Vintage boom may jolt luxury brands into action

Luxury brands realise second hand luxury market may boost appeal of primary market

Paris/ New York, July 10: Second- hand fashion, once confined to thrift stores, is outstripping sales growth in the primary luxury goods sector, helping market leader The RealReal expand its business and prompting international labels to look at tie- ups.

Sales of second- hand, or vintage, luxury goods — from Chanel handbags and Gucci dresses to Rolex watches — are thriving on dedicated web platforms that are drawing a younger clientele seeking bargains and championing recycling.

The RealReal could be ready to list on the stock market within two years, when it expects the value of goods sold on the site to have roughly doubled to $ 1 billion annually, its founder and CEO said.

The seven- year- old US company is also in talks with high- end brands like Louis Vuitton parent LVMH and Gucci owner Kering over potential partnerships, Ms Julie Wainwright said.

Luxury labels have hitherto shunned the secondhand trade, fearing diluting their exclusivity and cannibalising their sales. But they are now finding it hard to ignore a secondhand luxury business that is worth $ 25 billion in annual revenue and is expected to grow by up to 10 per cent annually in coming years, according to Berenberg analysts.

That is more than twice the projected pace of growth of the much larger primary market.

While there are few indications so far that they are planning in- house ventures, brands including LVMH and Kering are now talking to vintage sites as they try to figure out how they might extract some value from the burgeoning sector, The RealReal and executives from other resellers said.

LVMH did not return requests to comment. Kering has said it is “testing things with The RealReal”, without elaborating. Second- hand platforms make their money by taking a cut of the resale price of an item, anything from 10 per cent to 50 per cent depending on the product and how much the seller has sold via the site.

The RealReal is facing growing competition from rival resellers looking to cash in on the booming market, including thredUP, which branched into luxury last year, and established players like Vestiaire Collective.

For The RealReal and its rivals, partnerships with big brands could raise their profile and give them an edge.

They declined to disclose details about the tie- ups they were discussing.

Resale platforms are betting most luxury firms will prefer to opt for strategic alliances rather than to go it alone, in part because the logistics of secondhand sales can be daunting.

Resellers said labels were also increasingly convinced by their argument that rather than threaten luxury sales, they may help funnel money back to brands.