Holiday Shoppers With Money to Burn Covet Secondhand Luxury
Peer-to-peer online luxury consignment shop Tradesy reported a jump in sales over the past few weeks for used high-end shoes, jewelry and handbags. In the past, the Santa Monica, California-based company didn’t see such a pronounced rise in purchases this time of year, said Tradesy Chief Executive Officer Tracy DiNunzio. But recent years, and especially this year, have been different.
“We actually wouldn’t have very big spikes around the holidays,” she said. “Customers would say ‘I’m not going to give someone something used for a gift.’” But consumer attitudes are changing. Sales of rings this month soared 92% compared with last year, DiNunzio said—Cartier being a customer favorite—and purchases of Saint Laurent boots climbed 36%.
The CEO also attributed increased sales in part to a sense among consumers of doing their part—leaning toward sustainability in a time of crisis, and the belief that giving pre-owned gifts has become more acceptable.
The total secondhand market includes online resale and traditional thrift stores such as Goodwill and Salvation Army, which are primarily (but not exclusively) offline. Collectively, the market is poised to reach $80 billion by 2029, according to online reseller ThredUp.
When the pandemic shuttered brick-and-mortar stores, consumers found more options and better deals on resale marketplaces. Even as stores slowly reopened over the summer, DiNunzio said new customers continued to flock to her site and demand for secondhand luxury remained strong.
“The adoption of resale by those traditional luxury retail customers has really accelerated,” she said. “They continue to be extremely active, equal to or more than our typical buyer profile.”
Founded in 2009, Tradesy launched at the height of the financial crisis, when shoppers who initially snubbed pre-owned fashion began to see they could save money without sacrificing style. “A new attitude emerged, and it was really the birth of the resale category,” DiNunzio said.
This time around, wealthy consumers with disposable income are joining in. The economic uncertainty of the pandemic and the deep recession that came with it has heightened their focus on value, too.
“It’s a shift toward high quality, designer pieces that will hold its value over time,” DiNunzio said. “Customers have gotten savvy and are thinking about luxury purchases as an investment.”
Fueled by enduring brand recognition, meticulous craftsmanship and the hype of a limited-edition drop, designer items can be timeless status symbols with resale values shoppers can bank on.
Consignors of high-end sneakers and handbags have reaped big returns. The perennially sold-out Louis Vuitton Pochette purse goes for an average of $1,300 on Tradesy, more than double its retail price tag. The resale value of Kanye West’s Yeezy Boost 350 surged 157% on online luxury consignment store RealReal Inc.
“With everything being more casual, luxury pieces not only make shoppers feel more put together; it’s a way to treat yourself and know it’s something you can make money on down the line,” said Sasha Skoda, head of women’s at RealReal.
RealReal’s gross merchandise value dropped 3% in the third quarter compared with last year to $245.4 million as the company struggled with supply disruptions due to Covid-19. Shares of the company, which went public in 2019, have gained 14% this year.
Apart from shoppers looking for a luxury item, younger secondhand hunters are doubling down on the resale market.
Generation Z shoppers are bargain hunting more than any other age group, with 80% of young shoppers polled saying there's no stigma in buying used fashion, according to ThredUp.
While a critique of fast-fashion existed prior to the pandemic, Covid-19 accelerated adoption of secondhand shopping—bringing the role of circular business models to the forefront of consumers’ consciousness.
At RealReal, about one-third of customers said they shop on the platform as a replacement for fast-fashion, Skoda said.
“Fashion is one of the least sustainable industries on the planet,” said Michael Stanley-Jones, a program management officer with the United Nations Environment Program. “We’ve all become our own waste managers, hoarding fashion waste in our closets.”
Efforts to increase the life cycle of clothing through resale—and ultimately mitigate its environmental impact—is noble, Jones said, but reaching sustainability goals will take more than just thrifting.
“Certainly, consumer behavior will help, but that’s not going to tip the scale,” he explained. “Companies, manufacturers, consumers, and investors all need to be in sync.”
©2020 Bloomberg L.P.