Brands’ endeavors in the metaverse continue to come into fruition. On Tuesday, Tokens.com made headlines thanks to a large-scale real estate purchase. The crypto investment company’s Metaverse Group subsidiary paid $2.4 million – in crypto – in what is being called one of “the largest ever land acquisitions.” The important caveat is that the land exists exclusively “in the metaverse.” Specifically, Metaverse Group splashed out more than $2 million for a 6,090 square feet parcel of virtual land on Decentraland. Located in the Fashion Street District of the Ethereum-powered decentralized 3D virtual reality platform, Toronto-based Tokens.com revealed that the real estate will be used “by fashion brands to advertise, host fashion shows, and have e-commerce storefronts, staffed by virtual staff.” 

The Metaverse Group, Decentraland news is the latest development to come in the swiftly-growing alternative universe – one that combines immersive virtual reality, massive multi-player online gaming platforms, and various other facets of the web – and it comes as consumers, brands (including fashion ones), and crypto firms continue to make inroads into the space. 

In the past several weeks, alone, Nike announced a noteworthy partnership with Roblox to enable its fans to “connect, create, share experiences, and compete” in a “bespoke” virtual world called Nikeland. Adidas teased efforts of its own impending venture into the metaverse – or the “adiVerse” as its being called – with platform The Sandbox. London-based brand Stefan Cooke teamed up with EA to bring menswear to The Sims universe, and Moncler debuted a collaboration with Epic Games in a tie-up that sees its collaboration with 1017 Alyx 9SM enter into the Fortnite virtual world.

This is a short excerpt from a deep-dive that was published exclusively for TFL subscribers. Join today to gain access to all of our exclusive content.

SKIMS, the burgeoning loungewear brand of Kim Kardashian, might be eyeing an expansion. Amid the frenzy that was its recently-revealed collaboration with Fendi, one that reportedly generated $1 million in sales in just one minute this week, a trademark application for registration that counsel for the reality television mega-star’s company quietly filed last year with the U.S. Patent and Trademark Office for “Hims by Skims” for use on “Hats; Leggings; Loungewear; Shapewear; Slippers; Socks; Sweatpants; T-shirts; Underwear; Boxer briefs; Boxer shorts; Hoodies” surfaced, and it appears to suggest that a play by the almost three-year-old brand to enter into the menswear market is in the works. 

Skims’ November 2020 trademark application for registration was filed on an intent-to-use basis (and comes in lieu of any existing use of the “Hims” aspects of the mark by KKW and co. to date), which very well could mean that a men’s-focused venture called “Hims by Skims” may never actually come into fruition. The name and the potential use of it by Skims is interesting, nonetheless, as a result of the existence of another already-existing brand with a very similar name. That other market occupant is Hims, the four-year-old telehealth company that is in the business of doling out prescription and over-the-counter drugs, and supplements (namely, of the erectile dysfunction, hair loss, acne, and anxiety kind) online, while also selling personal care products for men. 

Sweatpants and supplements – and certainly prescription medication – occupy different segments of the market of one another, but a couple key things stand out (to me, at least) as worth considering in terms of possible confusion between Hims by Skims, and Hims – which filed a trademark application for registration of its own in October 2021 in Class 3 for use on everything from shampoo and cologne to anti-wrinkle cream and facial moisturizers – and thus, prospective pushback should Kim’s Skims make a move towards male consumers.

The Zone of Expansion

The primary point worth considering is the zone of natural expansion, a trademark doctrine that essentially holds that a trademark holder’s existing rights can be extended to other areas of the market that it would reasonably be expected to enter. For a recent example of how this works, the organizers of Woodstock argued in the case that they filed in a New York federal court in 2018 that while their main business centers on festival production, the sale of recreational marijuana is within the zone of expansion of such entertainment services, and thus, they are not running afoul of the rights of other entities with federally registered “Woodstock” trademarks for smoking-related items by using the festival’s name on recreational marijuana products. In February, the U.S. Circuit Court of Appeals for the Second Circuit upheld the U.S. District Court for the Southern District of New York’s preliminary injunction in favor of the Woodstock organizers.

