"It's good in everything, but it's a bit expensive. But expensive is not its fault, it's mine."
This sentence is often used to ridicule luxury goods. In terms of definition, luxury goods are "a consumer product with unique, scarce, and rare characteristics that exceed the scope of people's needs for survival and development."
▲ Picture from: Gucci
The rarity and exclusivity of luxury brands make them very attractive to buyers in the second-hand market, but the brands themselves tend to wait and see or even skeptical about the second-hand market.
After all, the second-hand market offers the option of "reaching on tiptoes", but it can stimulate people's desire for luxury goods, but it cannot be excessive to destroy the demand of the primary market.
In the past two years, many luxury brands have also begun to take the initiative to embrace the second-hand market. Is this a contradiction? Is the second-hand market a threat to luxury brands, or is it an increasingly important "friend"?
Valentino, Gucci, Richemont Group have embraced second-hand
Recently, Italian luxury brand Valentino (Valentino) launched a second-hand resale project, Valentino Vintage , to join the luxury cycle fashion.
▲ Picture from: Valentino
Interested consumers provide photos of second-hand products via email. If the initial approval is obtained, the actual product needs to be re-evaluated in the store, and the cooperative Zhonggu store will make a quotation. If the consumer accepts the quotation, they can resell and get corresponding shopping points. Starting from January next year, these points can be consumed in 4 Valentino flagship stores.
▲ Picture from: Valentino
Valentino's resale can be considered conservative, and the limited scale plus point redemption seems to be to maintain the loyalty of old users.
Contrary to Valentino, Gucci chooses to sell second-hand goods. In September this year, Gucci launched the online concept store Vault. Luxe.Co reported that within a few hours of going online, many products have been sold out, including Bamboo slub bags from the 1960s and printed silk dresses from 1999.
These second-hands have undergone a comprehensive restoration, and the designer has also transformed some orphans in a personalized way. Each second-hand item has a unique number and special packaging.
▲ Picture from: Luxe.Co
In addition, in October 2020, Gucci took the lead in cooperating with The RealReal, an American second-hand luxury e-commerce company. Every time a user purchases or consigns a piece of Gucci second-hand clothing on The RealReal, The RealReal uses the non-profit organization One Tree Planted to plant a tree.
According to the "Bain 2021 Luxury Research Spring Edition", the global second-hand luxury market in 2020 will be around 28 billion euros; Gucci parent company Kering Group has invested in three second-hand luxury startups since January this year; 2018 In 2012, Richemont, which owns luxury brands such as Cartier and Jaeger-LeCoultre, acquired Watchfinder, a British second-hand watch trading platform.
For luxury brands, there are many benefits to "put down" and join the second-hand luxury goods market. The first is to catch up with the sustainability boom-protecting the environment and attracting people with sustainable ideas.
The Boston Consulting Group reports that 85% of second-hand buyers reduce overconsumption by replacing fast fashion with fewer, higher-quality, and more durable goods.
▲ Picture from: BoF
In fact, the long service life of luxury goods originally supports the development of circular economy. However, in the past, the luxury industry often did not actively consider this, and even went to the opposite side, using simple and rude "destroy" to clean up inventory. The reason is simple. Luxury goods never depend on small profits but quick turnover. They would rather destroy them than sell them at a discount.
In fiscal year 2018, Burberry destroyed a total of more than 28.6 million pounds of inventory, including animal fur products, which was criticized by a group of environmentalists; Richemont also bought back inventory from jewelers and destroyed 480 million euros in two years Watch.
"The Economist" once pointed out that the rise of online second-hand clothing may save the inventory of luxury goods. In the future, many new "used" clothes may be sold on second-hand platforms. Selling products in second-hand rather than cheaper ways may be clever, and brands can also strictly control the proportion of such products in total sales, so as not to lose brand value.
In addition, many problems in the traditional second-hand luxury goods market also make luxury brands miserable.
Second-hand e-commerce platforms have become the hardest hit area for imitations in the luxury goods market. According to the data of Yousheyi in 2020, the proportion of imitation products purchased through domestic social platforms and e-commerce platforms is 26.49% and 6.57%, respectively.
Many "professional appraisals" cannot be officially recognized by luxury brands. In April of this year, Dewu and Vipshop staged the "True and Fake Gucci Belts". The results of the two authentication and certification companies were opposite. Chanel once stated that “the so-called professionally trained authentication experts are not credible. Only Chanel really understands them. The appearance of a genuine bag".
The core of the transaction of second-hand luxury goods is "trust." When consumers buy second-hand goods, they find that they are fake and inferior, which damages the image of luxury brands. In the future, consumers are likely to be inclined to second-hand platforms that cooperate with luxury brands. Luxury brands will not only take a share of the second-hand market, but also avoid certain fakes.
▲ The RealReal, a second-hand luxury e-commerce company, opened a physical store.
Of course, we can also observe from the other side-who is consuming second-hand luxury goods, so as to know what luxury brands are fighting for to participate in and encourage the second-hand market.
Start with second-hand luxury goods, and then
In 2020, Kering Group acquired a 5% stake in Vestiaire Collective, Europe's largest second-hand luxury goods website. This acquisition makes Vestiaire Collective valued at more than $1 billion. The CEO of Kering Group stated:
Today's second-hand luxury goods are a promising and stable future trend, especially for young consumers.
