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Second-hand luxury market: statistics and analysis

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It will have escaped no one’s notice that the second-hand luxury market has exploded in recent years. Buying second-hand luxury clothing or leather goods is no longer taboo. This market is growing by 12% per year and already represents 25 billion Euros. Ambivalent behaviours fuel its growth: on the one hand those of new customers who want to access a brand; on the other hand, those of loyal customers who resell the products they buy new to buy new ones. In this article, we take you on a journey to the heart of the second-hand luxury market and its statistics that would scare more than one marketer.

This analysis is brought to you by IntoTheMinds, a market research and customer satisfaction and loyalty consulting firm.

Summary



20 statistics on the second-hand luxury market

  • 25 billion €: the second-hand luxury market worldwide (source BCG)
  • 36 billion €: the value of the second-hand luxury market in 2021 (source BCG)
  • 12%: the average annual growth rate of the second-hand luxury market
  • x 2: the demand for second-hand luxury goods is expected to double in the next five years.
  • between 7 and 9%: the share of second-hand goods in the luxury market
  • 30% of French people say they bought a second-hand garment in 2018, 32% in 2019
  • 60% of French people say they purchase second-hand products
  • 1 billion euros in turnover for the clothing market alone in France
  • 1.3 billion: Chrono24 sales volume in 2019
  • 500%: increase in sales of Chanel items after Karl Lagerfeld’s death
  • 1%: the return rate of luxury watches purchased on second-hand platforms
  • 44% of luxury customers check out already planning to resell their bags (BCG)
  • 40000: the number of articles put online each week on Vestiaire Collective
  • 8 million: the number of buyers and sellers registered on Vestiaire Collective
  • 40m: the fundraising carried out in 2019 by Vestiaire Collective
  • 11m: the number of Vinted members (source: Les Echos)
  • 1.5 million: the number of daily visitors to Vinted
  • 23,000: the number of new daily listings on Vinted
  • 1 billion euros: the valuation of Vinted
  • 15€: the average basket on Vinted


Which luxury products are benefiting from the second-hand boom?

You only have to look at a platform like Vestiaire Collective to see that all luxury items are benefiting from the boom in second-hand goods. Platforms specialising in one category of article (watches, for example) are still powerful and present, but they are now competing with more common players.

The arrival of eBay in the world of online sales has changed the situation. It has gradually encouraged buyers and sellers to take an interest in objects that were previously absent from the second-hand market: luxury items. At the beginning of the 21st century, online offers were organised around certain specific verticals. Chrono24 was launched in 2003, for example, and is still the dominant marketplace today. This does not mean that luxury watches were not resold before. Specialists, with physical stores, have always existed.

It should be noted, however, that the semantics used by these shops before the internet era was quite different. When it came to second-hand clothes, for example, they spoke of “vintage”. This semantics is not necessarily used on online platforms where the bulk of sales are made up of recent pieces. One may wonder whether the word “Vintage” is not a brake on buying rather than a lever. Today’s consumers are mainly looking for a good deal (the number one motivation for 96% of buyers) for current parts. This buying bulimia will temporarily slow down during the Coronavirus crisis.



Why second-hand luxury is interesting for the brands themselves

Maintaining and acquiring new customers

Brands have long identified the second-hand luxury market as a growth driver. This is evidenced by the acquisition in 2018 of Watchfinder, the British specialist in high-quality second-hand watches. Beyond this example, seeing its products being bought and sold on the second-hand market represents a real opportunity to find new customers and build loyalty with old ones.
For the former, second-hand is a kind of initiation; for the latter, it allows them to resell pieces that are out of fashion and to buy new ones. This stock rotation thus feeds the demand and the production of the brands.
The strategy followed by Weston is, in this sense particularly interesting. In essence, it promotes old products (reconditioning and resale in a “noble” range) and allows current owners to treat themselves with a voucher. The voucher is also a marketing technique used by other brands that are starting to sell second-hand goods. See, for example, Cyrillus, an upmarket children’s clothing brand, which has been present on the Disruptual platform since 2017. When an item is sold, the brand will match 50% of the voucher amount. And it works since 80% of them choose the voucher rather than the cash.
A study carried out by BCG in partnership with Vestiaire Collective gives us impressive figures on the behaviour of second-hand consumers. Indeed, for 62% of customers, second-hand goods were their first contact with the brand. The loyalty effect is, therefore, evident for new buyers. On the other hand, for buyers of new products (those who resell their garments to make room in their dressing room), the behaviour is different. We thus learn that 70% of these people rarely buy second-hand.

Cyrillus sells second-hand clothing on a dedicated platform called “second story”. This platform is managed by the French company Disruptual.

In June 2018, the luxury group Richemont (Piaget, Jaeger-LeCoultre) acquired Watchfinder, a platform specialising in second-hand luxury watches.