The zone of expansion issue also came up in the since-resolved squabble between Off-White and S.C. Johnson over their respective OFF trademarks, with the multinational consumer packaged goods and chemicals company arguing that its products and those of Off-White are not only “likely to be marketed and sold to the same consumers, and move in the same channels of trade,” but Off-White’s goods, namely bags in this case, “are in the likely zone of expansion for goods sold by S.C. Johnson under the OFF! marks,” thereby, leading to further potential for confusion.

And still yet, in a zone of expansion-esque argument of its own, Zara managed to successfully put a stop to the registration of the “Zara Tanzania Adventures” trademark for use in Classes 39 (travel and tourism services), 41 (wildlife education and training services, ecology, safaris) and 43 (travel agency and hotel services) back in 2019. At the time, K&L Gates’ Simon Casinader and Daniel Cartmell noted that the Spanish fast fashion brand’s win before the Court of Justice of the European Union “demonstrates the far reaching, evolving nature of fashion brands, and the markets they can operate in and are expanding into.”

The zone of expansion theory could prove a useful tool for Hims – which along with its female-focused counterpart Hers, boasts more than 500,000 subscription members – should it add merch to its offerings. The company is, after all, in the midst of expansion, unveiling a new app this week, complete with a “Member Store” that the San Francisco-based company says will “bring together the entirety of the Hims & Hers product portfolio – from supplements to support sleep to products tackling hair-loss – into one simple and personalized space.”

Since the app is the first step in a larger roll out of “additional educational programs, wellness content, community support, and other services” – and presumably, other goods – “over time and based on the needs and feedback of consumers,” and a move to brick-and-mortar by way of a newly-announced partnership with Walgreens, it is not difficult to imagine Hims attempting to bolster its “community” with branded products, such as t-shirts or even underwear (the latter of which is not light-years removed from erectile dysfunction medication) in the same way as so many other buzzy direct-to-consumer companies have done. 

One company that comes to mind is Glossier, which got its start exclusively selling cosmetics and has since expanded into apparel and accessories, including branded hoodies, bags, and water bottles. If its pending trademark applications are any indication, Glossier is looking to expand further into the market via vitamins and supplements, as well as home-oriented offerings like candles. 

There are seemingly countless other examples, as companies continue to blur the lines between traditional offerings and those that can be expected from a modern company catering to brand-happy, community-leaning millennials. Peloton has workout offerings and sells a lot of them; the interactive fitness platform sold 600,000 units of branded apparel in Q4 of 2020. The Ritz Paris has teamed up with Frame for a collab of trademark-bearing wares. Shaving company Harry’s has expanded beyond razors, and has hats, fanny packs, and boxers currently up for sale on its e-commerce site. Alcohol brand Haus offers up branded tote bags. Hell, even Soylent has merch if you want to proclaim your love for soy-based meal-replacement drinks through branded t-shirts, sweatshirts, and hats. 

Against this background and given that just about every buzzy company – from drink-makers to exercise bike companies – is first and foremost a brand (and ideally, an Instagram-friendly one) that happens to also sell products/services, it probably is not a stretch to argue that merch is absolutely within the realm of imaginable expansion for Hims (and also Hers). As for whether anyone would want to wear the name of the company that provides them with acne or anxiety medication is, of course, another matter. 

Collaboration >> Confusion

The other key point worth considering here is the role that collaborations – and the emerging adoption of some interesting new examples of co-branding – play when it comes to the issue of potential confusion (i.e., the core element at the heart of a trademark infringement claim). As TFL wrote back in at least 2017, the onslaught of branded collabs that has become the norm for fashion brands and consumer products-makers more broadly has likely made it so that consumers are increasingly susceptible to confusion about the source of goods/services, as sometimes the source can be more than one entity. In other words and in light of the continued reliance by companies on creativity-by-collaboration (as opposed to actual creativity, one might argue), it is entirely likely that any given product in the market is the result of a collaboration and/or that an ever-growing list of brands are engaging in such collaborative efforts, thereby, blurring the line between respective brands’ offerings.

