuitton launched the Crafty Onthego GM, priced at US$2,860, as part of its capsule collection for autumn 2020.

The website highlights the everyday aspects of the bag: “As useful on workdays as weekends, this stylish tote’s boxy shape means lots of room inside for office files and a laptop”. The focus is clearly on the practical aspect, allowing us to combine work and play.

So, is the more impractical but fancy “It bag” category dead?

My prediction: no. On the contrary, trends in one direction are typically followed by trends in the opposite direction.

Consequently, in the autumn season, we see luxury brands featuring impractical bags, like Gucci’s Mad Cookies top handle bag, a small light metal bag inspired by a classic cookie can, for the new MX collection. Impractical, almost absurd, this new “It bag” is a clear statement piece without any distinct function.

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But a statement bag, especially a rare and limited-edition piece, has a different function. The real value drivers of these items are their hidden luxury aspects. My research, first published as part of my doctoral thesis “Decoding Luxury” in 2008, indicated in a quantitative study that associating with a luxury brand enhances self-perception and the perception by others.

One finding was that being associated with a luxury item can make a person be perceived as more attractive, and hold a higher degree of sophistication and expertise.

This is astounding. It suggests that a handbag can have a similar effect as plastic surgery or a degree at Harvard. These hidden aspects of luxury are still underestimated. It is critical for brands to develop a clear understanding of how much value the hidden aspects of luxury generate.

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The price point of US$3,000 for the Mad Cookies bag indicates that these value components are extreme, allowing brands to tap into them for pricing, rather than for the product itself.

Extreme value also explains why “It bags” won’t disappear. They position you socially, and might even make you seem more attractive and smarter. The Chinese TV drama Nothing But Thirty recently sent shock waves through the luxury world with a scene where one of the protagonists carried the “wrong” bag within her social cycle.

It was “just” a US$9,000 limited edition Chanel bag, instead of the Hermès Birkin and Kelly bags everyone else was carrying. Due to the faux-pas, the protagonist was cut out from a social media post. The girlfriends did not want to be seen with someone wearing the seemingly “lesser” bag.

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This underscores a difficulty in choosing the right “It bag”. You have to know which bag to wear in which situation. The right brand at the right place signals a lot about you. It determines how you see yourself and how others perceive you. In a recent luxury masterclass, one of the female participants consequently stated that she wears her bag mainly as a positioning signal to other women. In this context, the “It bag” is here to stay.

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