As the economy worsens, are luxury products still a safe investment?

The luxury fashion industry often considers its products not only purchases, but also assets. Watch collectors sometimes refer to their collections as “portfolios,” which are full of assets that can appreciate over time and even appreciate in value.

But recent events have shaken confidence in the idea of ​​investing in alternative assets. When cryptocurrency exchange FTX collapsed in early November, users lost billions of dollars. At the same time, the deteriorating US economy and rising inflation mean that the average American consumer is in dire financial straits. As investments and other assets such as NFTs become more volatile, can luxury fashion retain its appeal as a safe-haven investment?

Many sellers say yes. Thirat Kamdar, general manager of luxury at eBay, said a big part of eBay’s appeal to luxury consumers is that they can buy something at a good value and sell it later to recoup some or most of its original cost. In a survey of its users that eBay conducted earlier this month, 85% said they saw luxury items like watches as safer and less volatile assets to invest in “compared to other assets.”

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“Many of our customers see luxury as a currency,” Kamdar said. “We have grown over previous downturns and Bain is still reporting [the luxury industry will grow] during this year”.

But there is a caveat. Kamdar said that for luxury goods to be safe assets, the customer must be aware of what they are buying.

To that end, eBay has a pricing tool called Terapeak, which it released last year for free to all users, allowing them to see the current retail price, historical resale price, and listing history of a product. It can be useful for sellers and buyers to understand what they are buying, how much it is worth and its future value. Handbag retailer Rebag has a similar tool called Clair that customers can use to calculate the resale value of any bag before making a purchase.

“Specific categories, like watches and bags, have the highest chance of appreciating time, but they require a lot of customer knowledge,” said Yuriy Dovzhansky, director of Visible Ventures, which has invested in resale companies like Recurate.

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In this respect, handbags can be compared to watches, but only for specific brands. While many of the Swiss luxury watch brands can be valuable assets – including Rolex, Patek Phillipe, Omega, Paneria and Tag Heuer – according to the secondary luxury platform LePrix, only three handbag brands have the same quality – Hermés, Chanel and Louis Vuitton.

Aside from education, another factor is whether or not these prices will be maintained. Tim Strack, founder and CEO of watch marketplace Chrono24, said he recently attended an investor conference where an investor told him his watch portfolio was currently outperforming his stock portfolio.

“Watches are a durable asset,” Streck said. “You can buy a Rolex directly from the brand and immediately be able to resell it for more than you paid. Although this is also because it is now impossible to get a Rolex on the primary market. The waiting list is years long. “

But even watches are not completely immune to market conditions. The price of watches bought directly from the brand has risen by up to 10% this year, tracking inflation and rising production costs. But in the secondary market, watch prices actually fell, falling about 2% in September, according to watch market tracker WatchCharts.

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“The price of watches on the secondary market is going down,” Dovzhanksi said. “It’s a pretty significant drop. There’s definitely some volatility there. If you’re really knowledgeable, that’s great, but I wouldn’t say it’s my best recommendation for a safe investment.”

For some in the luxury space, luxury assets are still outclassed by the unregulated volatility of the crypto market.

“I’ve had customers who bought rings from us in 2019 come back this year for re-evaluations because diamond prices have gone up so much lately,” said Olivia Landau, founder and CEO of fine jewelry and diamond brand The Clear. Cut off. “People are interested in older investments, like gold or diamonds, because they’ve seen how crypto and NFTs are treating everyone.”


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