(Burberry actually argued this point in the trademark lawsuit that it filed against Target in 2018, in which its counsel claimed that consumer confusion was likely to abound in connection with the checkered wares being sold by the retail chain due to “Target’s well-publicized history of collaborating with popular brands and fashion designers to promote and sell Target-exclusive limited-edition collections.” In other words, because Target has engaged in a string of collaborations in the past, who is to easily say if something is or is not the product of a collaboration going forward?)

The chance of confusion is heightened by the inter-industry tie-ups that continue to make their way to market with regularity, whether it be co-branded home furnishings from Off-White and Ikea, apparel from Proenza Schouler and Mercedes-Benz, or a cartoon that consists of both Balenciaga wares and the Simpsons. Beyond that, there are the tie-ups between arguably unlikely bedfellows, such as LVMH-owned Fendi and Capri-owned Versace, stalwart jewelry company Tiffany & Co. and hyped streetwear brand Supreme, or loungewear company Skims and high fashion house Fendi. 

And still yet, the potential for confusion is increased even more by the fact that a growing number of products are coming to market bearing the mashed-together trademarks of more than one market entity. Fendace, anyone? How about Gucci bags with Balenciaga branding on them? If you are not confused (even for just a minute), there is a chance that you might not be paying close attention.

Ultimately, the reality is that in an effort to consistently create novelty to attract consumers, almost any combination could make for an often-heavily-hyped collaboration. Crocs x Hidden Valley Ranch comes to mind as just one example. At the same time, it seems that far fewer things are being left off the table in terms of what the reasonable zone of expansion for a brand could/should look like. And all the while, trademarks, themselves, are readily taking a wide range of forms – from red zip tie and pink bubble wrap pouches to mashed up marks from different companies (a la Yeezy Gap and Gucci x Balenciaga branding). Taken all together, this could make Hims by Skims – and a whole slew of other examples – a confusing prospect for consumers when it comes to the notion of source. 

It will be interesting to see what – if anything – happens if/when Kardashian’s brand actually begins using Hims by Skims in commerce; the USPTO issued a notice of allowance for the mark in May and last month, it approved Skims’ first request for an Extension of Time to File a Statement of Use. Should Hims take action, it would not be the first time that a Kardashian business has faced pushback over a trademark. In fact, Kim was embroiled in a separate trademark tangle over the name for her skincare venture, SKKN and SKKN by Kim, this summer, after filing trademark applications for registration for those names.

Drip Creationz, the sneaker customizer that was slapped with a trademark infringement and dilution, and counterfeiting lawsuit by Nike this summer for allegedly selling modified sneakers, as well as outright fakes that bear Nike branding, admits that while it has sold customized Nike sneakers without authorization from Nike, it has not engaged in “any alleged bad acts,” despite the sportswear titan’s claims to the contrary. Three months after Nike filed suit against Customs by Ilene dba Drip Creationz, the sneaker customizer has denied the bulk of Nike’s claims in a newly-filed answer, and set out a number of affirmative defenses that shed light on arguments that it will dive into down the road.

In the answer that it filed with a California federal court last week, Drip Creationz makes a few admissions about the nature of its operations, stating, for instance, that it is in the business of “reselling authentic Nike Air Force 1 products purchased from Nike and its authorized distributors and sellers,” and that it also “sells shoes referred to as ‘D1.’” However, the majority of the filing consists of Drip Creationz denying many of the allegations that Nike made in its complaint, including that Drip Creationz “has taken systemic steps in an attempt to falsely associate its infringing ‘customizations’ with Nike,” including by using Nike trademarks “and/or confusingly similar marks on the infringing products and in its advertising.” 

At the heart of Nike’s complaint is its argument that Drip Creationz is selling formerly authentic Nike sneakers, which it “materially alter[s] … in ways Nike has never approved or authorized,” as well as different products that it purports “to be genuine Nike products, but that are, in fact, counterfeits.” Beaverton, Oregon-based Nike alleges that the latter sneakers take the form of “knockoff Air Force 1-style shoes,” which Drip Creationz refers to as its “D1” sneakers, and which bear designs that allegedly infringe upon Nike’s registered trademarks for to its Air Force 1 shoes. In case that is not enough, Nike contends that the copycat footwear also has “crooked proportions, messy stitching, cheap details, and [is] taller than the real Air Force 1 shoes.”

