buying a bag vintage Gucci is no longer just a collector’s hobby. Similarly, the used watch business is not a leap into the void, but rather a promising investment. The second-hand luxury market has skyrocketed in 2021 to reach 33,000 million euros, after an increase of 65% since 2017, according to a study by the consulting firm Bain & Company. In contrast, the first-hand market has only grown by 12% in the same period. The increase in sales on digital platforms and a growing concern for sustainability among both younger consumers and brands stand out among the reasons for the flourishing of this sector. A trend that large luxury companies cannot turn their backs on when drawing up their growth strategy.
According to recent research by the Boston Consulting Group (BCG), consumers of second-hand luxury items are slightly in favor of men (55%) and tend to be younger (mostly millennials or Generation Z). Gabriela Salinas, a professor at the ESIC business school, believes that the new generations are increasingly aware of sustainability and the need to consume intelligently. “We are in the age of declassé consumptionin which the idea that spending money frivolously makes you look less cool is beginning to take hold,” he says.
Another fundamental factor in the growth of the sector responds to the disappearance of the stigma of the second hand. This change in mentality has consolidated the reputation of resale, which has become a highly valued purchase option. “Before buying second-hand seemed like a cheap things business, dedicated to people with few resources. Now this prejudice is weakening, also thanks to the fact that digital platforms are authenticating the products to verify that they are genuine”, adds Salinas.
The proliferation of digital apps for buying and selling luxury goods gives consumers more direct access to this market. Vestaire Collective is one of the leading players in this e-commerce. Founded in Paris in 2009, the platform operates in 80 countries and has an inventory of more than 3 million items from 10,000 different brands. In 2021, it has experienced strong growth, with orders increasing 90% globally. At the moment, the United States is its largest market, although East Asia, Southeast Asia and Oceania have seen considerable development in the last year. “Traditional dealers have to adapt to an increasingly digital landscape, where brands, also through apps, will integrate more and more sustainable options so that customers can sell their old parts and buy new ones,” says Sophie Hersan, co-founder of Vestiaire Collective. The company has not communicated its business volume to EL PAÍS, but in March of last year it achieved the status of Unicorn, so its valuation exceeds 1,000 million dollars.
Watches and jewelry, the most demanded items
In terms of product categories, the analysts consulted by this newspaper agree that watches and jewelry represent more than 75% of the market. Pawn Shop has been one of the leading companies in Spain in the sale of second-hand luxury watches for eight years. Álvaro Martín, one of its owners, explains that these accessories are a refuge value for investors, because they know for sure that in the coming years they will increase their market value.
According to this businessman, the Rolex, Patek Philippe and Audemars Piguet brands have created a veritable bubble in the second-hand market. “In their stores they don’t give the most demanded models to anyone except the most cutting-edge customers or whoever is on the waiting list, which is a minimum of four years. Thus, there is a lot of demand, but very little supply, which is why used watches are worth double or triple that of new ones”, he comments. Martín celebrates that the coronavirus crisis has not affected his business, since in 2021 he had a turnover of between 3 and 4 million euros, around 40% more than two years ago.
Beyond watches and jewelry, key apparel categories like bags and shoes are gaining market share. The Vintalogy brand, specialized in clothing vintagehas four stores in Madrid and three of them are mainly dedicated to the sale of sneakers. “During the pandemic we realized that it was the only thing our customers kept buying. They have a marketing unbeatable, even more since when the great icons of music and entertainment partnered with brands to make all kinds of versions”, says Juan Fraile, one of the two founding partners.
Vintalogy’s fourth store, located in the Rastro area, mixes ordinary garments with luxury items. Fraile indicates that the consumer is increasingly cosmopolitan and heterodox. Especially the youngest, who approach the second-hand luxury market in a more eclectic way, combining pieces from different brands to find their personal style. Although high-end clothing sales are picking up, they have not yet reached the pre-crisis level. “We closed 2021 with a turnover of close to half a million, half that of 2019. The events have not yet been resumed and many employees continue to telework,” he settles.
Brands cooperate with digital trading platforms
One of the hot topics in the second-hand business is the participation of brands in the sale of their garments. If until a few years ago luxury firms were wary of this market for fear that it would harm their image of excellence, now many of them invest in used clothing sales platforms. 5% of the shareholders of Vestiaire Collective belong to Kering. Two years ago, Gucci signed a collaboration agreement with TheRealReal, the leading platform in the United States for buying and selling items. “Second-hand is a trend that is here to stay and most luxury brands, despite an initial period of perplexity, are trying to integrate it into their global strategy,” says Filippo Bianchi, an analyst at BCG.
Collaborating with platforms allows brands to grow in a controlled manner and win their battle against counterfeiting. “By signing agreements with resale companies on-linethey can intervene in the selection and curation process of the garments for sale and, if they are not up to the mark or if they are not original, they can decide not to offer them through these channels”, adds Salinas.
Many brands have realized that it is necessary to favor their accessibility to more and more users in order to increase their presence in the market. The second-hand sector is one way to meet this objective. According to BCG’s latest research on this business, 62% of consumers would buy more fashion brands that partner with online shopping platforms. At the same time, luxury companies should not get off the exclusivity bandwagon, as most consumers buy high-end products because they want to look different from others. For those brands that strike this balance, the rewards will be numerous.
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