WSJ Reports “Hermes’ Crazy Economics”
Analysis of the phenomenon of Hermes Birkin bags overturning common sense
Costs $1000, but sold for $32,000 after passing through two hands
Customers engage in ‘gift bombardment’ towards store staff,
Hermes Birkin bag, a key product of Hermes. / Photo=HankyungDB,
, “Luxury brand Hermes’ famous bag, the ‘Birkin bag,’ is being sold at double or triple the retail price in the second-hand market. Customers are engaging in a rare phenomenon of ‘gift bombardment’ towards store employees to impress the staff who primarily determine the purchasing customers.”,
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, “The Wall Street Journal (WSJ) reported in an article titled ‘The Crazy Economics of the World’s Most Coveted Handbag’ on the 23rd local time, analyzing the social phenomenon surrounding Hermes Birkin bags.”,
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, “According to the report, the price of the basic model of the Birkin bag, the black ‘Birkin 25,’ in the US stores is $11,400 (approximately 16 million won) before tax, but buyers can immediately resell this bag for over double that amount, at $23,000 (approximately 32 million won). Major reseller companies sell it for $32,000 (approximately 45 million won) through social networking services (SNS), Las Vegas pop-up stores, and similar channels.”,
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, “The bag, which has a manufacturing cost of only $1000 (approximately 1.4 million won), is being sold at over 32 times the cost through stores, customers, and resellers in no time. This phenomenon is occurring due to its rarity. Even with a lot of money, acquiring a Birkin bag at the store is like ‘catching a falling star,’ according to luxury consumers.”,
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, “The power dynamics between customers and store staff at Hermes stores have changed. As the store staff primarily decide who to sell the Birkin bag to from among many waiting lists, customers make efforts to build a good relationship with the responsible salesperson. At Hermes stores, customers greet the staff warmly, and some ultra-wealthy clients even go to the extent of baking cookies at home as ‘gift bombardment’ to get closer to the staff. Some even offer expensive concert tickets or cash envelopes.”,
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, “Not only intimacy with the staff but also a purchase history is required. Customers must have a history of spending large amounts on other products such as silk scarves or watches, not just the Birkin bag, for the salesperson to consider them as qualified buyers. Judy Taylor, the founder of luxury bag reseller ‘Madison Avenue Couture,’ suggested that one way to quickly purchase a Birkin bag at an official store is to spend a substantial amount on expensive jewelry or furniture.”,
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, ‘Famous figures often showcase themselves carrying the Birkin bag as a symbol of wealth. Influential figures like Kim Kardashian are known for collecting various Birkin bags. Christine Lagarde, the President of the European Central Bank (ECB), is also often spotted with a Birkin bag. WSJ stated, “There is nothing better than the Birkin bag to symbolize status for those who want to display their wealth.”‘,
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