While Drip Creationz acknowledges that it sells the “D1” sneakers that Nike references in its complaint, it neither admits nor denies the Swoosh’s claim the sneakers are counterfeit goods. 

Drip Creationz sneakers

First Sale?

What Drip Creationz does deny is that the “direct approval of Nike is necessary or required for [the] lawful sale of its products,” presumably referring to the modified Nike sneakers. This claim ties into a number of the customizer’s thirteen affirmative defenses, including its argument that it is shielded from liability on the basis of fair use, as well as the first sale doctrine. Specifically, counsel for Drip Creationz asserts that the company’s sale of modified sneakers that it purchased from Nike and/or authorized Nike retailers “amount[s] to a resale by the first purchaser of the original product and is, thus, protected under the first sale doctrine and does not constitute trademark infringement or unfair competition.” 

Undoubtedly a tool for many resellers, the first sale doctrine essentially states that once a trademark owner, such as Nike, releases its products into the market, the purchasers of those genuine trademark-bearing goods may resell them without facing trademark infringement liability. The (very obvious) problem here is that there are limitations to the protections provided by the first sale doctrine. For instance, the doctrine does not apply when a product that is being resold is “materially different” than the product that was sold by the trademark owner or its authorized dealers. 

That exception is relevant here given that the Nike sneakers that Drip Creationz is selling have been modified to include what Nike says are “fake and unauthorized Nike Swoosh designs, as well as third party trademarks and protected images,” such as a pattern that mirrors Burberry’s trademark-protected check, Frito-Lay-owned Cheetos’ Chester Cheetah character, Travis Scott’s Astroworld graphic, and Chick-fil-A’s stylized word mark, along with an image from one of the fast food chain’s its “EAT MORE CHIKIN” campaigns. It would seem to me that such modifications likely take any viable first sale arguments off of the table, especially since at least some of these modifications make unauthorized use of others’ copyrights and trademarks beyond Nike. 

In additional affirmative defenses, Drip Creationz takes issue with Nike’s trademark infringement claim by arguing that a critical element is missing, namely, “there is no likelihood of confusion between Nike’s asserted trademarks and the trademarks and/or usages made by Drip Creationz,” i.e., consumers seeing the modified sneakers would not be misled about the nature and/or source of the sneakers. More specifically, they would not believe that Nike was affiliated with the customized footwear in any way or that it had authorized their production by Drip Creationz. 

Counsel for the customizer also asserts in the company’s defense that “one or more of the asserted marks of Nike is invalid based upon its failure to operate as a mark and/or a failure of Nike to make continuous use of its purported marks,” although, they do not assert which Nike marks that they are referring to. (If I had to guess, in claiming failure to function as a trademark, Drip Creationz is probably taking issue with Nike’s rights in the configuration of its Air Force One sneaker sans the Swoosh logo, which Nike has maintained at least one federal trademark registration for in the U.S. since June 2008.)

And still yet, Drip Creationz claims that “Nike has sustained no harm, irreparable or otherwise, due to the alleged actions of Drip Creationz.” This comes in contrast, of course, with Nike’s assertions that it is, in fact, suffering “considerable” damage from such unauthorized customizations and alleged counterfeit sneakers not only due to alleged differences in quality but also because “as more unauthorized ‘customizations’ get manufactured and sold, the harder it becomes for consumers to identify authorized collaborations and authentic products; eventually no one will know which products Nike has approved and which it has not.”

A Growing Number of Cases 

The case comes as Nike has been initiating a growing number of trademark lawsuits against customizers ranging from Drip Creationz and John Geiger to MSCHF and former employee Jeffrey Waskowiak and his company KickRich LLC. As TFL has previously mentioned, the cases have been met with scorn from no shortage of Nike fans, who have accused the sneaker giant on social media of taking customizers ideas and mass producing them, while also benefitting from the culture-building that comes with exercises in customization and potential boosts to the demand for – and thus, the longevity of – silhouettes thanks to the appeal driven by particularly well-done customization projects. 

