Recently, Gucci acknowledge the importance of the growing second-hand luxury market by tying up with The RealReal to sell unused and gently used Gucci products on the consignment marketplace. Last year, Burberry tied up with The Real Real to tap into the fast growing resale market as well.
More and more luxury brands are warming up to the idea of resale. In the last few years, the secondhand luxury market has been growing at a rate that is faster that the luxury industry’s overall growth. A recent report by the Boston Consulting Group (BCG) pegs the industry at €21 billion and is growing at 8 per cent per year.
As per BCG’s research analysis, secondhand sales do not reduce the purchase of new products. People sell their past luxury purchases and reinvest the money in buying new products. The secondhand luxury market also provides an entry point for new customers, especially the younger generation — millennials and Generation Z.
Watches account for 75% of secondhand sales, with jewellery making up the remaining 25% in the hard luxury category. While most of them are offline sales, the report expects the online channel to expand henceforth with the market entry of classic players.
The financial instability and a shift in mindset brought about by the COVID-19 crisis is spurring more buyers across age groups to consider secondhand hard luxury goods as a promising investment. Online sales have catapulted and buyers are questioning the sustainability of luxury goods.
Social media and digitization are also playing a role in the growth of the market. It is a prime purchase driver and gives consumers easy access to personalised services. The report notes that brands and retailers are increasingly relying on social media to promote luxury experiences and events as well as geographically specific product offerings.
In a BCG survey conducted with Altagamma in 2020, 62 per cent of luxury consumers said they would consider buying a secondhand luxury item and 25 per cent indicated that they made such a purchase in the past year (18 per cent of whom purchased watches and jewellery).
The analysis also found that there are more male consumers (55 per cent) of secondhand luxury and tend to be younger (mostly millennials and Generation Z). They look for deals, factor sustainability into their purchases and are conscious of resale value, treating hard luxury goods as investments.
The research also indicated that they would prefer to buy secondhand luxury products from the brand itself or at least want the brand to certify products sold through resellers.
The report states that while classic luxury brands offer an experience, they might not be strong in online operations or may be completely offline. On the other hand, resellers and online marketplaces like eBay have e-commerce capabilities along with high volume and a large inventory but lack experience. BCG suggest that luxury brands capitalise the secondhand luxury market through acquisition, join ventures, partnerships and new offerings.