The concepts of resale and luxury retailing don’t go hand in hand. Resale is a bargain hunters’ playground; the general belief is that it’s for those who can’t afford to buy things full price. Luxury on the other hand, is defined by brand equity and a sense of exclusivity that’s reserved for the more affluent crowd. But due to retailers like the RealReal, the ‘luxury’ and ‘resale’ worlds have collided and revolutionized the retail industry. In 2019, Investment bank Berenberg predicted that the second-hand luxury market will increase to almost 9% of all luxury sales by 2020; and it is expected to grow to $36 billion in 2021! Historically, the luxury resale market has been dominated and fragmented by small local boutiques with limited consumer reach. But times have most definitely changed and as the economy continues to remain uncertain, penny pinching is the order of the day and more people – even those who can afford it, are opting to spend their coin on second-hand goods instead of paying full price.
Second-hand Luxury Has Become the New Normal
From television commercials to magazine and billboard advertisements, we are being bombarded with the allure of second-hand luxury, whether buying or selling pre-owned items, it has become a popular trend since the recession. Some of the most well-known options when it comes to peer to peer marketplace services are platforms like eBay, Tradsey and Poshmark, as convenient as these sites are for getting goods in front of the right audience, there is a high level of seller participation required, from taking photos of the products, positing, pricing research and shipping items.
Next we have brick and mortar, even though many stores have transitioned into the ecommerce space in recent years, they are still going strong. The only requirement is that the seller makes their way to the store with their goods, or they are collected via a concierge service and the seller receives a commission.
Then you have the RealReal, a high-end multimillion-dollar consignment store where you can sell your designer goods. Due to their wide customer reach, you are more or less guaranteed to sell your unwanted items, and they do all the work on your behalf. You can sell anything from men’s, women’s and kid’s clothing, home decor, fine art and watches as long it’s in reasonable condition and that it falls under the luxury category. It’s a win win for buyers and sellers, buyers can purchase their favorite brands at a fraction of the price, and with the company’s team of experts who put every item through a no-nonsense authentication process, they are certain to take home the real deal!
Second-hand Goods – What’s the Appeal?
According to management consulting firm Bain & Co, the luxury resale market has exploded into a $6 billion industry. Pricing has had an undeniable influence on this growth as items typically sell anywhere from 30% to 90% less than the original price of similar items. This is true even when the goods are on sale. Consumers flock to stores during clearance, but you will never find second-hand prices on the shelves. There are many more reasons why second-hand luxury goods are so appealing.
Ethical: Today, consumers, especially Generation Z and millennials, the markets biggest participants – have a deep concern for responsible consumption and sustainability. Buying second-hand goods is an excellent way to show love for the environment. The textile industry uses procedures that are pollutant intensive and energy demanding to create the unique fibres for the wonderful array of clothing we have piled up in our closets. When considering how our garments are made, it is impossible to undermine the environmental impact that it has. According to research conducted by Quantis Intl, footwear and apparel industries generate 8 percent of GHG emissions, which is almost as much as the entire European Union!
Second-hand goods generate a circular luxury economy which is currently a hot topic in the fashion industry. Stella McCartney is one of the many advocates of extending the life of clothes and has expressed her disdain for the truckloads of fast fashion that are being landfilled or incinerated. According to the environmental action group WRAP, wearing clothes for an extra nine months will reduce waste footprints and carbon waste by around 20-30% each.
The RealReal takes pride in their contribution to a more responsible ecosystem.
Mix and Match: The customer mindset has made a radical shift, gone are the days when consumers want everything to match. Today it is considered extremely hip to combine a piece from the 1920’s with the latest catwalk ensemble.
Vintage: Designer clothes are seasonal, and when the season is over, the items are not sold again. That’s part of the appeal of name brands, and why you will see every celebrity carrying the same handbag or wearing the same shoes at the same time. People who buy designer clothes know that if they don’t get that new release now, they will never get it. So, if you missed out on that Louis Vuitton bag 50 years ago, the RealReal might just have it in stock! For those who like edgy, unique fashion trends, second-hand clothing is the way forward.
Product Accessibility: The second-hand market provides its customers with a wide range of products, outside of vintage items, iconic or rare items are especially popular, these include collaborations and limited editions that you won’t find again on the first-hand sales network.
While fashion behemoths like Chanel have criticised companies like the RealReal for chipping away at department store profits, there is no denying that the appeal for second-hand luxury goods is manifold. Consumers on a budget get access to the brands they love at the same time as breathing new life into old products. Those who’ve grown out of or grown tired of what’s in their closet can trade it in for cash and purchase replacements they prefer. So, in a nutshell, with $80.5 million in sales in 2019, it doesn’t look like the RealReal is going anywhere any time soon!
