Vin­tage sec­ond­hand fash­ion sales is out­strip­ping that of luxur y prod­ucts

Se­cond-hand fash­ion, once con­fined to thrift stores, is out­strip­ping sales growth in the pri­mary mar­ket, prompt­ing high-end brands to look at tie-ups, write Sarah White and Melissa Fares of Reuters

Bangkok Post - - BUSINESS -

S ale­sof 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.

Mar­ket leader 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, ac­cord­ing to its founder and chief ex­ec­u­tive Julie Wain­wright.

“The seven-year-old US com­pany is also in talks with high-end brands like Louis Vuit­ton par­ent LVMH Moët Hen­nessy Louis Vuit­ton SE and Gucci owner Ker­ing SA over po­ten­tial part­ner­ships,’’ she told Reuters.

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

FRIEND OR FOE TO BRANDS?

Se­cond-hand plat­forms make their money by tak­ing a cut of the resale price of an item, any­thing from 10% to 50% 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. But some ex­ec­u­tives, in­clud­ing Ves­ti­aire CEO Se­bastien Fabre, said deals could in­clude data-shar­ing that al­low brands to track what kind of peo­ple were buy­ing and sell­ing their prod­ucts, and how items’ value was hold­ing. Such in­for­ma­tion could in­form their mar­ket­ing cam­paigns and pric­ing.

The RealReal’s ex­ist­ing part­ner­ship with Bri­tish la­bel Stella McCart­ney could also serve as a model.

The brand ac­tively en­cour­ages shop­pers to re­cy­cle its clothes by of­fer­ing $100 vouch­ers, half paid for by The RealReal, to spend on new prod­ucts in stores for ev­ery old Stella McCart­ney item they sell on the site.

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 se­cond-hand 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.

Wain­wright said about a fifth of the money that sell­ers made was spent on buy­ing items on the site, sug­gest­ing a sig­nif­i­cant pro­por­tion might go back into the broader ap­parel mar­ket.

“I think we’re past the point where they may have felt we were a threat,” she said. “For many mil­len­ni­als it’s their first-time ex­pe­ri­ence with a lux­ury brand on our site.”

‘I ALSO SHOP AT PRADA’

The RealReal has a 100-strong team of anti-coun­ter­feit­ers to weed out fakes, and pro­cesses be­tween 200,000 to 300,000 prod­ucts a month.

Ves­ti­aire, which also works with au­then­ti­ca­tors, adds 6,000 new prod­ucts a day to its site, af­ter 30% of all items sub­mit­ted for resale are re­jected.

Prices and dis­counts vary con­sid­er­ably, with de­ter­min­ing fac­tors in­clud­ing the con­di­tion of the item and how in de­mand a brand if at that mo­ment.

For ex­am­ple, shop­pers on The RealReal can buy a 2015 black lace top from Givenchy for €1,210 ($1,416), around a third of the orig­i­nal price, while polka-dot­ted Ba­len­ci­aga high heels from last year were down to €374 from around €876.

Yet some things hold their value or even fetch pre­mi­ums se­cond-hand. A ma­roon Her­mes Birkin bag made of os­trich leather from 2009 is on The RealReal at €21,130 when its 2017 re­tail price as a new prod­uct was around €15,000.

In New York’s Soho district, Chinese stu­dent Fan Tu shopped for pre­owned items from Prada and LVMH la­bel Ce­line at The RealReal’s store — its first, with a se­cond due to open in Los An­ge­les in Au­gust.

Tu, who had raised about $4,500 from sell­ing used clothes via The RealReal this year, said she was not just af­ter bar­gains — rather any­thing that caught her eye from her favourite la­bels, new or old.

“I also shop at Ce­line, right across the street, and at Prada, two blocks away,” she said, clutch­ing a pair of her old Chanel boots and Dolce & Gab­bana loafers des­tined for resale.

I think we’re past the point where they may have felt we were a threat ... For many mil­len­ni­als it’s their first-time ex­pe­ri­ence with a lux­ury brand on our site. JULIE WAIN­WRIGHT THE REALREAL FOUNDER AND CHIEF EX­EC­U­TIVE

Lux­ury shoes and ac­ces­sories are dis­played at The RealReal shop in New York.

Gucci al­li­ga­tor skin shoes are dis­played for sale.

Yet some things hold their value or even fetch pre­mi­ums se­cond-hand.

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