An economist’s guide to the luxury-handbag market

You could spot a fake a mile off. The plasticky “Prado” wallets arranged on bedsheets on the pavements lining Canal Street in New York bore only a passing resemblance to the ones for sale in the Prada store in Soho. The fake Chanel bags they lay next to were lumpy, misshapen and smelled a little like petrol. An attempt to make a quick buck by buying one and passing it off as genuine—perhaps by taking it to a small local consignment store—would have been met with raised eyebrows and a chuckle.

What an innocent time. Now booming demand, technological improvements and sheer opportunism have transformed the market for buying and selling luxury bags. lvmh, a luxury conglomerate, sold about €10bn-worth ($13bn) of leather goods in 2013. By 2023 it was selling €42bn-worth—a 320% increase in just ten years. (The global economy, by contrast, grew by only 30%.) Dedicated reselling platforms, such as the RealReal and Vestiaire Collective, have expanded rapidly. Revenues from reselling luxury bags and clothing now add up to around $200bn a year. So producers of counterfeits have upped their game, too. Women now gather in Reddit groups to “QC” (quality check) bags they order from China via WeChat. Called “superfakes” by the New York Times, such dupes are often spot on—down to having the correct number of stitches on each side of the classic Chanel quilted diamond (up to 11, apparently). They cost about a tenth of the regular price.