The resale industry is growing explosively, with sales accelerating during the pandemic, and luxury brands have mixed feelings about it. Chanel, for instance, has sued TheRealReal and What Goes Around Comes Around, claiming secondhand stores are “piggybacking on [its] reputation.” Forward-thinking luxury brands aren’t resisting or ignoring resale, though—they’re embracing it.
Case in point: Kering—the luxury conglomerate that owns Gucci, Balenciaga, and Alexander McQueen—just announced it is contributing to a $216 million investment in a French secondhand marketplace called Vestiaire Collective, led by investment firm Tiger Global Management. This partnership is meant to accelerate Vestiaire’s growth within the fast-growing resale sector, while giving Kering a way to explore potential new revenue streams from secondhand goods.
Grégory Boutté, Kering’s chief client and digital officer, recognizes that the luxury sector has had a troubled relationship with resale in the past. The resistance makes sense: Luxury houses spend millions on branding and creating high-end experiences for customers, all of which helps to justify the high cost of the goods they sell. When used versions of their products pop up on secondhand sites, the company no longer has control over how their brand is perceived.
But Boutté says Kering has been paying close attention to the rise of the resale sector, which is currently valued at $28 billion and is growing 25 times faster than the overall retail market; it is forecast to reach $64 billion in the next five years. He points out that young consumers are particularly drawn to resale. “We care a lot about controlling the customer’s experience,” says Boutté. “But we also realize that resale is going to grow whether we like it or not. So we want to play an active role in shaping it, and defining our own place within it.”
Over the past two years, we’ve seen how luxury brands can partner with resale platforms. Stella McCartney gave customers $100 in store credit for selling items on TheRealReal. Meanwhile, Gucci launched its own branded microsite on TheRealReal with curated secondhand products. In each of these cases, the company was able to better control its branding within the resale ecosystem.
From Kering’s perspective, partnering with resale platforms could also lead to more revenue for its brands. Kering explored a version of this earlier this year, before its investment, in which Alexander McQueen partnered with Vestiaire on a program called “Brand Approved.” The luxury label contacted its best customers, offering them store credit to return garments, accessories, and shoes from previous collections, which would then be sold on Vestiaire.
Resale companies, along with some fashion brands, have made the case that a thriving secondhand market is better for the planet, because it allows products to circulate in the economy for longer. One environmental group found that extending the life of a product by nine months decreases its carbon footprint between 20% and 30%. However, it’s possible that all of these partnerships actually encourage even more consumption. In fact, a survey conducted by Vestiaire and BCG found that 32% of respondents sold secondhand goods so that they could buy new products. Indeed, Alexander McQueen’s partnership with Vestiaire is designed to encourage the brand’s customers to shop even more frequently.
Maximilian Bittner, Vestiaire CEO, points out that it’s still early days for the current iteration of the resale industry, and there is still a lot of research to be done in order to better understand how the secondhand market will impact the planet. What’s clear to Bittner, though, is that platforms such as his encourage consumers to think of luxury goods as assets, rather than consumables, which might encourage them to take better care of their products so they retain value for longer. “There is still a lot we need to do to work towards a more sustainable fashion industry,” says Bittner. “But we know for a fact that resale can play a powerful role in creating a circular system.”