Luxury + Resale
Lots of thoughts and questions
(listen above)
Bonjour mes amis,
Today we address luxury + resale
Rolex, Chloe, Gucci and Neiman Marcus are four of the very few examples of the luxury market entering into resale directly. Of course there’s a huge resale market for luxury items, but not many luxury brands are willing to own that resale experience- they seem content to let it play out without joining the game themselves.
It’s in stark contrast to the rest of the fashion industry at all price points who seem intrigued by resale and have been hopping into the waters to test it out for some years now.
I’ll discuss the four luxury examples I shared, and then I’ll share the forces at play- as I see them- that keep the luxury market out of resale.
Luxury Example #1:
Brand: Chloé
Digital ID: EON
Resale Marketplace: Vestiaire Collective
Chloe recently launched a partnership with digital ID provider EON and resale marketplace Vestiaire Collective. Here’s EON’s description:
For Spring 2023, certain Chloe handbags, shoes and clothes will have unique identifiers accessible to consumers. If you and your friend bought the same garment, yours will have a different ID than your friend’s.
Scanning your garment with your mobile device, connects you to a Digital ID managed by EON and you can access information on how to clean the product, when and where it was made, what it’s made of and a history of its journey through production to the sale where you bought it. It will also allow you to access brand information and brand services, including a digital certificate from Trust-Place that verifies your ownership.
When you’re ready to sell it, you select “resale” and it is automatically listed on the resale company Vestiaire Collective’s site.
I think this is absolutely a step in the right direction, and I applaud Chloé for working out a very cool program with two complementary vendors.
If I may, a few comments:
This program is hard to find on the Chloé website, and they only talk about selling products, not buying resale. I wish they would talk about both to encourage their customers to truly participate in both sides of resale and to stand behind the product they make.
Chloé is partnering with resale marketplace Vestiaire Collective to sell the pre-owned Chloé items, but I think there’s an opportunity to sell them on their own website, especially because these items can be verified as authentic with their digital IDs. Chloé could benefit from new-to-brand customers by selling these items themselves.
I don’t know why Chloé would choose to put digital ID on some of their products and not all of their products. I hope this is an incremental strategy that is aiming to have everything produced with a digital ID in the coming seasons.
Luxury Example #2:
Rolex
Rolex launched their pre-owned program in 2022.
I love that they own this program! They have taken accountability for the certification process.
Because they are built to last, Rolex watches often live several lives. Rolex offers the opportunity to purchase previously worn timepieces that are certified as authentic and guaranteed by the brand.
I appreciate the acknowledgement that Rolex watches live several lives- this is how people already treat Rolex’s, so why not embrace the existing customers’ behavior and invite them into the brand in a new way?
From my research, you cannot purchase anything directly on the Rolex website, you have to go to a store, so I can’t fault them for not selling pre-owned on their website. Additionally, for something as valuable and expensive as a Rolex, I would find it quite fair to only sell pre-owned in a physical store where customers can inspect their purchase before buying it.
Luxury Example #3
Gucci
Gucci also has taken steps into the pre-owned market working with Vestiaire Collective in the EU and Trove in the US. Gucci offers in-store evaluation for certain collections. Store credit is given and the items are sold on Vestiaire’s website. Some very special items are sold on Gucci Vault, part of their own website experience.
I thought this quote from Kering CEO was interesting:
Kering sees the pre-owned market opportunity and they are getting involved by purchasing a stake in Vestiaire instead of having their brands offer resale directly. Kering may not want brand-owned resale, but they want to invest in the resale market.
Luxury Example #4
Fashionphile + Neiman Marcus
Fashionphile is a luxury resale platform who, I believe, has done extremely well in the resale market boom.
On the surface, FASHIONPHILE is about making pre-owned, ultra-luxury goods accessible. Rare pieces? We have them. Your favorite wishlist item for a steal? We’ve got that, too.
We’re about guaranteed-authentic Holy Grail products in great condition, and quick buy-outs on pieces you’re ready to sell.
And that when we create sustainable, practical solutions — for even the most luxurious of things — we not only make life better but frankly, more fun.