In terms of what is driving the onslaught of customizer-specific litigation from Nike, a representative for the company said this summer that the company is not aiming to “limit the individual expression of artisans, many of whom are some of the brand’s biggest fans,” and noted that Nike “often collaborates with designers, artists and other creatives to innovate new products and experiences for our consumers with the Nike brand.” Instead, Nike says such litigation is the result of the fact that the brand “cannot allow unauthorized customizers to build a business using and leveraging some of our most iconic trademarks, undermining the value of Nike’s intellectual property,” as well as of its “brand, goodwill, and hard-earned reputation.” In other words, Nike says that it is simply policing its valuable trademark rights in order to maintain that value. 

The Way Forward

In terms of what this string of customization-centric cases – which has seen Nike take on both established names like MSCHF, as well as also much smaller companies like KickRich – means for other customizers, it is almost certainly intended to send a message to the burgeoning modifications market that Nike will not sit back and watch its marks being used (and profited from) without its authorization. 

While this goal seems straightforward enough from a trademark perspective, it is often lost on consumers, hence, the backlash that such suits cause on social media. With this in mind, it is worth considering what Nike could do differently, and what a potential alternative to litigation for truly customized Nike footwear (i.e., modifications to authentic Nike sneakers, as distinct from modifications made to sneakers that are infringing or counterfeit from the outset) could look like.

Ultimately, it might work in Nike’s favor to get involved by, for instance, launching a platform (maybe in conjunction with its Nike By You initiative) to partner with brand-approved customizers. Such a venture would only allow Nike to only control critical aspects of the customization market (and potentially the secondary market for such goods), including the quality of the sneakers, the terms of sale, pricing, etc. After all, it is many of these elements that are irking Nike (and its legal counsel) when it comes to unauthorized customizations.

The ability for the Swoosh to exercise control over these components would help Nike to mitigate the damages that it has elucidated in its various customization complaints, such as low quality materials or the additional of trademark or copyright infringing elements, and thus, keep its reputation and goodwill in check. At the same time, it would also enable Nike to share in the profits being amassed by customizers, which is, of course, no small part of what these lawsuits are about.

And still yet, such an approach would permit Nike to change its tune (to some extent) in favor of a more PR-friendly approach, which is an increasingly important issue for brands in a digitally-connected where brands are not immune to cancel culture and the risk of alienating consumers by setting the wrong tone by way of things like advertising but also when it comes to litigation is very real. Not only would a collaborative effort enable Nike to make money from customizers, it could help it to adopt a “Just Do It” mentality when it comes to customizers, something that it is largely lacking as of now.

The case is Nike, Inc. v. Customs By Ilene, Inc., 5:21-cv-01201 (C.D.Cal.)

For their first physical runway show since they teamed up to take on the top creative job at Prada, longtime creative director Miuccia Prada and new partner Raf Simons, who joined the Milan-based brand last year, simultaneously sent out nearly 40 looks on models in Milan and in Shanghai in furtherance of a presentation that Mr. Simons and Mrs. Prada called “a new possibility” with an emphasis on the notion of “community” – even if that community is represented, in part, on large LED screens. 

Looking beyond the set-up, there was one element, in particular, that jumped out in the collection: the continued adoption and emphasis on a pared back version of the Prada triangle that the brand has affixed to its bags and other accessories for several decades, and that has become synonymous with the cult-favored fashion house. As we previously noted, Prada’s uses of its trademark triangle to date have been largely uniform in that the flipped triangle is placed on garments and accessories – complete with the words “PRADA Milano,” along with “DAL 1913,” which is a nod to brand’s founding year, and a tiny coat of arms included within the bounds of the shape. 

