Opinion: What the Hermès Birkin legal saga means for luxury

The Birkin bag, a symbol of unparalleled luxury and exclusivity, has captivated the imagination of the fashion world since its inception. Named after the actress and singer Jane Birkin, it represents the pinnacle of craftsmanship and status. This handcrafted masterpiece by Hermès, often requiring countless hours to produce, has become more than just an accessory — it's a cultural icon, embodying the ultimate blend of fashion, function, and exceptional storytelling. I have dedicated several Jing Daily columns to explaining how storytelling transformed the Birkin into not only one of the most desired luxury items on the planet but also an investment that outperforms many other investments over decades. The Birkin has become the undisputed queen of handbags, with a price tag starting around $10,000, and some limited-edition bags made of rare leathers can sell north of $100,000. Wearing a Birkin signals ultimate status. On a recent trip to Singapore, Malaysia, and Hong Kong, where I presented to some of the wealthiest individuals in Asia, the Birkin was practically ubiquitous. However, for most people who are eyeing a Birkin, buying these bags is almost out of reach. And this is not only because of the price tag but also because of a waiting list policy that has become increasingly obscure. The internet is full of stories of angry individuals who want to buy a Birkin (and the equally sought-after Kelly) but feel forced to buy other items by Hermès just to “qualify” to purchase the iconic bag. BoF reported on April 19, 2022, that “Chinese luxury consumers say they feel rising pressure to buy less-popular items to gain access to sought-after Birkin and Kelly bags.” Meanwhile, the Financial Times reported on November 3, 2023: “In videos posted to social media, shoppers list products from lipsticks and sandals to chinaware and towels that they have spent thousands of dollars amassing to compete in what they call ‘the Hermès Game.’ The goal is to be offered the chance to buy one of the French luxury house’s ultra-exclusive Birkin or Kelly handbags, which start at about $10,000 and cannot simply be bought by walking into a shop. To achieve this, brand loyalists seek to endear themselves with sales associates over months or even years by spending small fortunes on less restricted items.” The Financial Times further states that, despite these claims, Hermès says it “strictly prohibits the sales of certain products as a condition to the purchase of others.” From icon to courtroom Now, Hermès has found itself embroiled in a class-action lawsuit filed by two California residents. The lawsuit accuses Hermès of antitrust law violations, alleging the company engages in a practice known as “tying” — requiring customers to make additional purchases before allowing them the opportunity to buy a Birkin. This practice, the plaintiffs argue, is not only discriminatory but also serves to inflate the prices of these already highly exclusive bags. Sales associates are purported to push customers to buy other Hermès products, like shoes, scarves, and jewelry, to even stand a chance to purchase a Birkin. The plaintiffs are seeking unspecified monetary damages and a court order to halt these practices. The legal case against Hermès underscores the growing scrutiny by customers around luxury brands’ pricing and sales strategies, especially in times when price increases have become more frequent and significant. Since the pandemic, many luxury brands have increased prices drastically, with Chanel practically doubling the price of some of its bags. The lawsuit raises questions about the fairness and legality of such practices designed to maintain exclusivity and demand for high-end products. Lessons for luxury For other luxury brands watching this case unfold, there are several key takeaways. Firstly, the importance of transparency and fairness in sales practices cannot be overstated. I have argued many times that empathy and the creation of positive emotions are critical to maintaining a long-term client relationship. While preserving brand exclusivity is important, companies must always remember to avoid alienating clients, generating social media backlash, or inviting legal scrutiny. Brands need cultural capital to create desirability, yet its intangible and fragile nature means it can be lost rapidly when clients feel that brands don’t treat them the way they should be treated. Empathy and the creation of positive emotions are critical to maintaining long-term client relationships. Secondly, this lawsuit highlights the evolving legal landscape regarding consumer rights and antitrust laws. Brands might face challenges if their practices are seen as restricting competition unfairly. The lawsuit against Hermès over its Birkin bag pricing and sales policies is more than just a legal battle. It highlights the need for brands to create, nurture, and grow cultural capital. It is also a signal that a new generation of clients, Gen Z, is rapidly gaining importance. Research at Équité has shown that Gen Zers have high expectations, expect more in terms of fairness and social values, and are outspoken when it comes to sharing their emotions and frustrations on social media. It's a new game for luxury, prompting a reassessment of how luxury brands are marketed and sold to ensure that exclusivity doesn't verge into exclusion. As the case unfolds, it will be interesting to see its impact on the strategies of other luxury brands in an industry where the cultivation of desire is the most critical driver of perceived value. This is an opinion piece by Daniel Langer, CEO of Équité, recognized as one of the “Global Top Five Luxury Key Opinion Leaders to Watch.” He serves as an executive professor of luxury strategy and pricing at Pepperdine University in Malibu and as a professor of luxury at NYU, New York. Daniel has authored best-selling books on luxury management in English and Chinese, and is a respected global keynote speaker. Daniel conducts masterclasses on various luxury topics across the world. As a luxury expert featured on Bloomberg TV, Forbes, The Economist, and others; Daniel holds an MBA and a Ph.D. in luxury management, and has received education from Harvard Business School. Follow him: LinkedIn and Instagram. All opinions expressed in the column are his own and do not reflect the official position of Jing Daily.

Opinion: What the Hermès Birkin legal saga means for luxury

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Published March 25, 2024

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Opinion: What the Hermès Birkin legal saga means for luxury