In recent years, the selling of pre-owned luxury products has increased significantly, and the stigma associated with the consumption of second-hand luxury has faded.
The buying and selling of previously owned luxury items is referred to as luxury resale. Luxury goods are expensive and high-quality products. However, the demand for luxury resale is increasing, across the world, since it is more relatively inexpensive and offers both online and offline outlets for the marketing of second-hand products. The global luxury resale market is forecasted to reach US$39.23 billion in 2023, growing at a CAGR of 9.69% during the forecast period.
The European luxury resale market enjoyed the largest share of the global market, primarily owing to widespread presence of several luxury retail brands ranging from fashion apparel to cosmetics. On the other hand, the China hard luxury resale market is the emerging region in the global market, growing at a high CAGR due to the surge in the demand for pre-owned hard luxury items such as watches.
Top Impacting Factors:
Driver: Escalating Internet Users
Buying second-hand luxury is nothing new, but the sector has been growing considerably due to the rising internet users. The internet always makes it easier for the consumers to buy previously owned luxury products. Due to the rising internet users, almost all the prominent luxury players are also starting to resale their products through an e-commerce site. Therefore, the increasing number of internet users significantly implies the more reselling of second-hand luxury products, augmenting the luxury resale market.
The inherent lack of trust in buying second-hand luxury, is the most likely reason behind the low penetration in the market. Many people do not consider the second-hand luxury good sites as a trust-worthy option. And, in fact, they also feel that second-hand luxury lacks longevity. Some luxury players also sell the products which are generally replicas or fake products of the original one, which ultimately resulted in the lack of trust from the consumer point of view. The lack of trust in buying second-hand luxury is not only limited to consumers, but it is also affecting luxury brands. Hence, the inherent lack of trust is eventually regarded as a key factor that restrain the luxury resale market growth.
It can be seen that overall online sales are on the rise. Driven by better pricing, greater variety, numerous discount offers and easy payment mechanisms, consumers are more attracted to digital alternatives to buy luxury products. The quickly emerging online players appear best placed to capture this opportunity and would allow more buying and selling of pre-owned luxury goods on a digital platform. The rapidly increasing online sales of luxury goods would directly encourage the growth of the luxury resale market.
The COVID-19 Analysis:
The COVID-19 pandemic had a mixed impact on the global luxury resale market. As a result of the pandemic, slight decline in demand for luxury resale items was observed. The impact of prolonged lockdown had created a sudden gap in supply and demand of the secondhand luxury industry. The COVID-19 created awareness about eco-friendly methodology and usage of pre-owned luxury products was redefined. In the coming years, the market is predicted to grow at a faster rate and recover to the pre-COVID marks. With the increased understanding of the benefits of online platform of the industry, large number of large luxury brands are partnering with resale online platforms, and changing in marketing techniques by offering rebates over exchanging old luxury items over the new items, which would provide a boom in the industry.
Analysis of Key Players:
Historically, the global luxury resale market has been fragmented and dominated by small local boutiques with little consumer reach. However, due to the impact of COVID-19, the market witnesses the growing online luxury resale sites which have completely changed the luxury resale market and the market move towards consolidation. Recently, many online resale platforms have seen collaborating with luxury brands to ensure authentication of the products sold online. While, offline stores such as boutiques are closing or adopting hybrid models where they are showcasing their products and its information online so that customers are aware about the products and running their shops as exhibition, and storing purpose. The key players of the luxury resale market are:
Many luxury labels are finally recognizing that embracing resale of luxury goods trends offers a commercial potential. Previously, these labels fought and policed resale of their items, but lately they welcome it by working with e-resale platforms to market their pre-owned products. For instance, The RealReal has collaborated with Burberry, Stella McCartney, and, most recently, Gucci in 2020. In the meanwhile, Vestiaire Collective launched its "Brand Approved" buyback programme with Alexander McQueen in February 2021. The initiative works by granting store credit for the brand's current collection in return for past-season products, which are then examined and resold online via Alexander McQueen boutiques.