This fall, Ikea made headlines when it revealed that it would embark on an effort to buy back unwanted Ikea-brand furniture from consumers, and resell it at a discounted. The initiative – which the Swedish homewares giant says aims to give furniture in good condition “a second life and minimize the contribution to landfill” – comes as part of a larger effort to be “part of the solution to promote sustainable consumption and combat climate change.”
Save for some examples in the luxury yacht market, in which a small number of broker-less manufacturers buy back – and then resell – their pricey sea-faring creations; Apple, assuming that its “refurbished” products include some used items that have been bought back (or more likely, traded in); and the likes of Arc’teryx, Levi’s, and Patagonia, which enable consumers to trade in used apparel in exchange for credit, the practice of manufacturers (as opposed to brokers, dealers and/or second-hand retailers) acquiring their products from consumers – and then selling them to different consumers – is relatively rare.
With that in mind, Alexander McQueen revealed that it is taking a largely pioneering step in the buyback market by way of a new partnership with secondhand luxury marketplace Vestiaire Collective. In furtherance of its new “Brand Approved” program, Paris-based Vestiaire says 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 the Fanny Moizant and Sophie Hersan-founded Vestiaire, “These pieces will be sold by us and listed under our new ‘Brand Approved’ label, ensuring the house’s unique craftsmanship lives on.”
The 12-year-old resale company – whose inventory has almost exclusively depended on consumers consigning pre-owned products – states that Brand Approved is “a key part of our mission to make the fashion industry more circular.” Meanwhile, Kering-owned Alexander McQueen has more to gain in this scenario than just circularity credentials; the newly-revealed tie-up enables the brand to exert oversight over the nature of the pre-owned garments and accessories that will be offered up in close connection with its name via Vestiaire’s Brand Approved initiative, something that is significant for image-obsessed luxury brands, particularly as the resale market continues to grow at a break-neck rate.
To date, “Most brands have [failed] to capitalize on the booming resale market,” according to Luxe Digital. While there are certainly some exceptions, such as Gucci and Stella McCartney, for instance, both of which have teamed up with San Francisco-based resale giant The RealReal, luxury brands “have been hesitant to encourage resale by fear of cannibalizing sales of new products and diluting the exclusivity of their brands.” With that in mind, and in light of the McQueen x Vestiaire announcement, the fashion media has pondered whether an outright embrace of resale is worth it for luxury brands?
That is a worthwhile inquiry, but there is another question that is more appropriate/important: Is resale something that luxury brands can afford to sit out?
Chances are, the answer is likely no – and for a few different reasons. For one thing, the size of the resale market is unignorable. The market for luxury resale, alone, was worth a reported $24 billion in 2020, and is expected to grow to $51 billion by 2023, as consumers (particularly younger ones) continue to embrace the resale model. With such demand in mind, sitting out on resale – either by not partnering with established retail entities or by failing to roll out their own in-house ventures – brands are missing an opportunity to reach (and bank on) the growing pool of consumers that are actively buying pre-owned luxury goods, albeit from unaffiliated outlets.
Put another way, second-hand luxury can actually be seen as “a new growth driver and another high-quality, entry-level offer, such as perfumes, bags and shoes,” according to fashion consultancy Heuritech. (And those are precisely the types of high-margin offerings that enable most luxury brands – which, with their high turnover, volume-based models, are not actually based on exclusivity at all – to generate billions in revenue.)
A potentially more important reason, though, stems from the fact that the appeal of the resale market is so intrinsically linked to the original brands at play (and their trademarks). Even if there is not an affiliation between a resale entity and the original brand (and there often is not), there may as well be. This is because a significant part of what the consumer is buying into when it comes to the initial luxury of luxury goods and the resale of those same products is the brand, itself. As such, when a resale company markets and sells a Louis Vuitton, Gucci or Chanel-branded bag, for instance, the appeal, reputation, goodwill, etc. of that luxury brand is the draw, along with an attractive price tag, of course. (This affiliation-centric argument is at the heart of the lawsuit that Chanel filed against What Goes Around Comes Around back in 2018).
It follows from this that if there are issues with the authenticity and/or quality of a product sold in a resale capacity, it will not merely reflect poorly on the resale company, there is a chance that such consumer dissatisfaction will be imputed back to Louis Vuitton or Gucci or Chanel – even if the brand had nothing to do with the sale.
That is a risk for companies whose entire ability to sell products at a marked premium depends on their reputation among the consuming public, something that they have spent hundreds of millions of dollars (or more) building up over decades. With that in mind, luxury brands should be eager to become involved, if for no other reason than a quality control perspective. (And if the enduring lawsuits that Chanel – which is the second largest luxury brand in the world by revenue behind Louis Vuitton – has waged against resale entities are any indication, control is something that is desperately important to luxury brands.)
Ultimately, it is not as simple as luxury brands shying away from resale on the basis that the promotion of pre-owned goods may dent their ability to sell sizable quantities of new goods. It is not that black and white. The more integral issue centers on the fact that if brands do not adequately ensure the authenticity and quality – and frankly, the conditions in which their goods are merchandised and marketed – there is a chance that their ability to easily sell billions of dollars worth of new goods may be hindered anyway. If their image is tarnished by consumers buying sub-par (or counterfeit) pre-owned products, that could chip away at brand equity, and ultimately, reflect poorly on their new goods, thereby, deterring consumers.