In more recent seasons, however, as Prada’s triangle logo has been readily coursing through its collections, the use of its tried-and-true triangle has been supplemented the same little triangle symbol, albeit on its own – i.e., sans the Prada name and/or other identifying information. An empty triangle appeared on the invitations for the brand’s Fall/Winter 2021 show, and the side of hats in one of the brand’s 2020 menswear collections, and also on garments for Spring/Summer 2021. Fast forward a year to S/S 2022 and the use of the blank triangle – or in some cases, a triangle that simply bears a single word, Prada – was more consistent than ever before. Nary did a look or two go by without an almost bare triangle adorning a pointy-toe slingback, earring, arm band, or the left breast of a top or dress. 

As I documented in a previous article, the most immediate read of the room here is that Prada is looking to expand its rights in the triangle trademark. Because the vast majority of its uses of the mark to date have included the Prada name and the “Milano,” “DAL 1913,” etc. details, its rights are almost certainly limited to a mark depicting those various details (or confusingly similar iterations thereof). By putting forth a pared back version of that triangle (which can probably be likened to some extent to how brands across the board adopted streamlined versions of their word marks not all that long ago), Prada is doing something interesting: it is potentially setting itself up to enjoy more expansive rights in the little logo, and to (at least theoretically) enforce those rights against the use of similar triangle designs in instances when the “PRADA Milano,” “DAL 1913,” and the tiny coat of arms are missing from the equation. And there are increasingly many instances of this – from blatant fast fashion copies to uses of triangle configurations by similarly-situated high fashion brands that may confuse consumers as to source.

This is a likely driver behind the introduction and increasingly consistent use of more pared back takes on the triangle by Prada. In fact, in furtherance of what appears (to me) to be a larger effort to expand its rights in the triangle logo, Prada filed a trademark application for registration for a simplified (although, not completely blank) triangle mark with the European Union Intellectual Property Office (below, middle) in June. It has also filed a few applications for registration for streamlined triangle marks in the U.S., such as this one, in connection with its recycling initiative. And not to be overlooked, back in 2012, counsel for Prada filed a (since-issued) application for registration for a stylized blank multi-triangle mark (below, far right) for use in Class 18 and 25. It is worth noting that Prada’s rights in the latter mark, which essentially consists of not not but three triangles, are likely quite narrow due to the stylization at play.

This string of applications/registrations may ultimately pave the way for the brand to claim potentially robust rights in its specific use of a completely blank triangle mark sans any other markings – in connection with specific goods/services – in the U.S. and other markets at some point down the road … assuming that Prada can show that the triangle is “used in such a way as to make such a visual impression that the viewer would see it as a symbol of origin separate and apart from everything else,” as a New York federal court judge put it back in 1998. 

Prada trademarks

But there is probably more going on here than an incremental rights grab by Prada; it is likely a growth-oriented cash grab, too. It is worth noting that Prada’s adoption of streamlined branding in recent seasons has not come in lieu of its use of more traditional branding. In fact, the blank or partially blank triangles appear in collections along with the brand’s more traditionally-branded triangle offerings (i.e., triangles with the Prada name, Milano, DAL 1913, etc.). With this in mind, it seems that Prada may be looking to cast a wider net. In other words, by diversifying its offerings (including by varying its approach to branding), Prada can cater to a wider pool of luxury shoppers and their often-diverging tastes. 

Given the sheer size of the luxury goods market and the varying apparel and accessories appetites and demands of the globe-spanning consumers within it, it is realistic to assume that different people will want different things from the same brand. (This arguably makes any sweeping declarations about whether things like bold branding (think: logo mania) are “in” or “out” during any given season seemingly irrelevant.) Look no further than the Chinese market, where a shift will inevitably play out in light of the government-initiated push for “common prosperity,” which is expected to prompt consumers to distance themselves from ostentatiously-branded luxury goods, at least for the foreseeable future. At the same time, President Xi Jinping’s latest crackdown on the wealth inequality in China is unlikely to push consumers in the West to do away with logos right now. As such, in order for billion-dollar-plus brands to continue to pursue seemingly unending grow in what is an increasingly fragmented global market, they have to diversify their offerings – potentially within each collection. 

