Trends Analysis: The Rise of Luxury Resale and Consignment

We look at why luxury resale and consignment platforms are soaring in popularity and how luxury brands can capitalize on the trend.

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Brands like Versace, Balenciaga, and Hermès used to be unaffordable for the vast majority of fashion-conscious customers. Not anymore. Luxury resale and consignment sales are soaring online thanks to a stream of third-party platforms pairing resellers and buyers. While these sites service thousands of shoppers worldwide, few brands have captured this emerging market. 

What is behind the luxury consignment trend, how is it changing luxury retail and what can brands do to take back momentum? 

Luxury Resale Platforms Have Millions of Customers

Digital platforms like Vestiaire Collective, Fashionphile, and Watchfinder drive the luxury resale market, writes Helen Siwak, Founder of EcoLuxLuv Communications. Some have even made the jump to brick-and-mortar retail already. 

These sites are attracting heavy investment. “Since April, luxury resale companies Rebag, Fashionphile, Vestiaire Collective and The Luxury Closet have attracted more than $134 million in total investments, reflecting resale’s much brighter positioning compared to the rest of retail,” writes Glossy fashion reporter Danny Parisi.

Luxury resale platforms are maturing and growing beyond internet sales channels. “One of the biggest television advertising campaigns in the U.S. this season is from TheRealReal, the consignment site that promises up to 90% off luxury brands,” writes journalist Mark C. O’Flaherty at the Financial Times. The company was the first consignment reseller to go public via an IPO in 2019. It raised $300 million and now has stores in Chicago, New York, Los Angeles, and San Francisco.  

The industry even managed to weather the pandemic. Consignor membership at The RealReal grew 27% in the second quarter of 2020, reports Paper’s Aaron Royce. People have changed their buying habits. With stay-at-home orders in place and many people newly working from home, Royce reports that heels and evening bags have given way to luxury “loungewear, tops and accessories.”

They Have Global Appeal

The luxury consignment trend is a global phenomenon. Sarah Willersdorf, et al., at Boston Consulting Group puts the global market’s current value for luxury consignment “apparel, footwear, and accessories” at between $30 billion and $40 billion.  A BCG survey of 7,000 people in six countries finds an estimated compound annual growth rate of 15% to 20% over the next five years. The BCG team writes that online resale brands in more developed markets may even grow by as much as 100% each year.

There are luxury resale sites throughout Europe. According to company CEO Maria Raga, examples include the U.K.-based fashion resale app Depop, which has over 15 million registered users. Nearly all of those users (90%) are young, aged 26 or under. 

Another leader in luxury accessories resale is Collector Square in France. That platform has tens of thousands of listings and proved so popular that it opened a pop-up showroom in Paris in 2019.

They exist in the Middle East too. Kunal Kapoor founded The Luxury Closet in 2012, writes fashion journalist Sujata Assomull at Vogue Business. The store specializes in selling luxury pre-owned clothing, watches, and home decor items, carrying brands like Hermès and Louis Vuitton. Well over one-half (60%) of its customers come from the region, which Assomull says reflects the area’s “new openness to owning pre-owned luxury items.”

Sustainability Is a Factor in Their Success

The appeal of the luxury consignment industry is the potential environmental benefits it promises. “Consumers are realizing that the fashion industry is a major contributor to many ecological issues the planet is facing right now,” says Vestiaire Collective CEO Max Bittner. “They’re also becoming aware that they can take concrete actions to counter the negative impact of fashion.” 

The environmental benefits of resale shopping are sizable, according to a report from thredUP. If everyone bought a single pre-owned item instead of something new, it would save:

  • 5.7 billion pounds of greenhouse gases (equivalent to planting 66 million trees)
  • 25 billion gallons of water (or 1.25 billion showers)
  • 449 million pounds of waste (or 18,700 full garbage trucks)

Several clothing brands have recognized the benefits of offering pre-owned. Patagonia, for instance, has created Worn Wear as a way to resell pre-owned clothes. Eileen Fisher also has a resale program that encourages customers to return worn clothes to stores. The brand then repairs or alters items and offers them in their Renew collection. 

Platforms Offer More Affordable Access to Premium Goods

The affordability element is a significant  driver in demand for luxury consignment and authenticated pre-owned luxe platforms. These platforms make the fashion industry significantly more accessible to the average person, writes Elinor Block, Assistant Editor at Who What Wear UK. “[Resale fashion] is a great leveler, available to everyone and at every budget,” she explains. “It essentially democratises the industry, allowing everyone access to brands and trends that might have seemed too expensive before.”

According to the Clair index developed by designer handbag resale platform Rebag, the value of luxury fashion goods does not depreciate much. Hermès bags, for instance, hold 80% of their value, while Chanel and Louis Vuitton retain 63%. Some products even increase in price, like the hard-to-find Louis Vuitton Eva Crossbody, which has soared by 84%.

Use BaaS to Build Luxury Consignment

Luxury brands have an opportunity to capitalize on this market’s growth, writes Cate Trotter, Head of Trends at Insider Trends. A retailer that provides its own platform has complete control over how their brand is presented. “They control the experience and give customers confidence that it’s safe to buy and that they’re getting authentic, high quality products,” she says.

There are plenty of reasons luxury brands should be embracing resale, writes Luxe Digital Founder and Editor-in-Chief Florine Eppe Beauloye. Chief among them is a brand’s ability to own its customer data. Understanding how customers browse a brand’s resale site, which products they buy and how often they return them makes it easier to convert consignment shoppers into primary buyers. 

A brand-owned platform can also provide customer insights to product designers and marketers looking to reposition that brand.

That is not to say it is easy for luxury brands to create their own consignment platform. Far from it, writes Glenn Taylor at Retail TouchPoints

“The random nature of merchandising and inventory acquisition in a resale environment can be far more difficult for a luxury retailer to handle than it is for other fashion and apparel retailers that can afford to be less picky,” he explains. “The situation is made even more complex because established luxury resellers are generally more willing to take in products of varying quality.”

Partnering with an expert will be vital to a brand’s success. For one, many luxury brands do not have an effective digital presence. In a survey of 8,400 people by Vogue Business, the majority reported being less than enthusiastic about their digital experience with luxury brands.

Further, there are technical matters. A brand will need a separate site for its consignment offerings to avoid brand dilution. The brand will also need to coordinate with logistics providers to ensure items can be taken back and resold quickly. 

In each of these situations, a BaaS provider can help brands build their own DTC authenticated luxury consignment marketplace or up-market resale store online. 

Images by: Laura ChouetteGabrielle HendersonJane Palash

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