In October 2019, the Boston Consulting Group reported that younger consumers are more involved in the second-hand luxury goods market. 54% of Gen Z and 48% of millennials have conducted second-hand luxury goods transactions.
▲ Picture from: BCG
The rejuvenation of China's second-hand luxury goods market is also obvious. According to the "Overview of China's Second-hand Luxury Industry in 2021" by Tou Leopard Research Institute, nearly 50% of domestic consumers of second-hand luxury goods are under the age of 30.
Why are young people keen to buy second-hand luxury goods? The most direct reason is the balance between price and value. 96% of second-hand buyers said they bought second-hand luxury goods out of cost-effectiveness.
▲ Picture from: BCG
In addition, the reasons why consumers buy second-hand luxury goods include: better quality than small brands in the same price range, unique styles and strong sense of fashion, preference for middle-aged styles, and a lifestyle attitude that represents environmental protection.
For luxury brands, second-hand luxury goods are "fish hooks" that bring consumers into the primary market.
According to the "Vestiaire Customer Survey Report", 43% of people said they insist on using second-hand products, while the remaining 57% are willing to buy new products. In other words, second-hand luxury goods platforms are channels for luxury brands to establish contact with potential buyers.
▲ Picture from: Unsplash
Second-hand also means more choices. Classic models, limited editions, and models that have been discontinued for more than 10 years may all be bought.
Compared with the new products of the season, the more value-preserving classic models are more popular. They have the value of multiple resales, and some of them are even more expensive than the original price. Second-hand luxury goods platform Baghunter shows that a second-hand Hermès handbag creates an annual return rate of 14.2%. There are many individual buyers who use this to make a difference, and even use second-hand luxury goods as a sideline business.
▲ Picture from: Bain
In addition, many sellers in the second-hand market are buyers in the primary market. On the second-hand luxury goods platform Vestiaire Collective, 32% of sellers resell to buy brand new products.
In this large-scale second-hand luxury goods market, there are gray areas, large or small, and each depends on its ability and needs.
Those reasons not to sell and not to buy
There are still some luxury brands firmly avoiding resale.
In their view, there is an unstable relationship between brands and resale platforms. Support for "second-hand goods" means "unlimited end buyers", product distribution is difficult to control exclusively, product pricing and services are not standard, and may It will affect consumers' perception of the brand and cannot maintain the scarcity and exclusivity of the product.
▲ Picture from: Vogue
In October this year, Chanel launched a new sales policy in the UK, South Korea and other markets, restricting "each consumer can only buy one Timeless Classic flip bag and one Coco Handle handbag each year." Chanel's move is mainly to prevent reselling behavior, on the one hand, to combat purchasing and stocking, on the other hand to maintain brand value.
Hermes and Rolex have similar initiatives. The former restricts the number of consumers buying certain series of handbags, and it is stated in the terms of sale-"the consumer has agreed at the time of purchase, and will not resell the purchased Hermes products for commercial purposes"; the latter is aimed at great demand Popular styles or limited editions to be restricted.
▲ Picture from: Hermes official website
While restricting purchases, Chanel will increase the prices of products in May 2020, November 2020 and July 2021 respectively. In one price increase, the price of Chanel Le Boy Medium was raised from 36,200 yuan to 41,800 yuan, an increase of about 15%. This is not only due to the increase in raw material and transportation costs, but also a strategy to control its distribution.
Why are luxury goods so expensive? Consumers are actually very clear that the cost of raw materials actually only accounts for a very small part of the price of luxury goods. Advertising, marketing, retail channels, and brand building account for most of the spending. What they buy at high prices are scarce symbols, status symbols and exquisite life.
However, today's luxury goods have gradually become disenchanted. Before the Middle Ages, luxury goods were a symbol of the highest social and political hierarchy and a tribute to the victors from the conquered. At the beginning of the establishment of luxury brands, most of them served the royal family and nobles. It was not until the rich class appeared all over the world that the service field of luxury goods expanded from the nobles to the rich.
▲ Louis Vuitton early workshop
At the same time, in the 1990s, major luxury goods industries gradually abandoned the family workshop-style production model and became commercial companies full of ambitions for the global market. This has also led to the real popularization and civilianization of luxury goods, and they have been placed in an appropriate position-ordinary people are not often affordable, but they can also be reached on tiptoes.
Luxury brands themselves are also caught in a dilemma-in order to satisfy shareholders, the company must continue to expand, but this may be farther and farther away from the original definition of luxury.
▲ Picture from: Louis Vuitton
Dana Thomas, a senior fashion reporter at Newsweek, wrote in "How Luxury Lost Its Luster":
Luxury is just a product packaged and sold by hundreds of millions of enterprise groups. The focus is on growth, hit rate, brand awareness, advertising, and most importantly-profit. Modern factory assembly line production and replicable business models have ruined the industry, and overexposure has made those century-old brands lose their "mystery."
▲ Picture from: BoF
When luxury brands and young people start to pay attention to second-hand luxury goods, different people have different opinions on whether luxury goods are worth and whether second-hand is cost-effective. There are different reasons for buying and not buying.
Although we often criticize consumerism, as a social person, a part of the self is constructed by consumer behavior, and we are willing to jump into it.
A fascinating world still exists, and the conspicuousness and supremacy of luxury goods are also operating effectively. We do not understand which desires are constructed, but we often cannot resist it. I just hope that we can actively and selectively consume, instead of always being stumbling forward with the trend.
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