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

The retail business often sells its products more than just sales, but also assets. Collectors sometimes refer to their collections as “stuffed books,” filled with assets that can retain value over time and appreciate in value. .

But recent events have shaken confidence in the idea of ​​investing in other assets. When the FTX cryptocurrency exchange crashed in early November, users lost billions of dollars together. At the same time, the deterioration of the American economy and the growth of the economy means that the average American is in a difficult financial situation. As other investments and assets like NFTs move lower than ever before, can luxury stocks retain their appeal as a safe asset to invest in?

Most retailers say yes. Tirath Kamdar, head of luxury goods at eBay, says a big part of eBay’s appeal to luxury buyers is that they can buy something for a good price and sell it later for more. get some or most of the initial costs. In a survey of its users carried out by eBay earlier this month, 85% said that they saw luxury items such as watches as safer and less expensive to store, “compared to other assets.”

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“Many of our customers see luxury as an investment,” Kamdar said. “We grew on the first decline, and Bain is still reporting [the luxury industry will grow] throughout this year.”

But there is an explanation. For luxury goods to be safe assets, the buyer must understand what they are buying, Kamdar said.

In that case, eBay has a sales tool called Terapeak that was released to everyone last year, allowing them to see the current selling price, historical resale price and listing history for goods. It is intended to help buyers and sellers understand what they are buying, how good it is and how much it costs. future. Retailer Rebag has a similar tool called Clair that customers can use to calculate the resale value of any bag. not yet purchased.

“Special categories such as watches and handbags have the highest chance of appreciating time, but they need a lot of consumer knowledge,” said Yuriy Dovzhansky, principal at Visible Ventures, which invested in resale companies like Recurate.

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The replica bags are similar in appearance in this case, but only with special features. While many luxury Swiss watches can be valuable assets – including Rolex, Patek Phillipe, Omega, Paneria and Tag Heuer – only three handbag brands are the same. brands – Hermés, Chanel and Louis Vuitton – according to the LePrix ranking.

Beyond education, another aspect is whether or not those costs remain. Tim Stracke, founder and CEO of e-commerce marketplace Chrono24, said he recently attended an investor conference where a person told make money on him his watch is better stock now.

“Watches are a solid asset,” Strake said. “You can buy a Rolex directly from the brand and then sell it for more than what you paid for it. Although this is because you can’t find a Rolex in the original market right now. The waiting list is several years.”

But even watches aren’t completely immune to market conditions. Watch prices when bought directly from the brand have continued to rise by up to 10% this year, tracking alongside the price of the price and thus the increase in production costs. But in the secondary market, the price of the watch is decreasing, decreasing by about 2% in September, according to watch market watcher WatchCharts.

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“The monitoring of prices on the secondary market is decreasing,” said Dovzhanksy. “It’s a very important loss. There is definitely a problem there. If you really understand, it’s great, but I wouldn’t say it’s my best advice for the safest money.

For some in the luxury space, expensive assets are better than the unregulated visibility of the crypto market.

“I have had people who bought rings from us back in 2019 come back this year for a review because the price of diamonds has gone up recently,” he said. said Olivia Landau, founder and CEO of fine jewelry and diamond brand The Clear. cut. “People like old investments like gold or diamonds because they’ve seen how crypto and NFTs have made everyone.”


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