Second Hand Luxury Goods Are Not Brand Dealers' Threats, According To The Latest Report.

Recently, the Boston Consulting Group (BCG) has published two reports covering the theme of "second-hand luxury": one is the global luxury industry consumer insight report released by Altagamma, a luxury industry association of Italy. It reports 12000 luxury consumers in 10 countries. The other is a research report on 1005 customers of French second-hand luxury trading platform, "Vestiaire Customer Research Report".

These two reports show that in the past, the secondary luxury market, which was considered a small niche and low ceiling, has been reborn with the development of online channels. Luxury brands can achieve greater benefits by participating in and encouraging second-hand transactions, including improving brand image and acquiring new consumers.

Second hand luxury market is growing rapidly

The report shows that the scale of the second hand luxury goods market in the world has reached 25 billion US dollars in 2018 and grew at an average annual compound growth rate of 12%, which is expected to reach US $36 billion by 2021. The proportion of the global luxury goods market will increase from 7% in 2018 to 9% in the global market.

As far as channels are concerned, the growth of the second hand luxury market mainly comes from online channels, which now account for 25% of the market, while small, independent and consignment based offline stores are still the mainstream of the market.

As far as category is concerned, "bag" is the most popular category with its advantages such as convenient online shopping, easy to wear, large quantity of supply and so on. "Watches and jewellery" are closely followed, and clothing and shoes are relatively small because they can not be online tried or not.

As far as regions are concerned, the second largest luxury market in the US is the most prosperous. 50% of luxury consumers (who bought a luxury item in the past 12 months) have traded second-hand luxury goods, and the secondary luxury market in Europe and China is also growing rapidly.

As far as age is concerned, the younger consumers are more involved in second-hand luxury goods market, 54% of Z generation (born 1995) and 48% of the millennial generation (born 1981~1995) have traded second-hand luxury goods, while X generation (born 1965~1980) and baby boomers (born 1946 ~1964) are 38% and 35% respectively.

　　 Secondary luxury market's main engine of growth

Affordable price

The "affordable price" of second-hand luxury goods has always been the main reason for the growth of the market. For second-hand luxury market buyers and sellers, the purchase of second-hand luxury goods can reduce their TCO and increase their disposable income, which will also be used to continue to buy second-hand luxury goods or choose luxury goods. According to the Vestiaire customer survey report, 96% of respondents said they bought second-hand luxury goods for cost-effective.

(TCO) the total cost of ownership, that is, the cost of asset purchase and the sum of costs in the whole life service cycle. )

Professionalism and concentration continue to improve.

The two tier luxury market is often a "stepping stone" for consumers who do not have enough money to buy primary market products, and the expansion of online channels has accelerated this process. Compared with the traditional offline consignment stores, the online platform can provide buyers with more product selection and matching, and ensure product authenticity. The online platform can provide more perfect services to sellers, such as door-to-door picking, goods identification, storage and sale.

In addition, more and more online platforms are also moving down the line, expanding through offline stores, such as the US luxury luxury websites The RealReal and Rebag, which have established offline stores. The European luxury goods website Vestiaire has set up pop up (flash shop) in high-end department stores and shopping centers such as Selfridges, Le Bon March et al.

The professionalization of the online platform not only attracted buyers and sellers of the secondary market, but also attracted the influx of venture capital. RealReal raised more than US $280 million in 2018 and landed on NASDAQ in June 2019, with a current market value of US $1 billion 480 million. With the influx of capital onto the head line platform, the entry threshold of the industry has been raised, which has further increased the concentration of the market.

Changing consumption concept

The changing consumption concept is also promoting the secondary luxury market. At present, the main consumers in the luxury market are the millennial generation and the Z generation. They are more concerned about sustainability and rational consumption than the previous generation of consumers.

The consumer insight report of the global luxury industry shows that 59% of the first class and two tier luxury goods consumers say their products are "sustainable" affecting their buying behavior. 17% of the two level luxury goods market consumers think buying second-hand products is "consistent with sustainable thinking" buying behavior. The Vestiaire customer research report verified this view. More than 70% of respondents said they were committed to "moral consumption", and 13% of respondents said that sustainability is extremely important to them. Of the respondents who devoted themselves to "moral consumption", 57% of consumers said their impact on the environment was their primary consideration.

