China Daily Global Edition (USA)
Secondhand bags seize the spotlight of trendy consumers
For young luxury lovers in China, as the saying goes, what is old is the new trend. Again.
Secondhand luxury retailers have banked on opportunities on both livestreaming platforms and offline stores to provide a better omni-shopping experience, as outbound travel was affected by the COVID-19 pandemic, boosting the repatriates’ luxury spending.
At Sanlitun, one of the most popular shopping areas for young consumers in Beijing, a store named Panghu opened recently offering secondhand luxury items. The spacious store, which covers an area of 1,200 square meters, displays luxury bags at a claw crane, with piles of Hermes and Louis Vuitton on the shelf.
The store layout is divided by brands. Walking into the store is like stepping into a ride at the Transformer Zone in Universal Studios theme park. Its modern interior design and layout caters to younger consumers. From blind box to trend IP art works, the store has sought to become a trendy spot in the city.
Ma Cheng, founder of Panghu Technology Co Ltd, said the display of a large number of bags is to differentiate them with first-hand luxury stores while providing a pressure-free shopping experience, a gathering point for a variety of brands, a service from selling to repurchasing and a reliable supply chain.
With an investment of 200 million yuan ($31.5 million), the store has garnered more visitors than Ma expected, with crowds and queues packing it in during the weekends. During the first month it was opened in November, the store achieved profits when 15 percent of visitors turned into their customers.
Even at night when the store closes, livestreaming on Douyin helps to extend their business time. The livestreaming business is able to reach sales of 1 million yuan or more on a daily basis, said Ma.
One of the incentives Panghu offers is its free maintenance of bags purchased at its offline store, and lifelong battery and polishing services for their watches.
Moreover, secondhand merchandise can be repurchased by Panghu within six months after the customer buys them.
Kate Zhang sold a light purple leather Louis Vuitton speedy bag for 6,999 yuan at Panghu and is able to get a net of 5,999 yuan after the service fees.
“These days everyone wears a smaller bag, I no longer need a big bag. It is a good price for me to change to something mini,” she said.
Ma plans to turn Panghu into a mediumand high-end consumption distribution channel as a Chinese Farfetch. The company also supports domestic designers and emerging Chinese brands such as Color Point and Babi. Last year, Focustar Capital and ATM Capital led the third round investment of $50 million, following its first and second financing of nearly 300 million yuan. Its merchandise in circulation in 2020 exceeded 150,000 pieces, with GMV at over 1 billion yuan. Ma said they are considering the prospect of listing in the future.
When luxury buying was considered a symbol of social status and wealth earlier in the country, shopping luxury brands for generation Z consumers was more in the pursuit of lifestyles.
According to the 2020 Luxury Consumer Research conducted by iResearch, consumers below 30-years-old take up about half of the luxury consumers in terms of spending.
The domestic secondhand luxury market has big potential compared to the overseas markets as consumers have seen a turning point from preferences in new items to those with “good quality and price”, said the China Secondhand Luxury Market Report 2022, released by Isheyipai.com, a luxury item service provider.
The sector in 2021 reached a transaction revenue of more than 1.2 trillion yuan, while still lagging behind developed markets, said the report.
The majority of consumers for secondhand luxury products is found in first and secondtier cities, the report said. But there are expectations of seeing more growth coming from third and fourth tier cities, it said.