FBR Brief #5: Resale market
Luxury Resale report and fashion news digest
Happy Monday, readers!
This week we will look closer at the fashion resale market.
Consignment stores have been around for a while, but over the last few years, the resale market boomed driven by the rise of e-commerce and sustainability concerns. According to ThredUp report, it was a $7 billion industry in 2019 and it is set to become a $44 billion industry by 2029.
Luxury brands have long resisted stepping into the resale market, insisting that second-hand sales weaken brand value. But uncertain times have shown that customers may turn even more to these second-hand luxury goods. Yet, the resale market is still operated by third-party players. Only recently some online and off-line luxury retailers (Farfetch, Selfridges) and fast fashion players (H&M) have started to integrate the resale into their business model.
The RealReal Resale Report
The RealReal’s latest Resale Report revealed that this year Louis Vuitton is the most in-demand brand in luxury resale on the platform, followed by Gucci. Though understated luxury is rising in demand, luxury streetwear remains consistent. Balenciaga ranked No. 1 brand in streetwear, and overall demand for luxury streetwear spiked 486 percent in the past two years.
“Faced with economic uncertainty, shoppers are gravitating toward the safest bets in luxury: investment pieces. They’re spending on high-value, timeless styles with enduring resale value, knowing they can consign them in the future to recoup most of that investment or wear classic pieces for decades to come.” - Sasha Skoda, head of women’s for The RealReal.
Recommended reading: 6 Reasons Luxury Brands Should Embrace the Resale Market
Online resale players
The major online luxury resale players are US-based Fashionphile, The RealReal, Rebag and European Vestiaire Collective, each company differs in its business model. There are also social shopping platform Depop, online marketplace Ebay and other resale and social platforms not necessarily specialized in fashion & luxury resale.
Amid retail bankruptcies and lower sales due to pandemic, some online resale players have been thriving, while The RealReal struggled:
Vestiaire Collective raises €59 million to increase footprint in Asia - the luxury resale platform has raised an additional €59 million as it eyes expansion in Japan and South Korea.
Rebag, flush with funding, expands from handbag core to accessories resale - after raising $15 million in a Series D funding round, Resale platform Rebag will expand into new categories beyond designer handbags.
Fashionphile Secures $38.5 Million in Series B, Adds ‘White Glove’ Services - Handbag reseller Fashionphile announced $38.5 million in Series B funding and launched its “white glove” service.
Second-Hand Luxury Still Shines at The RealReal - the coronavirus pandemic weighed on luxury consignment marketplace The RealReal’s profitability, but other numbers point to a bright future ahead.
Quick note on China’s Resale Landscape:
The resale market’s growth has been significant. […] In the 2019 Chinese Secondhand Luxury Industry Report, showed that in 2018, sales of pre-owned luxury products amounted to 12.1 billion yuan ($1.7 billion). This places the Chinese market well behind the $5 billion and $6 billion resale luxury markets in Japan and the US respectively, but the yearly growth rate was impressive, clocking 20 percent annually for the last four years, a rate expected to continue, or even accelerate, this year (again, before the pandemic).
[…] Most of the secondhand sales activity in China happens online, with data from QuestMobile showing 60 percent of consumers in major cities report using secondhand sales apps. Unsurprisingly, the largest resale player in the general merchandise category is an Alibaba-backed company, Xianyu, which boasts more than 200 million users.
Related reading: Can China's Resale Market Threaten Luxury?
Investors have poured more than $134 million into luxury resale since April
Luxury resale companies Rebag, Fashionphile, Vestiaire Collective and The Luxury Closet have attracted more than $134 million in total investments, reflecting resale’s much brighter positioning compared to the rest of retail. The resale market is expected to grow from $7 billion this year to $36 billion by 2024, according to a June report from GlobalData. (Glossy)
Ebay data shows surge in second-hand fashion buys
Online marketplace Ebay has released new data which highlights an exponential increase in consumer appetite for second-hand fashion. (EcoTextile News)
Fashion house Alexander McQueen joins blockchain trend with new label
Alexander McQueen launched a new technology-driven label called MCQ, backed by a blockchain-based platform that enables both designers and consumers to securely register and trade clothing. (Cointelegraph)
Why H&M is jumping on resale at Cos
H&M-owned brand Cos is launching its own resale platform called Resell in an attempt to enter the secondhand market and promote circularity. However, sustainability advocates question the Cos's motives, given that the brand itself doesn’t reduce the volume of new products produced. (Vogue Business)
Selfridges accelerates efforts to sustainably 'reinvent retail'
As a part of "Project Earth" initiative, the UK’s department store introduced Repair Concierge service in 4 locations across the country and will soon launch ‘Resellfridges’ – its first own-brand resale model. (Edie)
The secondary market has always existed in the shadow of the primary luxury market, but now it’s moving into the spotlight, becoming a global phenomenon and one of the fastest-growing areas of the industry. Given growing demand for sustainability, we’ll see how the dynamics between primary and secondary markets unfolds.
Thanks for reading,
Assiya Assanbayeva
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