luxury brands will dominate the used market

Choosing the product that has gone through many past lives at the expense of its new version is becoming more and more popular. In this race, Web 3.0 seems to benefit some…

With global warming on the rise, new product is no longer a given. Thus, fashion resale platforms such as “Vinted” or “Vestiaire Collective” have never been more popular. In the face of these pure actors, how will luxury brands fare?

Second hand racing winners

At a time when Europe is reaching 10% inflation, the second-hand market is becoming more and more interesting. It gives everyone the privilege of giving new life to what is no longer used, of saving on the purchase of essential goods, of favoring quality over convenience, of reviving vintage… These many advantages naturally attract new consumers such as the middle class or, more particularly, the generation Z in love with ecology in an increasingly connected world.

At the heart of this market, already estimated at €86 billion in Europe, and expected to grow by 15% to 20% annually[1], the fashion industry takes precedence over all others. In fact, after the increase in popularity of polluting “fast fashion”, which internally produces modest clothes at full speed, it is rumored that in the next few years it will certainly see the overtaking of second-hand clothing.

Having grown by 140% between 2019 and 2021[2]second-hand e-commerce platforms are primarily responsible as they “hold 60% of the online fashion market”[3]. Boosted by the global Covid 19 crisis, the Lithuanian platform Vinted, one of the leaders in the second-hand fashion sector, now allows almost 50 million ‘vinties'[4] to monetize your wardrobe. If you have already made 70% of your purchases in 2020[5], Vinted today faces stiff competition from many platforms such as Vestiaire Collective, whose business model clearly inspires more responsible fashion. With 550,000 new items per week, the latter focuses on the luxury sector, whose values ​​and clientele were probably not what was expected.

Luxury brands compete

If the “fast fashion” that advocated low cost fashion and the overproduction of new garments did not rhyme with the uniqueness, rarity, authenticity and high prices of the luxury sector, it is equally difficult for brands to associate themselves with the often shredded of the second hand. But in a world of climate emergency, they have found much more in common than one might imagine, because according to the Hermès Foundation, “Luxury is what is durable, what is repairable, what is ahead.” Strongly echoing second-hand values ​​where most consumers go there to find a rare product, second-hand luxury is expected to see an annual growth rate of 10 to 15% over the next ten years.[6].

Thus, some luxury houses try to run their second-hand market in the image of the Gucci brand, offering a selection of vintage pieces freshly renovated by the house’s craftsmen.[7] using its GucciVault online site. Unfortunately these opportunities on the used market are clearly stifled by those offered by pure players, multiplying publicity. Having understood their strike force, some are forging partnerships such as the Kering group, which took 5% stake in Vestiaire Collective in 2021[8].

This market, led by the giants, puts brands at a disadvantage, which no longer have any power over the resale prices of items that are often 50% cheaper online, and which have no knowledge of the players who consume these “used” items. on the most popular platforms. On the buyer’s side, even if some are arming themselves more and more, platforms are increasing problems of authenticity or payment scams, which keep shyer consumers away. After a study[9], “71% of French people say they would buy second-hand luxury goods more often if brands ran their own resales.” While adapting to popular and sustainable circular fashion in the real world is very difficult when you are a luxury brand, the technologies of tomorrow’s world are sure to change the game.

Opportunities of new technologies

With the announcement of web 3.0, several luxury retailers are gradually settling into this new digital universe, commonly known as the “metaverse”. We find in particular the Dolce & Gabbana brand which offered in 2021 to virtually and/or physically acquire one of the 9 unique pieces of the “Genezi Collection” collection on the UNXD platform. In 2022 he participates in the first Fashion Week on the Decentral metaverse together with many others such as Etro, or Giuseppe Zanotti and launches an ephemeral shop that allows users to dress their avatars with the most beautiful pieces of the house. According to one study, Dolce & Gabbana was reportedly reported to be $25.66 million[10] following the various projects on this new universe which constitutes a real potential for the latter given its multiple appearances.

In reality, the presence of luxury brands on Web 3.0 brings them closer to a modern generation that is consuming a lot of these products called “Non Fungible Tokens” (NFT). From a technical point of view, they are certified by the blockchain which guarantees their authenticity, rarity and exclusivity, concepts that cannot be overlooked when talking about luxury. To the delight of these users looking similar to those found on second hand, these NFTs are very easily tradable on this market because all the important information about the life of the item will have been held in the blockchain. : historical holders, price… As a result, the act of resale is greatly facilitated since any question of counterfeiting is excluded.

In addition to all the virtues of NFT mentioned above, they have the ability to give luxury brands sovereignty over the second-hand market. Equipped with “smart contract” technology that offers some possibilities such as the generation of “royalties” (remuneration of the brand for each resale of an NFT), luxury labels could thus benefit from a life annuity on their items. Furthermore, this information is hardly overlooked when we know that a Gucci handbag has sold the most in the metaverse[11] than its real-life counterpart. Furthermore, they could also collect data on second-hand players, future prospects of the first-hand market, which, in the form of avatars in the metaverse, will offer brands an unprecedented angle of knowledge.

To establish themselves on the ever-growing second-hand market, luxury brands must free themselves from platforms, approaching generation Z, their main target. Finally, all this effervescence behind this uncertain world where they have the possibility of issuing digital goods associated with their articles, guaranteeing not only perfect confidence with the consumer, but also an economic added value, isn’t it therefore a boon for luxury brands? With more than half in the test/launch phase before 2025[12] luxury brands try it on web 3.0, perhaps without knowing that they have so much to gain.

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