It's all about exclusivity. At least that’s what Sotheby's Global Head of Fashion and Accessories Cynthia Houlton says. If you remove the exclusivity of a luxury item, then what’s so special about it? According to Time, the annual return on a Birkin was 14.2%, whereas the S&Ps return was 8.7% a year. Living in a time where owning a Birkin can be a better investment than stocks can mean many things, namely a thriving resale market- at least for those who can afford it.
But what makes luxury brands so exclusive? For one, they’re expensive. But even more importantly, they’re scarce. Luxury brands like Hermès and even Supreme share one key trait: limited production. If you want to buy a product from one of these brands, you may have to wait months if not years, and for brands like Hermès, you’re not even guaranteed to get the style and color you want. That’s where the resale market comes in. If the luxury business model is based on exclusivity then the resale model is based on accessibility. Although you will have to pay hundreds of thousands of dollars to get your hands on the product you want, people are willing to pay a premium to get their desired product without having to wait in line or spend thousands of dollars buying other products to qualify to buy the product they are looking for.
The luxury market is booming and each year more and more luxury products are resold into a secondary market where their values grow. Statistics online report that more than 62% of resellers have resold products for more than they have bought them for. Companies like TheRealReal, Sotheby’s, and Farfetch resell luxury products to capitalize off this growth. When speaking on the Nordy Pod, Anna Wintour said that designer brands should sell their own vintage pieces for profit and some brands have done just this. Zenith, Van Cleef & Arpels, Cartier and Buccellati have begun reselling vintage pieces from their old collections, with Zenith releasing two collections filled with vintage pieces.
Online luxury consignment stores have driven the secondary market past what traditional brick and mortar stores have accomplished. Already, the luxury resale market represents a 24 billion dollar market. Aside from a handful of brands, most luxury brands have avoided capitalizing on resale to prevent from damaging sales of newly released products and reducing the exclusivity of their brand images. Still, this thriving resale market introduces the opportunity for greater sustainability and profit in the .
As the price of luxury goods goes up, so does motivation for counterfeit creators. To combat the spread of fake products, resale companies such as The RealReal and Vestiaire Collective spend time finding authentication for each and every luxury product they acquire.
The allure of luxury products lies in their exclusivity, but luxury brands should be reconsidering their strategies. With the secondhand market growing four times faster than the primary market, perhaps it’s time for brands to break into the secondhand market. Balancing exclusivity and accessibility will be key considerations for both first hand luxury brands and resale businesses as they navigate the dynamics of the luxury industry.
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Sources & References:
https://fashionista.com/2023/06/luxury-brands-handbags-scarcity-resale
https://www.voguebusiness.com/companies/the-hard-luxury-resale-race-heats-up?status=verified
https://time.com/4182246/hermes-birkin-bag-investment-gold/
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