The Investment Wardrobe: The Financialization of Luxury Fashion

The line between Wall Street and High-Fashion is blurring. As resale platforms surge and collectors turn their closets into profitable portfolios, fashion is no longer just about taste – it’s about returns.

According to Sotheby’s, “high-end fashion goods” are “unique, rare and precious products, often associated with high quality, craftsmanship, and exclusivity, popular among high-net-worth individuals and aspirational customers”. So, how can a high-end fashion good be seen as a financial commodity, and why has the market started perceiving it as such?

First, with an already estimated 25-30 billion USD market size (2020) and a predicted compounded annual growth rate of 10-15 percent over the next decade, the resale luxury market is one to watch. A new study from McKinsey concludes that, while 75-80 percent of luxury consumers are still strictly new-product buyers, consumers consider rarity value and sustainability more than ever. With the rise of specialized digital trading platforms and changes in consumer behavior (with the so-called “generational headwind” phenomenon, where younger buyers – Millennials and Generation Z – are significantly more willing to purchase pre-owned products), the resale luxury market presents high rewards and unprecedented interest from both consumers and brands. Besides that, in April 2025, US President Donald Trump announced sweeping Luxury Tariffs, affecting imports from over 180 countries and causing major fashion brands to experience significant stock declines. It’s anticipated that prices of second-hand luxury goods will soar as panic sets in. Meanwhile, collectors are more than happy to sell their goods at a premium in the resale luxury market.

Also, the rise in the potential of high-end fashion goods as investments is partially due to the changes in consumer perception. A Business of Fashion Report made in partnership with eBay states that half of the surveyed luxury shoppers in the US are monitoring the market value of their luxury accessories, and more than half believe this value could appreciate.

Constantly reinforcing the authentication of second-hand fashion goods as an essential feature, 80 percent of luxury shoppers believe that the value of their luxury accessories is less volatile than or on par with their other assets. Besides that, more than half of the surveyed luxury shoppers see these goods as a form of currency, being open to exchanging them for other luxury items.

One of the most compelling examples of fashion items becoming a financial instrument is the Hermès Birkin Bag. First introduced by Hermès in 1984, the Birkin Bag has become one of the most coveted luxury accessories due to its exclusivity, craftsmanship, and use of premium materials. Recent studies have shown that these bags have demonstrated impressive returns and often outperform traditional investment options. Birkin bags have provided an average annual return of 14.2 percent since 1980, compared to the S&P 500’s average return of 8.7 percent over the same period, showing a more consistent upward trend. In 2020, the Birkin bag experienced an average return of 38 percent, showcasing its resilience even amid economic downturns. The factors behind this are its scarcity, as the brand maintains a strict limitation on production, driving up demand, its quality, and brand prestige.

Another compelling example is Luxury Watches. A study conducted by Swiss finance professors Philippe Weisskopf and Philippe Masset found that luxury watches exhibited lower market volatility (3.9 percent annual volatility) compared to other asset classes, with fixed income being the closest at 5-8 percent. Adding to that, a Deloitte 2023 survey indicated a 39 percent increase in interest in pre-owned watches by investors to diversify their portfolio and protect their investments against inflation, as rare pre-owned watches have surged in value, with some models appreciating by up to 20 percent annually.

In conclusion, the convergence of fashion and finance is reshaping the luxury market. As high-end fashion goods gain recognition as viable investment assets, driven by their rarity, quality, and brand prestige, both consumers and brands are adapting to this new approach. The rise of resale platforms, changing consumer behaviors, and economic factors like tariffs are accelerating this shift. More than ever, luxury items are being recognized not just for their visual appeal, but for their financial potential, challenging the traditional notion of what qualifies as an asset.