Fight against counterfeiting

Another motivation for brands to “embrace” the second-hand market is resistance to counterfeiting. Apart from a few specific items, a second-hand object is usually much cheaper than its new counterpart. For luxury watches, the discount can be as much as 70%! The price difference between second-hand and counterfeit becomes more acceptable (or even negligible), which reduces the temptation for new buyers to opt for a product that is not original. A “vintage” Hermès square can be bought for as little as 80€, while good quality Chinese copies are available for around 100€. What would be the interest for the buyer not to opt for the original?

In short, second-hand allows to streamline the luxury market by allowing:

  • current customers to “make room” and buy again (loyalty)
  • for new buyers to enter the world of luxury at a lower price (acquisition)

 

Counterfeiting is a scourge for luxury brands. In Italy counterfeit bags are sold on the street by street vendors (photo taken in Venice).

 

Weston’s doing vintage

advertising westonHere is an advertisement that has been published in several French newspapers. Which shows the interest that brands are now developing for the second-hand. This advertisement is a good illustration of the marketing strategy of luxury brands: marketing second-hand products on the one hand, and making former buyers’ buyback (that is to say, building loyalty) on the other. In the case of Weston, it should be noted that the shoes are reconditioned and in a certain sense “ennobled” since they are part of a “Vintage” range. Who says Vintage necessarily says rarity, authenticity, nostalgia.

Translation of the ad : “WESTON VINTAGE – J.M. Weston collects pairs of Weston’ shoes that you no longer wear to restore them and offer them for sale in the WESTON VINTAGE COLLECTION. Deposit them in our shops following the advice of an expert, a gift voucher of a minimum of 100€ will be offered to you.


The special case of unobtainable new objects

Some items simply cannot be bought new. Too rare, reserved for customers chosen by the brand, they are only accessible to others via the second-hand market. Some models of Patek Philippe watches, for example, are only produced in small numbers each year. Customers are required to fill out a file and apply for purchase. One dealer told us that he had 30 customers on a waiting list for a model for which he only received 2 timepieces a year. For those who want a particular watch, the only way is, therefore, the “grey market”. However, do not expect to get a good deal. The Patek Philippe model 5131 (photo opposite, copyright Patek Philippe) is about twice as expensive as if you were lucky enough to buy it new from an authorised dealer.



4 consumer motivations for buying second-hand clothing

Make a good deal

That’s probably the most obvious reason. As a general rule, the second hand is much cheaper than the new. In the survey of 1,005 customers of the Vestiaire Collective platform, 96% of the purchasers said that this was the most important reason.  Second-hand purchases are therefore primarily driven by making ends meet at the difficult end of the month.

A wide choice

The second most important reason, at the top of the consumer response list (Vestiaire Collective survey), the wide choice appeals to 83% of customers.

Anticipated rarity

The death of a creator, the end of a partnership, the end of a career, are all motivations for consumers to rush into the production of specific designers. It will be remembered that when Karl Lagerfeld passed away (see our article here), sales of Chanel products had increased by 500% on the Videdressing platform. The same phenomenon occurred when Hedi Slimane announced his departure from Yves Saint-Laurent (600% increase). When Phoebe Philo, whom he replaced, joined Celine in 2017, she experienced the same thing.

Hermes’ Kelly bag is a highly sought-after second-hand item. This emblematic model appears on the cover of the “exceptional pieces” section on the Vestiaire Collective platform.

Proven rarity

In the case of limited-edition pieces, or simply when a model is no longer produced, the only channel for sourcing is second hand. Specific models of bags, for example, are particularly rare (think of the Kelly model by Hermès). Vestiaire Collective has 8 VIP account managers to find them. They are in contact with compulsive buyers whose XXL wardrobe needs to be renewed regularly. For this exceptional clientele, Vestiaire Collective takes care (for a higher commission) of taking the photos, taking the items, putting them online and selling them. Luxury service for clients who can, therefore, satisfy their shopping desires and feed their addictions to luxury.



7 second-hand platforms that compete against each other

  • Vestiaire Collective raised €40m in 2019
  • Videdressing was acquired by Leboncoin at the end of 2018.
  • United Wardrobe (NL) has 3 million users
  • StockX raised $110m in June 2019
  • Vinted (LT) has 11m members and raised €128m in November 2019.
  • ThredUP (US) has raised $130m since its creation in 2009.
  • The RealReal was introduced on Wall Street on June 28, 2019 ($300m raised).

 

Illustration images: Shutterstock, Patek Philippe, Vestiaire Collective, Seconde Histoire

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Author: Pierre-Nicolas Schwab

Pierre-Nicolas est Docteur en Marketing et dirige l'agence d'études de marché IntoTheMinds. Ses domaines de prédilection sont le BigData l'e-commerce, le commerce de proximité, l'HoReCa et la logistique. Il est également chercheur en marketing à l'Université Libre de Bruxelles et sert de coach et formateur à plusieurs organisations et institutions publiques. Il peut être contacté par email, Linkedin ou par téléphone (+32 486 42 79 42)

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