Walking around with a Medium Flap Chanel handbag is going to cost you. A lot. Like, as much as two Apple Macbook Pros. Or a nice 2000s-era Toyota Corolla. Or nearly one year at California State University.
On Tuesday, the bag consignment and re-selling platform Baghunter published an analysis that found the price of Chanel’s classic Medium Flap Bag has increased by 72 percent over the last six years. At $4,900, the bag costs $2,405 more than it did when the recession began in 2008, and $2,932.83 more—adjusted for inflation—than it did in its debut in 1955. (A $4,900 handbag is, by the way, also five times what most American have in savings.) Even for a couture company, that’s pretty excessive.
To its critics, the Chanel Medium Flap and its peer purses are emblematic of a luxury-handbag bubble that’s about to burst. During the peak of the recession, at least two New York Times stories argued that luxury-logo consumption was on the decline as traditional high rollers opted for more “discreet luxury goods,” to reflect the frugal mood of the times. By 2014, as prices rose and yet luxury bags continued to sell off the shelves, the Wall Street Journal pointed to one year’s slowed sales growth to argue the overpriced bag was doomed, while Business of Fashion called the market too “crowded” to last long.
Last year, reporters again saw an end drawing near, when slightly below ultra-luxury, “premium” brands like Kate Spade, Michael Kors, and Coach, whose bags retail for a comparatively thrifty $200 to $400, reported slower sales growth and price cuts at retailers like Nordstrom. “The designer handbag industry is losing its luster,” Business Insider reported; “What happens when the hot handbag trend is to not buy a new one?” The Wall Street Journal asked.
But publications are too hasty to forecast doom. During the recession, high-end bag manufacturers Hermès and Louis Vuitton saw sales increase, an unlikely bright spot during an overall slump in luxury sales. And if you look at the industry in broader terms, it appears Chanel has had good reason to raise the prices of its classic bags during economic hard times. The recession helped to boost the segment’s bright prospects and growing bottom line: In 2015, Research and Markets reported that Chanel and other ultra-luxury companies such as Gucci, Louis Vuitton, Hèrmes, and Prada were leading the handbag market, which, more than just experiencing growth during an economic downturn, actually ranks “among the fastest growing segments of the overall luxury goods industry,” according to the report.
And let’s not forget, American women possess an average of 11 handbags in their closets. Twenty percent of U.S. women have spent over $200 on a bag; nearly 10 percent have shelled out over $400. In the past, social scientists have accounted for the particularly pricey appeal of ultra-luxury handbags in part by pointing to the daunting effect they have on other women—women use bags with high-end logos to intimidate romantic rivals, according to at least four studies. But the recession also spurred a new body of research looking into the buying habits of luxury consumers during economically tough times. Their work offers us a glimpse into the strange psyche of people who flock to ever-more-obscenely priced goods during and after an economic downturn.
So who actually buys Chanel in a recession? As it turns out, more people than journalists might have you believe. In 2010, three researchers from the University of Southern California and the University of California-Los Angeles investigated the claim embedded in several New York Times trend stories that conspicuous consumption had gone out of style. Collecting data on handbags sold on Gucci and Louis Vuitton’s websites and stores between January 2008 and May 2009, the researchers found that, rather than toning down their branding and slashing prices, the two fashion houses produced flashier, more expensive products with more conspicuous logos. This aggressively self-promotional tactic paid off—the researchers found that both companies’ profits in their handbags divisions rose in Europe, while in America Louis Vuitton’s revenues remained steady and Gucci’s increased by an average of 14.5 percent.
Arguments for the decline of conspicuous consumption often cite expert opinions and anecdotal shopping experiences. But, the USC and UCLA researchers argued, this evidence may be tainted by people’s self-interest. In other words, sources may be keenly aware that it doesn’t reflect well on them to tell a reporter that they have their eye on a Gucci tote bag with logos stamped all over it. All those people who don’t admit to buying expensive things during a recession? They’re probably skewing the truth to appear a bit more sensitive. “Our data support the notion that those who are still in the market for luxury goods… still like the loud products and are willing to pay a hefty sum for them,” the researchers wrote.
This isn’t a phenomenon that’s seeped as strongly into other luxury goods.In 2012, ESCP Europe marketing professor Chris Halliburton noted that, in economic hard times, classic items held more appeal than flash-in-the-pan trends. The French house Hermès, a traditional leather purveyor known for its famously unattainable Birkin bag (even Samantha in Sex and the City had a hard time getting one), showed the largest profit margins before and during the recession. “The core products and accessories,” he concluded, “triggered growth with the mid-position items the most vulnerable.” While that old fashion-industry adage about hemlines rising and falling with the stock market may not be true for apparel, it appears to hold some weight for handbags, where conservatism is on-trend during a recession.
That’s not to say that luxury buyers are putting together more boring, conservative ensembles during a recession—the downturn may, in fact, be forcing them to get more creative, even more democratic, in their choices. Halliburton attributed the fact that luxury markets outperformed premium brands like DKNY, Tommy Hilfiger, and Polo Ralph Lauren in part to the rise in fast fashion. In the past decade, cheap, accessible, fashion-forward brands like H&M, Forever 21, and Zara have given rise to an increase in “mix-and-match” fashion, Halliburton notes, which has popularized the combination of high-end and affordable items. In many ways, of course, this mix-and-match trend makes perfect sense for a recession—if people who buy luxury goods risk looking insensitive by flaunting their wealth, wearing some threads from Target may help mitigate the effect of expensive logos.
But consumers don’t always look to the stock market to dictate what they wear—these days, luxury buyers are primarily concerned with what their look says about their identity, and oftentimes their identity is aspirational. Members of Generation Y place “individual value” (basically, their personal point of reference to the good) above other major factors in luxury purchasing decisions, such as functional, social, and financial values. What others think matters when it comes to this formation of personal identity: In an unstable post-recession job market, one-third of LinkedIn members report they buy luxury items to express themselves professionally and personally; more than half say they want these items to help them ascend in social status and improve their lifestyles to impress others.
Those buying luxury goods during a recession may also be attempting to rebelliously distinguish themselves as individuals, the USC and UCLA researchers reported. Because brands increased the visibility of their logos on their products, and because this tactic proved to be successful in 2008 and 2009, perhaps the largest market for luxury goods in a downturn is the iconoclasts—those who fly in the face of “social commentary calling on them to not send status signals,” the researchers wrote.
That’s not to say that people who purchase luxury handbags during economic hard times aren’t submitting to some massive social and capitalist norms. What are logos if not universally understandable announcements that the wearer is doing all right for him or herself? But the findings by the Los Angeles researchers complicate the standard portrait of who luxury-goods consumers are, and what their intentions are.
Maybe Chanel shoppers aren’t just craving a flap bag because Jessie J., Hilary Duff, Bella Thorne, and Taraji P. Henson are all wearing them, or because they want to impress at their next board meeting. Maybe Chanel consumers want to treat themselves, and, in the process of doing so, aren’t about to let the stock market cramp their style.