Product richness

Another reason for the rapid growth of the second hand luxury market is to provide consumers with ever more abundant product choices. In addition to antiques and regular second-hand luxury goods, there are two kinds of products growing rapidly in the second hand luxury market. One is limited products or iconic products. These products are hard to get in first class luxury goods market, usually forming a premium in the secondary luxury market. Resale prices are often higher than the issue price, and are highly correlated with product demand and scarcity.

The second category of products is a series of joint series - the cross border joint activities in the fashion industry are increasingly welcomed by young consumers, and have promoted more luxury brands to collaborate with artists and designers. According to the report, about 90% of the respondents were interested in the joint venture, and 50% of the respondents had bought limited or joint funds. Such purchases are more popular in China and younger generation. In addition, 62% said it was more interesting to find second-hand market by buying limited products and joint funds.

Why should luxury brands support the second hand luxury market?

In the past, luxury brand makers may see the second-hand luxury market as a threat. Now, the secondary luxury market may have greater value for luxury goods and luxury brands.

Second hand luxury market is an "recruitment mechanism".

The second hand luxury market can be used as a recruitment mechanism in the luxury industry. Many luxury goods "Xiao Bai" can enter the luxury market through buying second-hand luxury goods, and then contact with luxury brands. It can also encourage consumers in the primary market to reduce TCO and raise disposable income through the two tier market, thus promoting the sustainability of the whole industry.

The report shows that 71% of the second hand luxury market buyers tend to buy products and brands that they can not afford to buy in the primary market. Therefore, the secondary luxury market is a powerful way to establish a brand relationship between luxury brands and potential buyers. In addition, the discussion on products and brands in the secondary luxury market will have an impact on the brands and consumers in the primary market. For example, the brand can know what consumers like and conduct targeted publicity through the secondary market.

With the maturity of second-hand luxury buyers, their purchasing power tends to increase. When deciding to buy products and brands, they often choose products and brands that have been purchased in the two tier market. According to the Vestiaire customer research report, 62% of respondents said that the first brand they bought in the primary market was the brand they liked on the Vestiaire platform. Almost all of them said they would consider buying the brand again. Although 43% said they might insist on using second-hand products, the other 57% said they would choose to buy a single product.

Sellers in secondary market are buyers of primary market.

Sellers in the second hand luxury market usually sell some of the money they spend on their products by resale and then buy new luxuries. The report shows that 32% of second-hand luxury sellers said that the main purpose of their resale is to be able to buy new products. In fact, most secondary market sellers seldom buy in the secondary market, for example, the products of Vestiaire platform 70% are provided by the first hand market buyers who seldom buy second-hand market products. These buyers' transactions on the platform are mostly selling, and they only account for 3% of all transactions on the platform. In addition, the sellers of second-hand luxury goods have increased their purchasing power in the primary market by reducing their TCO, which benefits the luxury brands.

The secondary market has improved the sustainability of the luxury industry.

Second hand luxury goods market has extended the life of luxury goods. The report shows that most of the second hand luxury goods are of high quality. 62% of the products are not used or rarely wear (wear 3 to 10 times), which helps to develop circular economy. Designer Stella McCartney has said that if there is a large number of fast fashion products being incinerated or landfill every second, then I will become more and more convinced of the circular economy of fashion industry.

Luxury brands that support sustainable development can be proud of participating in a more responsible ecosystem, and they will eventually benefit from this positioning. Stella McCartney cooperated with The RealReal, and the women's clothing brand BASH and brand group SMCP also collaborate with Vestiaire Collective, which also enhanced their image in the new generation of consumers. French President Mucklow advocated the fashion convention at this year's G7 summit, which is committed to stopping global warming, restoring biodiversity and protecting the oceans. So far, 150 brands of some 32 companies have signed the agreement.

On the contrary, the destruction of stock and other acts is easily opposed by a new generation of consumers. A European luxury brand dealer has destroyed the unsold product of the previous year. When consumers discovered the brand and condemn it no longer to buy it, the brand quickly announced that it would not carry out such behavior in the future and would adopt sustainable improvement measures.

How luxury brands participate in the second hand luxury market?

Since luxury brands support and encourage the secondary luxury market to get more revenue, how can they participate?

Provide resale services, directly help buyers to spend more sustainably and support the recycling economy.

Actively carry out cross-border cooperation, organize public activities, integrate brand tradition into modern design, and inherit brand culture.

Strengthen the strike against counterfeit goods

Work with the resale platform to communicate with potential customers and get feedback on brand products and positioning.