Why Resale became the stake of the luxury brands?

May 19, 2022

Author:
Clemence

Why Resale became the stake of the luxury brands?

The U.S. second-hand fashion market should reach $57 billion by 2025. The opportunities in the resale market have never been greater in the fashion industry. Indeed, the    popularity of the secondhand market has encouraged brands to create their own channels, to control their brand identity. For instance, a few brands which started to launch their own secondhand market place, such as Apparis but also Sandro, The Kooples or Claudie Pierlot. The benefits are numerous for the brands due to a greener image, attractive prices for the customers and the disposal of stocks. The fashion industry cannot ignore the emergency of the environmental crisis, which pushes the government to establish laws to contribute to the reduction of waste from the fashion industry.  The law AGEC in France, or the proposed legislation in the European Union states that destroying unsold goods is no longer an option and brands must find viable solutions.

The high utilization of second hand marketplaces is coming from the customers, especially the new generations (millennials, Gen Z) which appear to value the sustainable development, inclusivity, transparency and traceability more than the previous generation. There’s also been an increase in physical thrift stores, 7% in the US from 2016-2018 .  

This increase in the resale market led by this younger demographic shows that  these new customers are looking to shop brands that are aligned to their ethics and values. Brands that want to create relationships with these new customers need to be part of the circular economy.

As mentioned in the introduction there are already brands that have started to take steps towards the second-hand market. In the US, brands such as Stella McCartney or Gucci are taking advantage of this emerging market, through collaboration with the platform ReaReal. Indeed, this channel is booming by providing the certification of high quality reselling only to the customer, while they promise to the brands, to communicate a green and ethical image ( and to dispose of their unsold inventory). Tradesy is also used by the luxury brands because it ensures a chic platform of reselling in the US. Additionally, for the other marketplace, like Depop, Poshmark or ThredUp which constitute a general clothes resale and are not focused on the luxury segment, luxury products remain the most coveted and in demand.

The phenomenon is not unique to the United States, since in Europe the resale market for the luxury sector is propelled by Vestiaire collective. The brand caters to fashionistas who adore the hunt for a good bargain but never sacrifice quality and style. The brand has sold to over 7 million fashion lovers in over 50 countries, and boasts over 600 thousand followers on Instagram. The most requested brands are Dior and Louis Vuitton, or the Italian houses Prada and Gucci. The resale of a product  can put it back in trend, and push the brand to include it again in its new collections (Saddle bag from Dior). On the other hand, the group SMCP (Sandro, Maje, Claudie Pierlot) possess their own marketplace. However, for the moment they have not done much communication about it, which could make us think that it's to not cannibalize their full price sales. Only time will tell how these two sales channels can work together.

Even the most famous retail store, such as Printemps, in Paris, has been seduced by the resale  market and decided to commercialize the unsold stock in a special corner of the shop, with high discount to attract the client.

These innovative brands who are experimenting with these resale channels are trying to answer the question: “How to extend luxury pieces’ lifespan by bringing them back into circulation?”

The second-hand market is therefore promising and full of promise for brands, as well as for consumers. However, the resale market reveals dilemmas for luxury brands. Indeed, their products rely on quality, but also a rarity and uniqueness fantasy. The accessibility to these products given by these online and physical shops can decrease this brands equity and desirability. Therefore, the challenge for luxury brands will be to manage to capture and cater to both, a younger customer that is hungry for sustainability and the traditional luxury customer that are attracted by scarcity and uniqueness.