(Most big brands are already doing this, of course. Louis Vuitton, for instance, has been known to target the Asian market with bags made from more exotic materials than some other markets due to established consumer preferences.)

As a final note, since most big and/or conglomerate-owned luxury brands’ revenues and margins are generated from the high-volume turnover of branded products, indicators of source – such as visible brand names, logos, monograms, red zip ties, etc. – are not going away any time soon. So, while Prada’s blank triangle may be a relatively pared back bit of branding, it is being used as branding, nonetheless, and chances are, it still serves to indicate the source of someone’s dress or purse – albeit in a slightly more discrete way way – to consumers who are in the know. 

This article has been updated to reference an EU trademark registration held by Prada for a stylized triangle trademark configuration, and to make mention of the following application, which was filed a week after the initial publication of this article …

Prada trademark

Before Versace and Fendi co-opted Milan Fashion Week headlines and seemingly endless Instagram posts with their Fendace co-branded collection, Gucci rolled out an interesting venture. Called the Gucci Vault, the endeavor takes the form of a “new experimental online space,” that provides a showcase of – and e-commerce platform for – a number of Alessandro Michele-selected emerging designers, such as Collinda Strada, Ahluwalia, Yueqi Qi, and Charles de Vilmorin, among others; shares the history of various vintage Gucci looks; and “explores the world of autonomous sensory meridian response (ASMR) through a series of sensorial triggers designed to stimulate the brain and elicit physical sensations.” 

At the same time, and in what is easily one of the most striking elements of the new project, the Gucci Vault platform also enables site visitors to get their hands on refurbished and/or customized vintage Gucci pieces. Writing for Vogue, Luke Leitch put forth a compelling description of the project, stating, “The logic behind Michele’s latest venture seems powerful. The idea of a luxury house offering vintage pre-owned items from its history is creatively mature, sustainably sensitive, and has commercial potential. Gucci is not only making moves to own its resale market, but by customizing the items before reselling them it is creating a new category of objects that are simultaneously vintage and new.” 

The resale element of the project certainly provides a number of points that are worthy of discussion, including – but not limited to: (1) the attractiveness of resale for luxury players; (2) the issue of amassing stock for such endeavors; and (3) the budding rise of the customization market (and the benefits that brands can gain from participation in that segment). 

Gucci Vault & The Allure of Resale

First things first: the Vault project is interesting, as it is the latest effort by Gucci in the resale market. Gucci, after all, was one of the relatively early movers when it comes to luxury brands testing out the waters of resale. It made headlines as the biggest name to partner with The RealReal (“TRR”) when the two parties announced a limited alliance in October 2020, which saw the resale giant partner with Gucci for a few months to launch an online shop featuring pre-owned Gucci items, sourced directly from Gucci, as well as from TRR’s own consignors. 

As TFL wrote at the time, by offering up – and thus, taking charge of the sale of – their own pre-owned products, brands can gain an additional point of access to entry-level luxury spenders in much the same way as more accessible, lower-priced, and oftentimes licensed products do. At the same time, such in-house efforts or joint ventures give brands greater levels of control over where and the conditions in which their pre-owned products are sold, while also enabling them to extend the life of their valuable trademarks should they opt to put certain products on ice and then resume selling them years later.

The Vault appears as though it could be one more step in the direction of a larger resale effort by Gucci. 

Gucci Vault image

Still yet, adopting resale efforts of their own – complete with in-house refurbishing – may enable brands to avoid issues with unauthorized efforts by third parties and the subsequent resale of modified products without alerting consumers of such modifications. (As we have discussed at length, this has arisen as an issue in the lawsuit that Chanel filed against What Goes Round Comes Around (“WGACA”). In that still-ongoing suit, the French fashion brand has claimed that the reseller misled consumers by enlisting a third-party company to repair and/or refurbish Chanel products before offering them for (re)sale and allegedly failing to alert consumers about the altered state of the bags. WGACA has since argued that the “limited ‘sprucing up’ that [was carried out by Rago Brothers Shoe & Leather Repair] … never resulted in a Chanel product [being] ‘so repaired, reconditioned, or altered to have lost its identity as a genuine Chanel item.”)