Neiman Marcus bought a minority stake in Fashionphile in 2019 and has a Fashionphile selling experience in-stores and online.
We’ve partnered with FASHIONPHILE, one of the most trusted ultra-luxury resale companies in the world, to make reselling your designer handbags and accessories easy and convenient. You’ll receive payment up front—including a 10% bonus if you choose to receive it as a Neiman Marcus Gift Card®—so you can invest in your next treasure on your timeline, all while helping prevent unnecessary waste. (link)
Similar to Gucci and Chloé, it seems like they are not selling any of the goods they take back through their stores, but are leveraging Fashionphile to sell on their platform. This speaks to taking different approaches for sellers and buyers. Sellers tend to be loyal customers with lots of product- brands usually ask them to sell their product, but do not ask them to buy resale; they prefer to keep these customers as full-price buyers who can help stock their resale programs. Resale buyers, on the other hand, tend to be a third new-to-brand (meaning the first time they purchase from a brand is through resale), a third loyal customers (who brands want to keep happy) and a third reactivated customers (customers who haven’t purchased in over a year who come back to sell their items and start purchasing with the brand again).
In this case, I would think Neiman’s would be quite interested in the new customers they would get from selling pre-loved items themselves, but they have chosen to sell with Fashionphile. They are choosing to keep their loyal customers happy by offering the selling experience, and I hope they are also considering offering the resale buying experience in-store or online in the future. I would also venture a guess that Fashonphile may share customer data with Neiman’s so Neiman’s can target the Fashionphile customers to get them into the Neiman Marcus customer base.
Forces At Play
Here are a few thoughts on why luxury brands may not be jumping on the resale bandwagon:
Luxury brands are notoriously slow adopters and for good reason. They know their products are super high quality and last a long time. They have built their brands over decades, not years, and they value their brand equity more than anything else. An exact replica of a Hermés Birkin bag without the “Hermes” branding is probably worth a fraction of the price the branded version sells for. Brands like Hermés, Chanel, Louis Vuittion, etc are taking their time to decide if resale will devalue their brand.
I think there’s an incredible opportunity here for luxury brands to leverage other aspects of the circular economy like repair (both visible and invisible) and remanufacturing. Coach (who I wouldn’t call luxury, but is close) is doing a great job with repair and remanufacturing.
Regarding resale, I believe there’s an opportunity for luxury brands to leverage resale to create amazing experiences that they can maintain full control of. For example, having a ‘vintage shop’ of items from a brand’s decades of existence would certainly be a marketing coup, would bring in existing and new customers, and would tell the resale story in a luxury setting. It seems like Gucci is dabbling here, and Rolex has definitely arrived.
Part of the mechanism of perceived luxury is the availability of items; having less at a higher price is an important way to keep brand equity. (Some luxury brands even destroy unsold merchandise to keep the feeling of scarcity.) I think luxury brands may be afraid of flooding their own market with too many resale items- but by not participating in resale, these items are everywhere anyways on other marketplaces. You can find all the top luxury brands for sale on TheRealReal, Vestiaire Collective, Fashionphile, DePop, ebay, etc. If luxury brands wanted to take back the items themselves, they could have more control over how and when they are resold.
For some reasons I do and do not understand, luxury brands are doing better than ever. They are reporting record earnings and the demand for their product continues to increase. I assume this is mostly due to the growing wealth and affluent classes in China, India and Brazil, among other countries. Business has never been better, so I imagine the attitude may be ‘if it’s not broke, don’t fix it’. I believe that innovation is crucial to maintaining relevance, but I understand that for luxury brands this innovation must be careful and strategic. I applaud Rolex for figuring out how to do resale on their own terms.
I wanted to mention digital ID as a huge opportunity in the luxury space. While I believe digital ID should be mandatory for ALL companies, it makes the most sense financially and strategically for luxury brands. They have the most to gain by tracking their inventory and having more control over the post-purchase experience.
Well- that was a lot and there’s still more to say- but I’ll stop!
As always, I’m curious what you think!
Take care,
Cynthia
cynthia@moltevolte.com
www.moltevolte.com