Thursday, 10 March 2011

HERMES BIRKIN= GIANT PONZI SCHEME. A lesson in supply and demand

The Hermes Birkin, possibly the most coveted bag in the world.  Our lust only heightened by its scarceness and prohibitive expense (although many of its fans will be ashamed to admit this latter assertion).

As this bag has been created and tacitly marketed as a status symbol, its price tag of £5500 for a bottom range 35cm Togo leads to ostentatious women dismissively waving their hand in the air and boldly alleging that it's worth the investment.

I do not put myself on a pedestal in making this assertion, for I too, on occasion, have been amongst these women- although conscious of my own delusions.

So, for those who justify their statements by reference to the bags scarcity, let me explain why they are deeply mistaken. Provided that their facts were right, their logic would be flawless and they would indeed be correct. However, the problem is that the demand for this bag is artificial.

This is because the demand is fuelled by three main things- illusion, delusion and resellers.

The brand gives the illusion that the bags are a rarity by keeping them in their store rooms and only selling to regular customers or those who bribe the shop assistants. I know this from loose lipped shop assistants and from personal experience.

People are happy to buy into this myth because somewhere inside even the most  modest amongst us feel sufficiently special to deserve something similarly unique. ! A bag thats Special- just like me!

Because people buy into this myth they are willing to pay a premium to own a Birkin and they retail for £7900 with most resellers. This makes it lucrative for individuals that are connected to the brand to slyly buy the bags and sell them on.

Once the market becomes saturated and customers realise that their assumptions are castles built on sand, demand will eventually crack. This is because all markets will eventually reach their efficient equilibrium (even luxury markets) no matter how much third parties try to distort their basic forces.

So I am going to say a firm NO to the Birkin. And besides the allure that the bag once held has been destroyed by the cheap fakes and copies touted around proudly by those who too have bought into the myth. This is a case of the Emperor's new clothes if ever I've seen one.





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