Brands like Chanel appear to be doubling-down on in-house repair efforts, likely as a way to bolster their sustainability credentials and also potentially, to prevent issues similar to the ones raised in the WGACA case.

Amassing Inventory 

One of the hurdles that has stuck out (to me) as a potential hindrance to the scale of third-party luxury resale endeavors is supply, as luxury resellers’ sales are dependent upon – and thus, potentially limited by – this very thing. As TRR, for instance, explicitly stated in its May 2019 S-1 filing with the Securities and Exchange Commission, “exclusive, authenticated pre-owned luxury supply drives demand,” with the reseller pointing to “fragmented supply” as an overarching issue inherent in “existing luxury resale models.” 

Brands that are looking to take ownership in the resale market are not necessarily immune from this concern, although they likely have a key advantage in that they have access to unsold inventory, an issue that has long plagued fashion brands and led to a thriving global grey market. The melding together of pre-owned goods and close-out pieces would certainly help brands to maintain larger inventories to off-load in a “resale” capacity.  (As TFL reported back in 2018, TRR appeared to be working with brands and/or retailers to off-load unsold apparel and accessories, seemingly putting it in the mix in the close-out space, as well as traditional consignment.) 

Should brands aim to make bigger moves in the resale segment, chances are, it may serve as a way for them to sell off unsold goods, as well, especially given looming legal mandates that prohibit the destruction of products.

At the same time, brands that are looking to gain more exclusivity over the secondary market for their goods may attempt to engage in buy-backs to some extent. Fellow Kering-owned brand Alexander McQueen revealed that it had gone this route when it announced that it would partner with Vestiaire Collective as part of the French reseller’s “Brand Approved” program. In an announcement early this year, the British brand and the reseller asserted that “Alexander McQueen has invited longstanding customers to [sell] back pre-loved pieces they no longer wear and receive store credit [to use in Alexander McQueen stores] in return.” According to Vestiaire, “These pieces will be sold by us and listed under our new ‘Brand Approved’ label, ensuring the house’s unique craftsmanship lives on.” It would not be surprising if other brands engage in similar efforts, and potentially, go so far as to include language in their point-of-sale terms that give them the ability to buy back products from consumers. (More to come on this point soon.) 

As for Gucci, creative director Alessandro Michele addressed the topic of supply in an interview this past week, telling Vogue that Gucci has “a vast network of sources for vintage Gucci, which it has been tapping to rebuild its archive.” 

Market for Customizations 

Gucci Vault image

Finally, the presence of customized products in the Gucci Vault is especially noteworthy, as it gives Gucci yet another intriguing offering for consumers, particularly ones that may already have a collection of the readily-available, off-the-self Gucci bags, and are looking for more exclusive, and potentially one-of-a-kind pieces.

Customizations is a burgeoning market that is absolutely worth paying attention to, with companies like MSCHF, for instance, and other sneaker customizers turning otherwise run of the mill Nike sneakers into investment pieces, with eye-watering prices at resale. Meanwhile, players situated at the upper echelon of the luxury spectrum, such as Swiss watch workshop Artisans de Genève and London-based watch customizer Titan Black, and Privé Porter founder Michelle Berk, have been successfully trying their hands at respectively making already ultra-valuable watches and Hermès Birkin bags even more exclusive (and even more expensive) by way of customizations. Look no further than the arm of big-time Birkin and Kelly collector Cardi B at any point to see Berk’s handiwork of Swarovski crystal designs.

As such, not only is resale, itself, fertile ground for luxury brands, in-house efforts to provide valuable pools of clients with customized goods is an opportunity both in terms of revenue generation and customer retention.

Forward-thinking luxury brands, Gucci included, will likely start to inch into this space in a bigger way in an effort to continue to connect with deep-pocketed consumers, who are looking for increasingly hard-to-get goods to supplement their collections of their accessories of choice, and to stand out in a market where luxury goods are more readily available than ever thanks to the presence of resale giants, and the rise of e-commerce-driven accessibility more generally.