From Gucci to Rolex Certified, Luxury Brands Continue to Test Resale

Image: Gucci

From Gucci to Rolex Certified, Luxury Brands Continue to Test Resale

Gucci is moving further into the secondary market. With the recent launch of Preloved, it is teaming up with Vestiaire Collective – the French resale company that luxury conglomerate Kering took a stake in a couple of years ago – for a program that enables consumers to buy ...

March 20, 2023 - By TFL

From Gucci to Rolex Certified, Luxury Brands Continue to Test Resale

Image : Gucci

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From Gucci to Rolex Certified, Luxury Brands Continue to Test Resale

Gucci is moving further into the secondary market. With the recent launch of Preloved, it is teaming up with Vestiaire Collective – the French resale company that luxury conglomerate Kering took a stake in a couple of years ago – for a program that enables consumers to buy and sell pre-owned Gucci bags. The experimental endeavor consists of a dedicated resale website for some of Gucci’s most iconic products and the introduction of pre-owned offerings in 26 Gucci stores across Europe. The new circular fashion venture follows neatly from earlier efforts by Gucci in this segment, including a limited collaboration with The RealReal back in 2020 and the subsequent debut of its Vault experimental online platform, where Gucci offers up refurbished and/or customized vintage pieces. 

Not the only luxury player making inroads in the resale realm, Rolex provided us with a good example of how luxury brands may opt to approach the secondary market, with the Swiss watch titan announcing in December that it would introduce a certified pre-owned program and offer up pre-owned watches that have been “inspected, refurbished and that meet the company’s minimum standards.” More recently, Chloé and Vestiaire announced the launch of a Digital ID-system that will not only enable Chloé customers to fully trace the lifecycle of an array of the brand’s offerings but will give them “Instant Resale capability [for Chloé items] through Vestiaire’s platform.” 

Meanwhile, Balenciaga, Valentino, Jean Paul Gaultier, and Oscar de la Renta, among others, have rolled out initiatives aimed at taking a stake in the burgeoning market for pre-owned products. 

Gucci resale ad

The logistics of the secondary market can be complicated (one need not look further than The RealReal to see just how difficult it is to successfully (and profitably) build, operate, and scale a luxury resale company), and there is an enduring risk that resale offerings will cannibalize the sale of brands’ new goods (more about that here). Nonetheless, there are some obvious draws …  

Revenue Steam – For one thing, resale represents a potentially notable – and growing – source of revenue. The market for pre-owned luxury goods topped $45 billion in 2022 – up 28 percent year-over-year (and double what it was worth in 2017), according to Bain & Company. At the same time, this segment saw its 2022 sales growth rise at a rate that was 1.3 times greater than the growth for new luxury goods. In addition to generating revenue, the resale channel enables brands to reach potential new consumers, particularly those in younger demographics, that may not be fully-fledged luxury shoppers (yet).

ESG Expectations – Another notable facet of resale ventures is that they can act as a way for companies to address rising ESG questions/expectations of investors, analysts, and consumers. Hermès CEO Axel Dumas, for example, was asked about resale/repairs during the company’s FY22 call with analysts last month. Dumas did not mention whether any resale efforts are in the works for Hermès but did say that the company is the “number one victim of unauthorized resale,” suggesting that the company could benefit from bringing resale efforts in-house. 

Control – Still yet, a significant motivation behind brands’ ventures into the resale market is likely their desire to wield a stronger hand in shaping how the resale of their offerings will look/work. After all, much of the appeal of luxury goods and the pricing power (and margins) that luxury players possess depends on their ability to carefully craft the marketing/merchandising of their brands/offerings and to tightly control the distribution of their trademark-bearing goods. 

While luxury brands have traditionally been able to exercise almost complete control over the marketing and distribution of their offerings, the rise – and robustness – of luxury resale has chipped away at that. Empowered by the tenets of the First Sale doctrine, digitally native resale companies – such as The RealReal, StockX, Fashionphile, Vestiaire, Rebag, LePrix, Privé Porter, etc. – have built businesses by making even the most exclusive luxury goods accessible to consumers on their own terms. As Flavio Cereda, the managing director of equity research, consumer and luxury at Jefferies International, previously told me for an article for the New York Times, resale is “the one channel that brands are so far largely unable to mold in terms of either volumes or pricing – and that in itself is hugely disruptive.” 

Brands’ displeasure with their inability to control the conditions in which products bearing their names and other trademarks are being sold has manifested itself in a few ways, including litigation. Chanel, for example, has been one of the more aggressive in the regard, filing a number of resale-specific suits over the past several years. In addition to initiating trademark suits over the alleged sale of counterfeit goods by resale companies like The RealReal and What Goes Around Comes Around, the brand argued in a since-settled lawsuit against Crepslocker that the British reseller was selling pre-owned Chanel products in significantly different conditions than it does. Among other things, Chanel pointed to Crepslocker’s sale of coveted Chanel handbags online, its failure to provide buyers with authentication cards for certain bags, and its practice of shipping Chanel products in non-Chanel packaging. 

Nike has similarly expressed dismay via litigation, taking issue with the sale of its sneakers by StockX on the basis that the resale platform has offered up NFTs tied to Swoosh-bearing sneakers at inflated prices and with “murky terms of purchase and ownership.” Nike also asserts that in at least few instances, StockX has sold counterfeit sneakers alongside authentic ones. 

Litigation is not the only way that brands have responded to what they view as sub-standard approaches to resale by third parties. Oscar de la Renta, for instance, opted to bring resale under its own roof and thus, under its control, in late 2021, after seeing that the brand was being presented poorly to consumers by way of the secondary marketing. The company’s items were being “misidentified” by third-party resale sites, and “there was a question of authenticity,” according to Fashionista. “We were very unhappy with it,” CEO Alex Bolen said. The New York-headquartered brand has since launched Encore, an e-commerce platform where it offers up pre-owned wares that have been “authenticated by our archivists and reconditioned by hand in our atelier.” 

Oscar de la Renta resale

In doing so, the brand can control the products being offered up (and the condition of them), the pricing and marketing at play, and other terms of sale, and more broadly, it can maintain a handle on its own brand image in the process. 

Data Points – Finally, one more perk of bringing resale efforts in house or closer to home via close collaborative efforts with established secondary market platforms is data. In addition to “retaining control over their brand and pricing structure,” Boston Consulting Group’s managing director Guia Ricci told SCMP that brands “can use the insights gained” as a result of such endeavors “to stay ahead of a fast-changing game.” By “collaborating with or managing the luxury resale market [in-house], luxury brands can benefit from access to additional data on purchasing patterns and underlying trends that would help in eventually converting secondhand shoppers to the primary market,” per Luxe Digital’s Florine Eppe Beauloye. 

THE BOTTOM LINE: With resale expected to “comprise a full third of the total luxury and fashion market” in the next several years by McKinsey’s estimations, more brands will almost certainly follow in the footsteps of Oscar de la Renta, Gucci, and co. In other words, more luxury names will stop sitting out on this segment entirely, and instead, will look to reap – or at least test – some of the potential benefits.

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