How Luxury Brands Could Cash In On the Growing Resale Market
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While the luxury resale market continues to grow at an average rate of 12% a year, a new study suggests that it will also benefit the larger luxury sector.
According to data from resale platform Vestiaire Collective and Boston Consulting Group, the resale economy could be an opportunity for luxury brands to connect with new audiences.
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Pre-owned luxury items are particularly popular with younger shoppers. They traditionally lack the funds to buy high-end products and often want things that won’t harm the planet.
In particular, the survey found that 71% of customers were purchasing items they could not afford to buy firsthand, with 62% saying they were buying from that brand for the first time. Of those 62%, almost all said they would buy from that brand again.
That creates an opportunity for luxury brands to connect with consumer groups that may have previously been out of reach. Particularly in the case of millennials and Generation Z consumers, who may go on to increase their annual income, this can create a pipeline of customers who will then shop directly from the brand and pay full price. Some 57% said they would definitely buy or would consider buying firsthand goods after their resale purchase.
BCG and Vestiaire Collective also highlighted the resale market as a way for luxury brands to showcase their support of and participation in sustainability initiatives. That can position a brand more favorably with younger consumers, who are increasingly concerned about environmental impact, while also promoting brand values indirectly through secondhand sites.
“The secondhand market prolongs the life of luxury products,” said Olivier Abtan, managing director and partner at BCG and leader of its global luxury sector worldwide. “Most of what is sold on luxury secondhand platforms is 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.”
The circular nature of reselling is also valuable for brands; while shoppers on resale sites are purchasing secondhand, the majority of resellers (70%) never or rarely purchase their items secondhand. An additional 44% of sellers also noted that they bought more expensive items when they had plans to resell them — and recoup some of the original expenditure.
The resale luxury market is forecast to grow to $36 billion in 2021, from $25 billion in 2018, at which point it will account for 9% of the total luxury market. By seeing this growth as an opportunity for customer engagement and brand marketing, luxury brands could also see a growth in their own revenue.
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