The resale of luxury items, or the second wings of desire

Dream clothes and nowhere to go. This could be the motto of fashion aficionados in the age of Covid-19. What good is wearing a pair of Louboutins while working from home, what good is a Gucci bag when the only dinners of the week take place at home? In the almost total absence of social theatre, those everyday scenes in which to be seen and situated, clothing habits cry out for the need for comfort and functionality: shapeless jeans or jogging bottoms, a t-shirt, trainers or lined clogs for the most saucy. Largely deprived of their symbolic functions – to seduce, to distinguish themselves socially – the more dressy or designer pieces find themselves relegated to the back of cupboards, neglected. Unless they are monetized on the flourishing luxury second-hand market.

For two years, it's been an explosion. According to the ThredUp platform, the resale of high-end clothing and accessories grew by 49% in 2019, or 25 times more than the first-hand market (2%). The pandemic has accelerated the online rush, social distancing measures oblige. On the MyPrivateDressing site, a pioneer in the e-resale of luxury fashion in Switzerland, the number of items posted has increased by 600%, while sales have increased by 300%. “Despite the crisis, fashion lovers want to renew their wardrobe. Their number one motivation is price. Paying 1,500 francs for a branded bag in very good condition when the new version is worth 4,000 in stores, it speaks to people, ”explains Babak Daghigh, the boss of this Geneva SME employing 45 people.

Unicorn and Gen-Z

For a long time, brands looked down on this market, which was considered parallel. Who did they think they were, these disloyal little competitors? What right did they have to buy directly from their customers to seduce others with knockdown prices? Except that today, the resale sector weighs nearly 40 million dollars worldwide, according to Boston Consulting Group. And although it represents only 2% of the global fashion and luxury market, its annual growth rate should reach between 15 and 20% by 2025. For high-end liners, the boat becomes difficult to ignore. For the past three years, several brands have joined forces with sites specializing in second-hand luxury to encourage the resale of their own products. Among them, Stella McCartney, Gucci and Alexander McQueen, all owned (until 2018 for Stella McCartney) by the French luxury giant Kering.

A random? Certainly not. Last March, Kering (Saint Laurent, Balenciaga, Bottega Veneta) confirmed its interest in the resale market by acquiring 5% of the capital of Vestiaire Collective, leader in second-hand fashion now valued at more than 1 billion euros. Created in 2008, the French company saw its transaction volumes double in 2020 and recorded a 90% growth in the number of its members over one year. “This fundraiser will allow us to accelerate our mission, which is to transform the fashion industry by introducing circular practices. We will also continue our expansion in Europe and accelerate our growth in the United States and Asia,” explains Sophie Hersan, co-founder of Vestiaire Collective, by email.

For his part, François-Henri Pinault, Chairman and CEO of Kering, emphasizes his desire to address young consumers. “The “mega brands” like Louis Vuitton or Gucci are very keen on seducing millennials or Gen-Z. These potential customers are very comfortable with internet tools, which they use to buy online, but also to find out about the brands they choose. They are very active on resale sites, probably because the products there are cheaper than on the first-hand market. But also because this audience is particularly sensitive to environmental issues. He perceives the second hand as a more sustainable consumption practice,” says Thomas Chauvet, analyst at Citi Bank in London.

Read also: When digital infiltrates fashion

Fishing for info

A more sustainable practice, but to what extent? For the circular economy promoted by Vestiaire Collective to be fully realized, it would not only be necessary to give several lives to all the clothes, bags and pairs of shoes brought into the world, but also to produce less of them. Stop feeding the beast of consumerism, in short. Can a global luxury giant? “Kering has a very sincere approach to sustainability, it's a subject that this group has really grasped for many years, especially in terms of production and distribution. But it is also a group listed on the stock exchange, so it will always be caught up in an ultra-liberal model. It is not because its leaders care about the environment that they forget the price of their action, which remains the number 1 priority”, advances Babak Daghigh.

But then, why acquire 5% of a site that facilitates the resale of used products? “First, it's a way of accepting the existence of these platforms, which was not easy. This also allows Kering to catch up in its understanding of the luxury second-hand market, assures Thomas Chauvet. Thanks to this investment, the leaders of the group are entitled to a seat on the board of directors of Vestiaire Collective. They will regularly discuss with the management of the company, understand its strategy, have access to the accounts. They will also be able to analyze in detail the desirability of certain brands, and obtain information concerning the customers who resell their pieces on Vestiaire Collective. And maybe in ten years, when Kering feels ready, the group will launch its own second-hand product platform.”

Residual value

Pending the creation of a 100% Gucci or Saint Laurent second-hand e-boutique, the luxury items listed on Vestiaire Collective or The RealReal, another world leader in the sector based in the United States, are generating gains that cannot be controlled at all the big houses. When dealers manage to get rid of a branded piece, what do they do with the money? Do they use it to save money, buy a car, or buy a dress from a competitor? In any case, the shortfall on this second transaction is immense for the label of the original product.

Maybe not for long. A commercial engineer of Belgian origin, Stéphanie Crespin founded in 2018 Reflaunt, a start-up offering a virtual bridge between second-hand sites and brands. By sneaking into the backend of e-commerce sites, the company creates an icon, a “button,” that allows customers to relist, with a single click, any listed item in their purchase history. The piece in question then finds itself propelled into the catalog of more than twenty second-hand sites, such as MyPrivateDressing. At the end of the operation, the retailer can either receive money or a voucher to redeem at the brand, along with a 10% bonus. “Clients choose to reinvest their money in 60% of cases. This allows labels to capture the residual value of their products, while creating a virtuous cycle of consumption. And, unlike what happens on second-hand sites, they can control everything: their image, their communication, customer data, ”explains Stéphanie Crespin, whose company already has Balenciaga, COS or Bash among its customers.

Last February, during a second round of investment, the company raised 2.23 million euros thanks to fashion personalities such as Nicolai Reffstrup, the founder and former CEO of the Danish brand Ganni. “Replacing traditional materials with organic alternatives is not enough. We must also consider how our products are consumed and treated after use. We must create a virtuous ecosystem. The resale of clothes is an essential aspect of this.”

Also read: MyPrivateDressing, fashion in virtuous mode