Gifts That Pay Off: These luxury-fashion gifts can also be good investments

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The Supreme x Louis Vuitton shoulder bag cost up to $2,400 when it debuted in 2017. Recently, one was available on luxury resale site The RealReal for $6,000.

Despite the 150% markup, The RealReal REAL, +2.14%  called it a “smart investment.”

If you have the time and a nose for fashion, your local consignment shop can be a great place to go on a treasure hunt for well-priced luxury items that appreciate when a style finds renewed trendiness. Fashion items are finding new life, and a high dollar value, in the secondhand market, making them luxe investment pieces, as well as great gifts.

Claire Foster, head of accessories and footwear at WGSN, a trend-forecasting group in London, said signature pieces that may appreciate in value appeal to the “aspirational consumer.”

That includes trend watchers who might not have the budget to buy a piece at full price but can swing it secondhand. For example, a brand new Gucci shoulder bag with the iconic double-G logo will run $2,300 on the Gucci website. A vintage bag on The RealReal with the same logo is $395. There are slight differences, including the lack of hardware design on the vintage version. But many would rather do without a little hardware rather than do without a Gucci handbag.

And according to the The RealReal’s Luxury Resale Report for 2019, demand for Gucci is up 78% year-over-year, driven by millennials.

The Dior Saddle Bag’s resale value has soared 373% since it came back in style, according to the report. The RealReal sold a limited-edition version from the 2003 collection for $1,695. A new Saddle bag in lambskin can run as much as $4,100 on the Christian Dior website.

‘Social currency’

The secondhand market for all luxury goods will reach $51 billion by 2023, more than double the $24 billion in 2018, according to resale marketplace ThredUp’s 2019 Resale Report.

“The industry where resale is having the most interesting/disruptive effect is the luxury market (driven by innovative business models — most notably The RealReal) — as the ability to buy used luxury goods (at a discount) introduces the brands to new customers, while the ability to earn residual/resale value also spurs more sales through the primary channels,” Wells Fargo analysts wrote in a report this year.

Certainly, there are some people who “absolutely get a thrill from unboxing original packaging” and would opt for new over used, said WGSN’s Foster.

But retailers like ThredUp and The RealReal are tapping into a host of socially conscious, deal-seeking shoppers, many of them millennials and their younger cohort Generation Z. They want trendy clothes and accessories without the waste of fast fashion, which is cheap but also wasteful.

“I wouldn’t dismiss the social currency of giving a secondhand gift this holiday season,” said Sam Blumenthal, senior marketing communications manager at ThredUp. “People are embracing more sustainable alternatives.”

What to look for

One of the best ways to retain the value of an item is to keep wear-and-tear to a minimum.

Look for iconic patterns and logos of high-end brands such as Burberry and Gucci that are easily recognizable.

A beloved designer’s departure from a brand drives up demand for items he or she created. When Phoebe Philo left French fashion house Céline, The RealReal says resale value jumped 30% as year-over-year demand rose by nearly a third.

The death of a designer has a similar effect. After Kate Spade’s death from suicide in June 2018, customers with an emotional connection to the brand sought out her purses, driving up prices.

Streetwear brands that “drop” special collections with limited supply also try to create column inches in fashion magazines and hype among consumers who are afraid they’ll miss out. The appeal of those items, which includes sneakers and merchandise from brands such as Nike and Off-White, a Milan-based brand run by American designer Virgil Abloh, also has appeal across a broad array of shoppers.

The top factor driving value, however, is scarcity. For example, a new Hermès Birkin bag is notoriously difficult to get, even for shoppers who can afford one. This is exactly what Hermès wants, according to Sasha Skoda, head of women’s at The RealReal.

An online search yields a number of those rare bags for tens of thousands, or even hundreds of thousands, of dollars.

So an Hermès Birkin is not only a fashionable way to carry your wallet, it’s a great investment for filling it.

Best New Ideas in Money: Gifts That Pay Off

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