Recently, famous auction houses like Christie’s and Sotheby’s started the fall auction season. The Handbags and Accessories session have become one of the most anticipating parts at Christie’s. Usually, the major part of this session will be Hermès bags. This year, the bidding will start on 26th November. The highest estimated price is a Hermès Kelly bag at HKD 1,800,000 – HKD 3,000,000.
Hermès’s way of selling
Hermès is known as one of the top luxury brands with no spokesperson. Most of their shares are owned by Hermès’s family members only. The net income reaches EUR 1.528 billion in 2019. Other than handbags, Hermès sells other products like home furnishings, jewelry, ready-to-wear, and so on.
Handbags are the most iconic products of Hermès, but unlike other brands, they do not sell the bags directly.
“You cannot just walk into a shop and then get a bag directly. Instead, you need to buy many other products first. Then after accumulating some purchase records, you might be eligible to get an ‘offer (handbag)’ from the salesperson. You might like this offer or might not, also, in most cases, you can’t choose. I will just buy whatever the salesperson offered.” Catrina, a Hermès bag lover shares, “Getting an ‘offer’ is already hard, so I won’t be picky on the offers.”
Customers will use ratios like 1:1.5, 1:2 to refer to the value of random products they bought to get a bag. For example, for 1:1.5, that means if the bag you get is worth HKD 100k, before getting that bag, you spent HKD 150k already on purchasing other products. In other words, the total cost of buying an HKD 100k bag is HKD 250k.
“There is no exact ratio. A lot of factors will affect that: your social status, whether you are a celebrity or not, your relationship with the salesperson… The ratio is a secret under the table and we are not allowed to talk about that to our customers. But it is an unwritten rule that every Hermès player knows.” A former Hermès salesperson, who would like to be anonymous, answers.
Miss G, a Hermès collector, does not go to Hermès store to get a bag. “I don’t like the feeling of not having the choice in my hand,” she says, “My priority will be an auction. Then will be buying from others. The price may be higher than getting one from a salesperson. But since I got the money, all I want is to buy the bag I like.”
Why do people buy Hermès?
Mrs. Lau’s story:
In a TV drama named Nothing But Thirty, Miss Gu wishes to join the mothers’ community from her son’s school and to seek opportunities for her family. When taking a group photo with other ladies, she was hidding her Chanel bag while the other ladies were holding Hermès.
A similar situation happens to Mrs. Lau as well. In Hong Kong, secondary schools are divided into Band 1, Band 2, and Band 3. Her son was not able to get into Band 1 top schools, thus they decided to send him to an international school.
“We are not like a super-rich family, to be honest. After joining the international school, I realized the wealth gap between our family and the other families could be large.” Mrs. Lau sighs, “To fit in their class, we spent a lot of money on purchasing this only Hermès bag. Because the other families have more resources on other activities, I have to stay closer to them so that my son won’t be left out.”
Catrina is an investment banker who has been working in the industry for 10 years. She sees Hermès as the reward for her hard work and success, and the representation that she is entering a “higher-class social status”.
She enjoys buying products from Hermès stores. For the products bought for accumulation reasons, she chooses to buy products like furnishing: “So that whenever I get home, I can see Hermès everywhere. My plates, blankets, pillows… I can feel and smell my success.”
Catrina says it is also common to see some young girls carrying Hermès. Some of them are from the rich-second generation group, meanwhile, some will buy Hermès on credit to create an image that they have the resources. “Sometimes I think they are just imitating some famous people or debutante as well.”
To get more ideas on this topic, Dr. Tom McDonald, a media anthropologist, accepted the interview to talk about this topic.
“If you just need to carry something, you could use an IKEA bag. And this will fulfill your need for carrying objects. But that is a very narrow view of what need is,” says Dr. McDonald, “We have all kinds of needs. We need to be recognized. We need to feel comfortable amongst our friends or when we’re out on the street… Sociologists or anthropologists realize that human kinds are complicated. It is difficult to rank only in Maslow’s hierarchy of needs. People do feel that they have genuine needs and social reasons for something like this and they do want to use it in all kinds of ways in the relationship. When we look a bit closer, we may find it’s not just about showing off.”
“It can be very easy to look at people’s practices on the surface. Often, we tend to find that people’s reasons for doing things are often less concerned with, say, American debutante or any celebrity, but perhaps more concerned with the immediate things to them, like their friends and their social relationships. For example, they might be doing it because their classmates are doing it.”
“When we see these kinds of practices, it is actually grounded. We’re always trying to make sense of people’s behavior in the context of their own lives and in the context of what they do.”
Is it conspicuous consumption, or waste?
“We do have customers who have the money to buy tones of bags back home and then place them in the cloakroom. Since they are rich, they could spend the money in whatever way they like.” The former salesperson shares.
Hong Kong is one of the most income unequal regions in the world. The Gini Coefficient, a ratio representing the wealth distribution where zero means equal distribution, for Hong Kong in 2016 is 0.539 while New York is 0.51. It often happens that when the rich people are consuming Veblen goods or more than what they might need, the rest of the society would throw some anger towards them.
“I think they are just showing off and wasting money. Why don’t they do more charity instead? Hong Kong still has a lot of people struggling to make a living!” Howard, an engineer who works for an IT company, shares his thought on this topic.
“What is waste? Anthropologist Mary Douglas said waste is just matter that is out of place,” says Dr. McDonald, “So if we return to this example of Hermès bag, it depends. There are Hermès bags that are kept in museums or galleries. We don’t say this is out of place, we venerate them. But equally, for some people they might say if you buy hundreds of bags and keep it in your home, that is a waste.”
“The problem here is that the money is being used in the way that it maybe shouldn’t be used, or that some people feel that it shouldn’t be used. It kind of depends on how you see things. Different groups of people may have different standards and to kind of acknowledge the complexity of these kinds of consumption choices. There is no simple answer. ” Dr. McDonald concludes.