Let’s get this right out of the way – I hate the term “investment piece” and want everyone to cease and desist the term’s usage immediately.
Whenever someone calls their latest purchase an “investment piece,” all I’m hearing is a flimsy defense for financial over-exertion. That’s because every single item of clothing you buy, from couture to consignment, IS an investment. The key metric most shoppers pay attention to is price — in reality, shoppers should be holistically monitoring how well their investments perform overall.
I think of my closet as a portfolio. Here’s how I measure ROI:
Fast Fashion
These are the affordable pieces from H&M, Zara and mall brands. They’re the equivalent of a junk bond – they may pay off in the short-term, but there’s no pay out in the long run. (Translation: that stuff has little-to-no resale value in consignment.)
But these investments can out-perform your expectations: The $40 Jessica Simpson jeans I’m wearing above have been favorites for years, and I’ve even re-dyed them for longevity. I wouldn’t get a cent for them on eBay, but they were still a great investment. (But the identical teal pair I purchased? Huge mistake and worst investment ever.)
Attainable Luxury
Next are brands like Marc Jacobs, Kate Spade, Michael by Michael Kors and Coach. This is where the price tags start to sting the average post-recession consumer. I often compare these brands to cars: they cost plenty, but once you drive off the lot, the market value tumbles 50%. My recommendation? Do not buy retail. If you compare these brands to fast-fashion, the cost-to-quality ratio doesn’t touch the luxury brands. (Every Marc Jacobs bag I’ve ever owned has fallen apart within a year of regular use, and they cost a pretty penny because I paid full price.)
Moreover, consignment stores hate these brands because they are difficult to re-sell for a decent profit. In fact, if you are in the market for a Coach bag, I highly recommend you check out the consignment scene in your town — you’ll be able to score a great bag for under $50.
Luxury
Here’s where it really starts to hurt: Chanel, Burberry, Louis Vuitton. These are the brands that are super-expensive even when they’re on sale. This is also where average shoppers begin feeling guilty and start tossing out the “It’s an investment piece” excuse.
To rationalize a splurge, most women do a cost-per-wear (CPW) calculation. If a jacket is $200, and you wear it 50 times each winter, the CPW is $1 after four years. But this rationale goes out the window for anything terribly expensive. You’d have to wear a full-price Chanel suit until age 80 to get the same CPW — and even private equity deals only last a decade.
My advice? If you’re shopping full-price, or even a retail mark-down, don’t hold yourself to unreasonable CPW expectations. Your weight and tastes will likely change, and there’s no guarantee that you’ll love it in 2 years, let alone 50.
And if you start calculating your credit card limit while rationalizing you’ll pass on the purchase to a daughter you don’t even have, it’s time to take a hint from the gun control folks and give yourself a waiting period. I recommend ONE YEAR before pulling the trigger. Yes. One year. If the luxury item you’re considering won’t be available in one year, it is not a wise investment — it is an impulse purchasing decision made under duress. If you still want it after a year? Congrats — it will be a fantastic investment!
Shopping consignment is the best ROI I have unlocked in this category. It’s where you will find luxury items at prices comparable to full-price, mid-tier/mall brands. And best of all? Because of the luxury label, there is a guaranteed buyer’s market when you move on to the next investment opportunity.
Happy hunting, and may your investments be wise.