Popularized by the cost conscious Gen Z and millennial consumers, who according to the Boston Consulting Group will account for 60 per cent of all luxury spending by 2026, the sharing economy model is being endorsed by two of luxury fashion’s biggest brands: Kering and Ralph Lauren. As a Business of Fashion report suggests, French conglomerate Kering recently led a €178 million ($215 million) funding round in Vestaire Collective which led it to acquiring a 5 per cent stake in the company. The deal valued the luxury resale platform at over $1 billion, signaling the growing interest of luxury brands in the second-hand luxury market.

More consumers prefer second-hand luxury

One major trend catching luxury brands’ attention is: clothing rentals. American mega-label Ralph Lauren recently launched ‘The Lauren Look,’ a $125 per month subscription service powered by Caastle that allows consumers to rent items from its lower-priced Lauren Ralph Lauren line. Of the two, the resale trend is being favored more by luxury players as there is significant interest amongst consumers for second-hand luxury goods. However, secondary market also encourages sale of new goods by boosting perceived affordability, says Bernstein analyst Luca Solca,

So far, luxury houses have stayed away from the secondary market due to their fear of brand dilution. However, the market provides a significant revenue opportunity that they cannot afford to ignore. Secondary market players can help convince shoppers to view their luxury goods as assets rather than consumables, says Max Bittner, Chief Executive Officer, Vestiaire Collective.

Kering, whose Gucci and Alexander McQueen labels have already forayed into the second-hand market, expect its products to retain value over time. The retailer hopes to launch these products before a wider audience in order to bring greater trust and order in the secondary market

Rise in rental services

Nowadays, more consumers are opting for renting clothes. They are increasingly turning to monthly subscription services like Spotify or Zipcar which help luxury brands serve a wider audience besides giving insights into the changing consumer behavior and product design.

However, rental forms a negligible percentage of overall fashion market which the pandemic has further crushed. In future too, the percentage of rentals in consumers’ closet is likely to remain minute as they are likely to prefer a mix of seasonal and customized pieces alongwith wardrobe staples.