Luxury resale market experiences a global growth spurt

“Buying new has lost its shine.”

These are the words of Fabienne Lupo, former head of Watches & Wonder, Geneva’s annual watch fair, who last year launched Reluxury, the first major event dedicated to the “recommerce of luxury, and collectible pieces”, according to its website. The first event, held in November 2022, attracted more than 40 exhibitors and more than 4,000 visitors as the luxury resale market experiences a global growth spurt. Call it “luxury thrifting”, if you will.

SA luxury reseller Luxity recently reported a compound annual growth rate of 40.8% over the last three years, something co-founder Michael Zaharieve attributes to several factors.

“South Africans have been cutting back on discretionary spending since the pandemic struck. Luxity offers a value proposition that is aligned with the needs of today’s luxury consumers. We make owning luxury goods more accessible by not only selling these items at a reduced price, but by also providing flexible payment options. At the same time, we give those who are tightening their belts a secure platform where they can sell their luxury items and earn a good return.

“We have seen the stigma that once accompanied [luxury resale] falling away. Five years ago, high new worth customers were only interested in selling and wanted to buy their luxury items new. But now, the number of people who sell to and buy from us is increasing every year, largely because of the sustainability element that buying and selling preowned affords.”

Delving into the topic in 2021, McKinsey & Company found that 75%-80% of luxury customers remained strictly new product buyers, but noted that “consumer behaviors and concerns are changing, pointing many toward preowned products”. The management consulting firm predicted that resale would, by 2025, comprise a full third of the luxury market due to patterns accelerated by factors including the pandemic, digital platforms and what they referred to as “generational headwinds”, with younger consumers — millennials and Gen Z — far more willing to purchase preowned goods than Gen X’ers and Baby Boomers.

For a generation that values aesthetics, probably driven by social media culture, this makes a lot of sense. Whereas before, an interest in fashion and beauty had been a niche hobbyist pursuit, both categories and the lifestyle around it have now become an inescapable part of popular culture. This is probably most clearly demonstrated by the rise of celebrity influencers whose only claim to fame is posting their daily outfits and make-up tutorials online.

Savvy consumer

It only makes sense that their millions of followers are similarly influenced to want a piece of the pie, and preowned luxury offers a more accessible price point for many who can’t afford to buy something fresh off the runways or from the latest luxury collections.

Luxury is thus no longer the exclusive purview of well-to-do, high net worth individuals. Everyone and their momma wants a Louis Vuitton or Telfar bag, a Gucci cap or the like. But beyond a desire for branded luxury to imitate the lifestyles of the rich and famous, the growth of the resale market is also tied to an increasingly savvy consumer.

Says James Rogers, sustainability officer at luxury reseller The Real Real: “Luxury items are created with craftsmanship and higher-quality materials, giving them a longer lifespan. Not only are more shoppers recognising that, but they are increasingly reselling, which demonstrates the longevity and is key to circulating these items more than once.”

As such, just like SA’s Luxity, the platform notes that its shoppers are far more likely to return to them to resell the items they purchase from them in the first place. “Buying new has lost its shine” is a catchy soundbite, but the reasons for the growth of the preowned luxury market are far more nuanced.