Luxury fashion companies should celebrate the growing consumer interest in pre-owned items rather than seeing it as a threat. While fashion houses like Chanel have spoken out against popular resale retailers like The RealReal and What Goes Around Comes Around, new research conducted by Boston Consulting Group (BCG) in partnership with reseller Vestaire Collective confirms that the second-hand market is actually way to boost luxury sales through helping new consumer demographics to garner an interest in luxury.
BCG and Vestaire Collective surveyed over 1,000 Vestaire Collective clients in 2018 and used the responses of 12,000 participants in 2019 BCG survey to determine how luxury brands can benefit from the explosion of the resale market.
Resale is a recruiting mechanism for luxury brands
The study determined that the second-hand market acts as a recruiting mechanism for luxury brands, as it encourages first-time luxury buyers to foster an interest in high-end brands. Seventy-one percent of pre-owned buyers shop for items from brands they cannot afford to purchase new. BCG and Vestaire Collective concluded that this data proves that the resale market can serve as a tool for luxury brands to engage with consumers who will likely be their own primary customers in the future, when the purchasing power of these consumers increases.
Similarly, 62 percent of respondents said that they bought their first item by a pre-owned and almost all of those respondents then said they would want to buy that brand again. Fifty-seven percent of resale shoppers would buying a future luxury item first-hand.
Second-hand sellers are first-hand buyers
“The buyers and sellers in the second-hand market are not the same," stated Olivier Abtan, managing director and partner of BCG. "The buyers cannot usually afford new products and second-hand is their way into the luxury world. Second-hand sellers are usually buyers of traditional luxury goods. They sell to reinvest in new full-price luxury products.”
Consumers who are selling second-hand luxury items typically do so in order to have the ability to reinvest in new, first-hand items. The consumers in this category do not tend to purchase second-hand, as Vestaire Collective noted that 70 percent of the total pre-owned sales on its platform are generated by sellers who seldom purchase second-hand.
Therefore, the study shows that luxury brands should support the resale market as it encourages its current target customer to return and make more first-hand purchases. In fact, 44 percent of sellers said that they purchase more expensive luxury items than they would have bought without a resale market.
Second hand is a great way to boost sustainability
Fashion resale has almost become synonymous with sustainability as more companies aim to offer solutions to high amounts of clothing waste. The option to sell used luxury items to a new owner extends the lifetime of these items, which is an important factor to younger consumers who are concerned. with the social and environmental impact of their purchases.
BCG and Vestaire Collective confirmed that as millenial and Gen-Z shoppers place greater importance impact of their purchases than previous generations, over 70 percent aim to shop ethically. Of these young consumers, 57 percent said that environmental impact is their primary concern.
“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,” explained Abtan.
Image: Vestaire Collective