Driven by a soaring demand for secondhand luxury goods, the resale market reached a value of $37.45 billion by the end of 2021, say analysts at Bain & Co, a management consulting firm. Analysts also attribute the growth in secondary luxury market with a rise in supply from an expanding area of players in the segment. The resale market offers brands and investors an opportunity to extend the lifetime of their products and reinfornce their commitment to sustainability, says Claudia D’Arpizio and Federica Levato, Analysts, Bain & Co.
Access to entry level buyers
Secondhand sales also offer brands an additional distribution channel, says a report by The Fashion Law. It enables brands to access entry-level luxury spenders as well as buyers of low-priced and licensed products. Luxury consumers also benefit from the network-based nature of luxury retail and its capacity to give brands a richer, data-led understanding of young consumers’ behavior. Resale brands like Alexander McQueen have partnered secondhand luxury marketplace Vestiare Collective for its ‘Brand Approved’ program. Gucci, meanwhile launched the Vault initiative to curate and offer up a selection of pre-owned items.
Concerns driving brands to resale
Though many luxe brands are looking at resale, the sector still faces many issues, say Bain analyst. These include: getting a suitable value for products; dealing with operational complexities like authentication; start-up stock and margins; introducing a successful branding strategy; widening customer base and ensuring correct pricing of resold products. These are some of the concerns driving brands to the resale market.
Few brands are also partnering pre-owned market players. For instance, Kering and shareholder Groupe Artemis have invested in resale companies like Vestiaire, Grailed, and GOAT; Chanel acquired Farfetch, which has a resale arm and venture of its own.
Rising 65 per cent from 2017, the luxury resale market has reached over €30 billion. Addressing the above issues can help brands sustain this growth momentum and outpace demand for new products in the luxury segment, adds the report.
