It is one of the hottest trends now and apparently it defeated, on several levels, a considerable skepticism. “Second-hand” luxury, guaranteed and certified, has become a model of business of great interest for brands and finance. Which is starting to invest on it and not by chance
Once it could (almost) seem a whim, while today it has become a billionaire business. Once it was (almost) frightening, while today it arouses an interest we could call “fatidic”. Second-hand, for luxury, is one of the hottest trends of the moment. The reason is quite clear. In fact, it features an important green factor, which is durability (especially rewarding leather accessories). Not only. It winks at the concept of circularity and at the idea of “buying less, buying better”. The last consequence is that it flies high at the stock exchange. Which, in the end, is more than enough to put some doubts and anxieties in stand-by, as we will see.
The commercial value
According to the “LuxCo 2030: A Vision of Sustainable Luxury” report, issued by Bain & Company and Positive Luxury, the market of second-hand fashion will be worth 20% of the turnover of sustainable luxury brands. Rental services, another switch of the market of luxury goods, is 10%. Boston Consulting Group reiterates the same concept. According to them, fashion retail should grow between 15 and 20% every year until 2025. PwC predicts that the market is going to double in the next five years, reaching 64 billion dollars within 2024. Kering is closing the circle of forecasts, expecting a growth of second-hand from 21% in 2021 to 27% in 2023. That will take the value of this sector over 60 billion dollars within 2025.
The financial value
The French at Kering talk about direct interests. In fact, they bought 5% of the trade portal Vestiaire Collective. The purchase was made through the participation of the giant of luxury in the last round of subsidies of 178 million Euro, which brought, for the first time, the quotation of the selling platform over one billion dollars. “Not much”, compared with the amount of 3,8 billion dollars achieved by StockX, a reseller of sneakers and of streetwear, that recently got a 255 million grant. Second-hand, therefore, is flying high. And it flies to the stock exchange. The RealReal was the first marketplace to be listed, in 2019. In October 2020, Thredup presented their IPO. In January 2021, Poshmark entered Wall Street.
According to Erika Andreetta, PwC partner, second-hand keeps on growing because it is considered a tool of sustainability and because it allows to purchase at competitive prices. Luca Solca, analyst at Bernstein, thinks that the market of second-hand can increase in a structural way. This wave, therefore, is not going to end soon. Actually, Solca believes that the market of retailing is an opportunity even for those who buy new clothing.
“Cunning consumers – he says – think that the cost of a fashion item is no longer the one indicated in the price tag, but the purchase cost, deducting the residual value it could have on the second-hand market”. François-Henri Pinault, president and CEO at Kering, explains, in conclusion, that in luxury second-hand goods are now a real and deeply rooted trend, especially among the youngest clients. Instead of ignoring it, our wish is to seize this opportunity to increase the value we offer to our customers and to influence the future of our sector, guiding it towards more innovative and sustainable practices”.
Mulberry is a significant case, as far as second-hand is concerned. Some months ago, they started an internal retailing service called Mulberry Exchange. This service lets customers exchange used articles against credits to spend in the shops or to buy authenticated and reconditioned second-hand items. Furthermore, they accepted Vestiaire Collective’s invitation to enter the Brand Approved programme. It works like this: brands invite their most loyal clients to put back in circulation the second-hand goods they are no longer using. Mulberry is the second brand joining Brand Approved after Alexander McQueen. Please note that in 2020, Vestiaire Collective had a growth by over 100% in the volume of their transactions. “Retailing on the whole is having a quick development, especially among Millennials and Gen Z consumers – states Maximilian Bittner, CEO –, who are going to shape the scenario of retail of the future”.
Too many clues make a huge proof. Which shows that second-hand must necessarily be taken into consideration. That is why, after two years of legal litigation, Chanel and The RealReal have decided to enter a temporary peace phase. The war was started by the French, who accused the reseller of “illicit commercial practices”. The fashion house declared that the portal had sold eight of their products as originals, including some bags that turned out to be counterfeited. Now Chanel and The RealReal have requested and obtained the temporary suspension, for 3 months, of their trial. They will go for an extrajudicial transaction agreement. And presumably they are going to get it.