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Luxury's 'Freak Category'
Wall Street Journal
Among the many things for which I'm grateful to my wife is that she's never asked for a $10,000 Hermès Birkin or Kelly handbag for Christmas, let alone attempted to assemble a collection of them. But if that happened to be her addiction, then the Ukrainian Institute of America, across the street from the mayor's home on East 79th Street, would have been the place to shop last week. That's where Heritage Auctions was holding a "Holiday Luxury Auction" preview of items for individuals whose net worth is robust enough that a Hermès 40-centimeter Matte Vert Veronese Alligator Birkin Bag with Palladium Hardware in pristine condition might constitute a bargain with an auction estimate in the $55,000 to $65,000 range. The sale will be held in Dallas on Dec. 6.
"Either your collectors who bought a bag and never used it or used it one time and moved on," explained Matt Rubinger, Heritage's director of luxury accessories.I can't say I spend a lot of time thinking about handbags, though I'm aware that a certain caliber of lady who lunches would feel naked without the correct designer bag. Nonetheless, I was startled to discover that none of these bags came from the manufacturers themselves; most were returning to the market directly from their owners.
It takes a lot to appall me. But it required a moment to absorb this concept: that there are people out there so wealthy they can afford to spend the equivalent of full-fee freshman-year tuition at Princeton on a handbag—and then never remove its wrapping. I just wanted to make sure I was hearing right.
"Is it somebody who has lost their money in the stock market; is it a divorce?" Mr. Rubinger asked rhetorically. "In this category, it's almost never that. They're trading up. They have a leather Kelly. They sell the leather version and buy a crocodile."
Indeed, Mr. Rubinger and his colleague Kathleen Guzman, the managing director of Heritage's New York offices, pointed out bags in the vitrines that still had the protective plastic film over their hardware. And apparently such is the passion they evoke that unlike other things you buy at auction instead of at a store in the hope of getting a steal—art, furniture, etc.—people are actually prepared to spend more for the bags than they originally cost only a few years ago, apparently because of their relative rarity.
"How many luxury goods can you think of you can buy on Madison Avenue that you'll get your money back?" Ms. Guzman said. "And possibly make money. This is a freak category."
"It's partly supply and demand," Mr. Rubinger added. "If you walk into Hermès right now, you can't get these even if you were Oprah Winfrey."
"It's the exclusivity that drives the market," Ms. Guzman said.
We happened to be standing before a case that included a Hermès Exceptional Collection Shiny Rouge H Porosus Crocodile 30-centimeter Birkin Bag with Solid 18K White Gold and Diamond Hardware in pristine condition. (Forgive me, but I take perverse pleasure in repeating the catalog copy.) It looked like a flashy red handbag to me.
I wondered about the provenance of the bag—described to me as the most valuable ever at auction, carrying an estimate of $80,000 to $90,000. Mr. Rubinger and Ms. Guzman explained that this may be one of the few corners of the auction world where provenance doesn't matter, or at least is kept tightly under wraps.
"She bought it in 2006 and had it as the trophy of her collection," Ms. Guzman said of the seller. "Very recently Hermès offered her the same bag in black. She decided she might actually use it in black."
I felt like a rubbernecker, but was compelled to know more about this lady. I mean, who spends close to $100,000 on a handbag and then says, "Oops! I don't really love it."
"She's from Florida," Ms. Guzman said. "A very well-known person. If I said the name, you would know it."
"In the entertainment industry?" I asked.
No. "But in an industry that hasn't that many well-known people in it."
"In other auction categories, provenance adds to value," she went on. "Here, it's all about confidentiality. Even if somebody is willing to give their name out, we wouldn't. The product stands on its own."
I also wondered whether embarrassment might play a role, especially at a moment when the chasm between the superrich and everybody else is growing by the day. That may have something to do with it, but family politics seems more a factor. This handbag, with its diamond encrusted latch and matching lock and keys, was a gift to the woman from her husband.
"Sometimes the wife doesn't want the husband to know they don't love the gift," Ms. Guzman explained.
And then there are storage issues. There are only so many shoes and handbags the average $25 million Manhattan apartment can hold. "Even if you have a full floor on Park Avenue, your closet isn't endless," Mr. Rubinger observed.
"It may be in California," Ms. Guzman said.
"And Texas," Mr. Rubinger added.
If there's any cause for comfort among those of us in the remaining 99.9%, it's only that rich New Yorkers seem subtly more self-conscious than their Southwest and West Coast handbag brethren. "New York is a little more subdued—browns and blacks," Mr. Rubinger said. "Whereas in Beverly Hills there's a slight preference for bright oranges, bright pinks."
"In Dallas," Ms. Guzman added, "they tend to collect more multiples. Everyone down there has a closet full. They don't just use them; they decorate with them."
Mr. Rubinger recalled the case of the Judith Leiber collector in Dallas. "The client had a dinner party," he recalled. "Instead of flowers as the centerpieces, she had Leibers."
Jessica Simpson caught a flight out of town with fiance Eric Johnson through LAX Airport on Tuesday (November 22) in Los Angeles. She carried her 40 CM Birkin in orange with gold hardware.