According to the Law of Demand, when price is high, demand for that particular item is low. However, that is not the case for the Hermès Birkin which retails from $7000 to $10000 Canadian. The demand for this bag has gotten so overwhelming that even the waitlists are full and unable to be added to. Furthermore, each individual bag is entirely handcrafted, which sets them apart from many in the bag industry, and the process requires at least 15 to 20 hours.

In an interview with the CEO of Hermes, Patrick Thomas, he states that Canada has become the fastest growing market for Hermès due the following reasons: Canada attracts many tourists, Canada has a good economy compared to Europeans nations, and the tastes of Canadians are changing. Many individuals are opting for a brand that is not as flashy or as “bling bling” according to Patrick and Hermès falls into the category of a luxury good whose logo is simple and is not embroidered all over the surface of the bag. It has managed to adapt to the changing interests and as a result, sales grew 15% in Europe even though the economy was in a recession and even greater in Canada.

I believe that the company is not going to decline any time soon because it knows what its customers [the wealthy and those who are saving to purchase a Hermes product] want and is willing to adapt to changes in society. I however can’t understand why individuals would spend over seven grand on a purse. Perhaps it’s because of the extra satisfaction they will get by sporting around a Birkin or they just want to show off their wealth or hardwork in a more classier way. However, these interests may be due to the fact that the bags are in high quality, something that can be used for a considerably long period of time.

I guess the saying the saying is true: good things come to those who wait. Those who want a Birkin will surely be waiting a hefty period of time!

References:

http://www.bnn.ca/News/2013/10/2/BLOG-Hermes-Birkin-The-most-in-demand-bag-in-the-world.aspx