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Why luxury brands should embrace the resale boom

Lauretta Roberts
18 October 2019

The global resale (or recommerce) market is one of the fastest growing in fashion and is set to hit $36 billion in 2021 (up from $25 billion last year), which represents around 9% of the luxury market.

Far from seeing it as a competitive channel to their new business, more and more brands, are embracing the opportunity it brings and, according to a new report from Boston Consulting Group (BCG) and global resale site Vestiaire Collective, if they are not they are missing a trick.

Entitled Why Luxury Brands Should Celebrate the Pre-Owned Boom, the study highlights the three key drivers for growth in the resale market and how luxury brands can benefit from them.

1 Resale is a "recruiting mechanism"

Pre-owned luxury buyers are usually consumers who don't have access to the primary luxury market, as 71% of the pre-owned buyers surveyed in the report lean towards items and brands they could not afford firsthand. Therefore second-hand market is a powerful way for luxury brands to connect with, and anchor their brand in the minds of potential future primary customers.

As second-hand luxury customers mature, their purchasing power tends to increase, making them ready to shift to the primary market. Of those surveyed, 62% said that they bought a brand they like for the first time second-hand on Vestiaire Collective and almost all of that 62% said they would consider buying that brand again. Research also shows that 57% would either definitely buy or would consider buying the item first-hand — making them solid prospects for the first-hand market.

2 Second-hand sellers are first-hand buyers

Second-hand sellers typically use resale to recoup some of their money back on first-hand purchases, often so they can reinvest in new, full-priced luxury products. Of those sellers surveyed, 32% said they were primarily selling because they wanted to purchase new firsthand goods. In addition, most pre-owned sellers do not tend to make many second-hand purchases. For example, of total pre-owned sales on the Vestiaire Collective platform, 70% are generated by sellers who rarely purchase second-hand. 44% of sellers stated that they purchase more expensive luxury items than they would have bought without a resale market. Furthermore, customers purchase more frequently, investing around the same amount on individual items but buying again once they free up their budgets.

3 It is a way to boost sustainability in the luxury world

The pre-owned market clearly extends the lifetime of luxury products. Most products sold on pre-owned luxury platforms are of high quality, with 62% unworn or scarcely worn. It also creates a circular luxury fashion economy. Luxury companies that support sustainability can feel proud to be part of a more responsible ecosystem, and they will ultimately benefit from such positioning. This is especially true given the importance of sustainability to young consumers today.

Attracting a new generation of conscious consumer

Gen Z and Millennial consumers place greater importance on sustainability than older generations and are key to driving the boom in resale.

According to the BCG/Vestiaire Collective survey 70% of this generation are trying to shop ethically and 13% say that sustainability is extremely important to them. Of those that shop ethically, 57% say that environmental impact is their primary concern.

Olivier Abtan, Managing Director and Partner of BCG and leader of its global luxury sector worldwide, explains: "The second-hand market prolongs the life of luxury products. Most of what is sold on luxury second-hand platforms is of high quality, with 62% of the clothes either unworn or hardly worn. Brands wishing to be more eco-friendly benefit from this circular luxury economy."

Offering more choice and the chance to track down rare or sold-out items

The resale market not only offers affordability but it is also used by consumers to track down items that have sold out or limited edition pieces from previous seasons; some 62% of buyers surveyed use it for that reason, while 83% stated they are drawn by the wide selection of products and brands which may no longer be available in the first-hand market.

Resale has become increasingly professionalised in recent years with services, predominantly based online, offering added value through curation, authentication and personalised marketing strategies.

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