Economics in Action: Hermes and Supply and Demand

Bloomberg explores why $10,000 Birkin bags are still such a hot commodity:

“’The limit to what Hermes sells is how much it can produce’ … revenue ‘is what they decide it’s going to be.’”

(Evil geniuses.)

“Rather than expanding leather-goods production aggressively, Hermes has limited supply to protect its image. Being too accessible can lead to ‘banalization’ and the company’s backlog of bag orders has probably helped insulate [Hermes] from the weakening world economy … “

(Limit the SUPPLY, expand the DEMAND, etc.)

“That, along with being famously impossible to obtain immediately if your name isn’t Gaga or Kardashian, has held their place in the upper echelon of timeless fashion.”

(“Gaga or Kardashian.”)

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