Podcast Summary: Slate Money – SWAG: Luxury Goods

Podcast: Slate Money
Episode: Slate Money: SWAG: Luxury Goods
Air Date: November 26, 2019
Host: Felix Salmon (A)
Guest: Max Bittner (B), CEO of Vestiaire Collective

Episode Overview

This episode of Slate Money dives into the world of luxury goods as alternative asset classes. Host Felix Salmon and guest Max Bittner, CEO of Vestiaire Collective, explore whether items traditionally seen as status symbols—from handbags and watches to sneakers—can also be considered investments. They discuss value retention, market trends, the role of scarcity and exclusivity, the rise of resale platforms, and the parallels and differences between luxury goods and other alternative assets like art and gold.

Key Discussion Points & Insights

1. Luxury Goods as Investments vs. Consumables

• Traditional View: Luxury goods are typically seen as consumable—status symbols bought for enjoyment, not for potential resale (00:55).

• Changing Perspective: Platforms like Vestiaire Collective highlight that luxury items can retain value, or even appreciate, making them closer to investment assets than pure consumption items (02:06).

• Mechanisms: Retained value depends on “right ownership at the right time in the lifecycle of the product” (02:07–03:52).

  “We check the authenticity of the products…we curate…but in the end, it’s a platform where people buy and sell luxury and affordable fashion.”
  — Max Bittner (02:17)

2. Scarcity, Exclusivity, and Secondary Market Dynamics

• Scarcity’s Role: High prices and value retention are often due to manufactured scarcity by brands (04:39–06:26).

  “Certain bags or certain watches are not available. So there is a scarcity.”
  — Max Bittner (06:08)

• Strategic Scarcity: Not primarily to benefit secondary markets or investment narratives, but to justify higher primary sale prices and exclusivity (06:39).
• Rising Primary Prices: Example: Price inflation in luxury suits not tied to material costs but “the ability...to charge a premium” based on brand and exclusivity (06:47).

3. Drivers of Secondary Market Value

• Depreciation & Rarity:

  • Value retention is a function of use/age (depreciation) and rarity/hype (trend cycles) (04:39–05:23).
  • Some items return 80–100% of original retail after 6–12 months if highly desired or rare.

• Examples of Speculation:

  • Sneakers are a leading example, with platforms like StockX allowing buying, holding, and reselling without the item ever changing hands physically (08:14).
  • Speculative buying often centers on limited “drops,” with demand instantly outstripping supply (12:29).

  “There’s students and…even high school students who make a killing out of that.”
  — Max Bittner (12:41)

4. Costs, Liquidity, and “Investment Grade” Thresholds

• Transaction Costs: Resale involves non-trivial logistics and platform costs, mostly shipping and authentication (~$40–50 per transaction), which can impact short-term trades (10:47).

  “If I go onto your website and I buy a bag and then immediately turn around and sell it…the average logistics cost…would be, let’s call it $40, $50 USD.”
  — Max Bittner (10:47)

• Investment Thresholds: Unlike art (which typically becomes “investment grade” only above ~$500,000), luxury goods can be asset-like at lower tiers: entry-level “investment-grade” handbags and watches start around $1,000–2,000 (14:05).

  “You’re talking about your basic Chanel Timeless bag…your lower-end Hermès bags, your Louis Vuitton bags. Those items…can easily…keep their value at 80, 90% of the original purchase.”
  — Max Bittner (14:05)

• Seasonality: Demand spikes around holidays—e.g., men buy Hermès bags as last-minute gifts in November/December, suppressing price sensitivity (15:23).

5. Sustainability & Changing Consumer Behavior

• Sustainability Angle:

  • The shift to treating luxury goods as assets supports sustainability, since longer item lifecycles reduce overall environmental impact (08:14–10:10).
  • Encourages “trading up” to higher quality, longer-lasting products rather than “fast fashion.”

  “…by educating consumers that these are assets which have a resale value, they might change their decision making away from buying cheap, fast fashion and trade up.”
  — Max Bittner (08:14)

6. Asset Class Context: Watches, Streetwear, and Market Evolution

• Watches As a Distinct Asset: A well-established, sophisticated secondary market; watchmakers actively manage resale, authenticity, and aftercare (15:50–16:55).

• Streetwear & Sneakers:

  • Rise attributed to masterful use of online communities, hype, and “drops” targeting millennials and Gen Z (17:49).
  • Luxury brands are now mimicking these tactics for traditional products (19:18–20:29).

  “The whole overall coolness factor of streetwear has absolutely exploded…they’ve picked up to this whole idea of resale, flash sales, drops, using social media to create some sort of a frenzy.”
  — Max Bittner (17:49)

7. Resale Platforms and The Shift in Brand Strategy

• Flash Sales and Seller Motivation: Engaging sellers in flash sales creates store awareness/followers, turning sellers into micro-entrepreneurs who need traffic and engagement (20:43).

• Direct Brand Involvement:

  • An emerging trend: brands selling directly on resale platforms, similar to secondary ticket market strategies for concerts (21:30–22:15).
  • These platforms can serve as customer acquisition channels, with many buyers purchasing items and brands “for the first time secondhand” before later trading up to new.

  “For the brands to interact directly with consumers on our platform, I think is a win-win situation...”
  — Max Bittner (23:31)

Notable Quotes & Memorable Moments

• On Parallels to Airline Classes:
  “The person who has an Hermès bag which is uniquely made for just them is the person flying on a private jet. The person who buys an Hermès bag directly in the store without waiting is flying first class...”
  — Max Bittner (02:32)

• On ‘Guaranteed’ Profits from Drops:
  “I can make an almost guaranteed profit if I stand in line outside Supreme waiting for a drop, buy a hoodie and then sell it on eBay…”
  — Felix Salmon (12:29)

Notable Timestamps

• 00:55 — Introduction to the concept: luxury as investment vs. consumption.
• 02:17 — Max explains Vestiaire Collective’s business model.
• 06:08 — Scarcity as a central tenet of luxury value.
• 09:59–10:47 — Secondary market costs (logistics, margin impact).
• 14:05 — Minimum spend for “investment grade” luxury goods.
• 15:23–15:34 — Seasonality in luxury resale dynamics.
• 16:06–16:55 — Watches as an established asset class with unique market features.
• 17:49–20:29 — Streetwear’s “frenzy” model, flash sales, and online hype.
• 20:43 — How sellers benefit from participating in platform campaigns.
• 21:30–23:31 — Future of luxury distribution: brands going direct-to-resale.

Conclusion

This episode provides a rich exploration of how luxury goods straddle the line between consumption and investment—underpinned by evolving consumer attitudes, sustainability movements, market mechanisms, and brand strategies. Max Bittner’s perspective illustrates the transformation of luxury goods into traded, appreciated, and sometimes speculative assets, with resale platforms like Vestiaire Collective at the center of this shift. The result: luxury items no longer simply symbolize status—they can, for savvy consumers, represent genuine stores of value.