It is now a fact that more and more luxury brands are stepping into the ‘dance’ of the resale network. Whether willing or not, resale prevails as a permanent outlet within the framework of industrial development, now constituting an essential condition for a sustainable future with golden contributions in parallel.
However, is it indeed a commendable effort to secure sustainability or just another marketing strategy that secures and serves the profile of awareness? And if it is indeed a business matter, how beneficial can it prove not only for the brand but also for the future of the luxury industry? Does a ‘golden’ collaboration with a well-known luxury resale site ultimately outweigh the risks it may face?
Covid-19 significantly contributed to the acceleration of this strategy, and we must acknowledge that the pandemic’s contribution yielded certain crucial decision points that alienate the existing norms. The new era of luxury opens its gates to a broader audience, and the multi-year transformation is now secured in just a few months.
The secondary market is undoubtedly at the pinnacle of luxury fashion, and while environmental concerns are undeniably catalytic factors in the current evolution, the primary causes for the increasing interest in luxury resale stores predispose to two thorny factors. The main ‘lever’ of mobilization is, in fact, the price opportunities for iconic pieces from titan houses for consumers and the higher turnover for retailers. The fact that these actions serve doubly sustainable solutions for the luxury industry is literally a coincidence that we must recognize and exploit not only as consumers but also more broadly as professionals.
The Pillars of the New Era
In early 2020, the luxury industry found itself amidst seismic changes. Consumers were increasingly inclined to spend their income on experiences (such as travel, etc.) rather than products, thus facilitating the rise of resale markets. While e-commerce steadily gained market share, tourism, a significant revenue driver for luxury products, did not ultimately serve as a primary source as increasing government regulation made local customers more essential.
Then, the pandemic struck, and the ‘seismic’ event took on an entirely new meaning. The global crisis of Covid-19 limited mobility even for the wealthiest consumers due to lockdowns and broader travel restrictions. Years of online innovation and change were secured in just a few months, as brands focused on revenue generation from the singular fruitful channel available in the market: e-commerce.
Resale at this point emerges as one of the pandemic’s biggest winners. Even as broader fashion sales declined significantly, the secondary market exploded. According to a recent ThredUp study, online second-hand fashion sales are expected to increase by 69% between 2019 and 2021, while specifically in the luxury category, the resale market is expected to grow by 15 to 20% annually for the next five years, much faster compared to the pre-COVID-19 trajectory, which, according to the Boston Consulting Group, was evolving into low double-digit numbers.
Source: BOF
An indicative picture of the increased demand in the broader secondhand market.
In recent years, the resale of the most recognized luxury products no longer dominates on online platforms like eBay, from which, as we already know, it has blossomed. Instead, it focuses on new, safer online platforms such as “TheRealReal” , “Vestiaire Collective”, and “Chrono24”, which are at the forefront of the “second life” revolution and are mainly accompanied by groups of trained and specialized professionals. The list of alternative “players” also reflects a significantly increased interest in entrepreneurship and competitiveness.
Luxury houses are now paying more attention to a business model that is attracting serious interest from Gen-Z and Millennial consumers, who, according to BCG, are expected to represent more than 60% of total luxury spending by 2026. It is worth reminding at this point that when we refer to this specific target group, environmental concerns are intense, and ecological criteria make the industry responsible for adapting to their needs and heightened requirements.
Thus, diplomacy plays a crucial role in this game, where luxury houses, recognizing the benefits of the Luxury Resale Network, “embrace” the new trend with the ultimate aim of protecting their sensitivity to sustainable solutions. Collaborations and initiatives with established physical and digital retail traders, such as Selfridges and Farfetch, confirm the tactic deployed within the context of luxury industrial evolution. Major houses such as Gucci, Stella McCartney, and Burberry have already signed partnerships with “The Real Real”, aiming not only to safeguard the authenticity and undermine uncertified counterfeit luxury products, which tend to tarnish their reputation by generating huge illegal profits. If you find this action surprising, it is simply a marketing strategy that automatically secures the future of the resale business and combats not only the “black market” but also any kind of illegal activity that has been strongly affecting the luxury market in recent years.
The Risks of Luxury Resale
The demand for resale products now seems to surpass the interest in new items. According to a recent study by BOF, Louis Vuitton, Hermès, Chanel, and Gucci account for the largest share of demand for second-hand bags, while Rolex tends to dominate in watches. However, this finding threatens to increase the visibility of products, both online and in the broader consumer daily life. This means that while luxury brands negotiate their exclusivity, they must further intensify their efforts against the commodification of their brand. Therefore, while the new era may not fully meet the expectations of major houses, it can undoubtedly prove beneficial for a more innovative approach and the discovery of timeless solutions. After all, the continuous pursuit of fruitful innovative ideas is not exclusively about 2021 or the temporary period of COVID-19 but is an ongoing and uninterrupted struggle within the framework of “The New Normal” that will never cease to be recycled through the depths of time.
The creative director Alessandro Michele adds an ironic touch to the Gucci Fall/Winter 2020 show
Another issue that arises regarding collaborations with resale platforms is the uncertainty about their reliability. The presence of counterfeit products on these platforms has been a major concern for some time. An example of this is the recent trademark infringement and counterfeiting lawsuit, where the French luxury house Chanel accused The RealReal of selling counterfeit bags. Additionally, a CNBC investigation revealed weaknesses in the platform’s identity verification process, leading to the sale of counterfeit products.
How can a sustainable market be achieved when such significant issues are involved? Only collaboration would solve the problem and indeed seems almost inevitable. Could it be that well-known houses find themselves in a complete deadlock and are ultimately forced to join the ‘dance’? Time will tell. What is certain, however, is that wherever Gucci goes… loyal followers follow. Perhaps afterwards, we will remember the value of sustainability, but this time not as a supporting role but as the protagonist.
The term ‘sustainability’ is not just another trend or a passing fashion; it is ‘the’ fashion. It is the beginning of The New Normal and already takes center stage in everyone’s lives. Let us not forget that consumer consciousness, which encompasses a dynamic target group of strong ecological concerns, now holds the final word, already defining the new rules of the ever-rising and unshakable luxury industry.
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