An in-depth report about resale as a strategy for luxury companies by Claire Kent.
Resale is a powerful weapon for luxury companies who want to own the Gen Z customer.
Let me tell you an intergenerational story. As a teenager, years before my job as a luxury goods analyst in the City, I remember devouring Vogue religiously. One year I used my entire wages from a summer job at Harrod’s to buy a single Armani jacket. Fast forward a generation and this summer my environmentally aware teenage daughter sold a wardrobe’s worth of clothes on Depop to buy a vintage Ralph Lauren top. And rather than reading glossy magazines she gets her inspiration from TikTok.
Luxury companies that don’t offer resale risk losing relevance for the Gen Z customer, as resale reinforces a luxury company’s sustainability credentials.
Further, resale is the modern-day equivalent of gaining a future customer by initially selling them a luxury fragrance. When Gen Z starts climbing the career ladder, they will have already joined their tribe.
Luxury companies that master resale will own these customers in a way that selling new products does not. Most customers who sell a vintage item via one of the very few luxury brands that offer resale typically use the store credit they receive to invest in a new item. In this way the luxury brand is building a deeper relationship with its customer.
There is a fear among luxury brands of being flooded with counterfeits. This is a legitimate concern. However, their trump card over every other reseller is that they are perceived to have ultimate authority over distinguishing authentic items from counterfeits. This means that, were they to enter the resale business, they would naturally become the channel of choice.
Some luxury goods companies, including LVMH, Prada and Richemont-owned Cartier, have joined forces on a blockchain solution that will allow customers to authenticate their goods. However, developing digital passports could be a double-edged sword. Whilst they should solve the problem of luxury counterfeiting in the future, they would also give every reseller just as much power in resale as the luxury brand. Tight control is at the heart of every successful luxury company, and if luxury companies want to control the resale market, they would be better off remaining the only possible authenticators of their products.
For now, luxury companies have only dipped their toe in the resale market. Most customers looking for a branded vintage item would turn to one of the resale marketplaces such as The RealReal, Vestiaire Collective or Plum (in Asia) first.
A handful of companies have partnered with one of the resale marketplaces for a limited period, such as Burberry with The RealReal. Others have taken a stake in a resale marketplace, such as Kering’s 5% stake in Vestiaire Collective. Some have partnered with a resale-as-a-service provider that helps brands offer their own resale, such as Isabel Marant with service provider, Faume. Very few have taken the step of offering an in-house resale service, such as Mulberry or Mark Cross.
As I write here in leafy West London, it’s easy to take a very Western view of the world. A foolish mistake. Nine out of ten members of Gen Z live in Asia, so this is where the opportunity lies for the luxury resale market. In the past there has been resistance to used goods in Asia. There are three main reasons for this – superstitions; negative associations linked to poverty; and fear of purchasing counterfeit items. But attitudes towards second-hand in Asia are changing and if luxury brands were to involve themselves in resale directly, this fear of counterfeit would be overcome. Resale should be part of every luxury company’s Asian strategy.
Reflecting on the buying habits of my daughter and her peers, makes me wonder which luxury brands the twenty something middle class aspirational girls in Shanghai and Mumbai will aspire to own in 2030.