Secondhand luxury sales growing faster than purchases of new items
Most of us like nice things. Not all of us can afford them. Pandemic-related supply chain issues and inflation have made it more difficult for many people to get their hands on the new designer items they love so well. Instead, they’ve turned to secondhand luxury, buying previously owned clothes, bags, and accessories that deliver the real thing for less. Millennials and Gen-Z are leading the charge, with a combination of concern for the environment and budget constraints driving them. They have some major brands joining the trend.
For brands, the decision of whether to jump on the secondhand luxury trend is a tough one. On one hand, there’s the opportunity to reach large populations of younger clientele that might otherwise never buy anything directly from you. On the other hand, there’s the risk of diluting the brand and losing revenue by having fewer products in circulation and missing out on sales of new items.
Several big brands have chosen the former option, given that there are nearly 250 million U.S. consumers open to secondhand shopping, according to ThredUP findings. Globally, secondhand apparel is growing three times faster than the overall apparel market. In the U.S., it’s eight times faster growth.
Given that, it’s not much of a surprise that Burberry, Gucci, Alexander McQueen, and Balenciaga are embracing secondhand luxury. They’re partnering with “recommerce” services such as The RealReal, Reflaunt, and Vestiaire Collective to authenticate used items and take a cut of the resales.
“Luxury brands have historically traded on exclusivity and limited accessibility – that was before secondhand marketplaces gave anyone with an extra $486 the chance to buy a luxury item and snap a picture wearing or holding it on Instagram,” PYMNTS’ Karen Webster wrote. “Today’s recommerce marketplaces will, over time, become more like discount sites than luxury resale as the high-quality goods move to these designer-owned and branded marketplaces. Payment providers will compete for the consumers and luxury brands as they court and cultivate the next generation of luxury buyers with brand affinity.”
It’s not just clothing and handbags that are seeing a secondhand luxury surge. Watches, once feared altogether forsaken by younger generations, are enjoying a renaissance thanks to secondhand purchases. A Deloitte report estimates that secondhand sales will account for nearly half the watch market by 2030. Most luxury watchmakers view the trend as having a positive influence on brand perception and value, with only 6% concerned that it will threaten sales of new watches.
Richemont has gone so far as to purchase recommerce site Watchfinder, with competitors Chrono24, Subdial, Watchbox, and Hodinkee all poised for growth.
“The growth potential for the pre-owned market is enormous,” Deloitte Switzerland head of consumer fashion and luxury Karine Szegedi told Bloomberg.
Young people are fueling the secondary market here as well, with 48% of Millennials and 31% of Zoomers likely to buy a pre-owned watch in the next year.
“Our audience is so different than who you assume a traditional watch buyer to be,” Hodinkee founder Ben Clymer told Deloitte researchers. “They’re much younger, they’re buying and selling watches much more often, and they care about pre-owned.”
Tricks of the Trade
While most secondhand luxury consumers buy just once or a handful of times, some have made a career of buying and selling. About 75% of secondhand luxury sellers are also buyers, and these “circulars” have developed a few tricks, Marcus Shen, CEO of liquidation auction site B-Stock, says. One is to shop the sales, taking advantage of discounts and promotions to scoop up merchandise, reselling it online at nearly full retail price, and pocketing the difference. Returned items that are essentially brand new are another secondhand source of sales. Retailers have found they can recoup some of their loss rather than tossing the items out altogether.
In addition to the larger recommerce sites, there are some popular boutiques that offer great vintage finds in their brick-and-mortar locations as well as online. One is Amarcord Vintage Fashion, which has two locations in New York City and offers free domestic shipping on vintage Gucci, Prada, Fendi, Versace, and Jean Paul Gaultier pieces. Dallas-based Vintage Martini has everything from Victorian-style clothes to designer fashion from the 1960s-‘90s.
Expect more brands and recommerce sites to go all-in as secondhand luxury sales outpace purchases of new items.
“The smart luxury retailers will set aside their disdain for the democratizing of their luxury brand and use it as an entry point to build the next generation of brand loyalists — on their terms,” Webster wrote.
Even when it’s pre-owned, luxury never goes out of style.