Luxury fashion resale is just the tip of the iceberg

10 Mar 2022 , 3:44pm

Bird & Bird's Nicola Conway explains the many reasons why the fashion resale business continues to grow

Consumer shopping and luxury spending trends confirm that fashion resale is still growing. Bain & Company reported last year that luxury resale is estimated to be worth around €28 billion and, importantly, is rising [1].The reasons for the continued evolution are plentiful.

Firstly, the Covid-19 pandemic increased consumer comfort level with shopping online and making purchases sight-unseen. In the luxury fashion sphere, customers are increasingly relaxed about relying on photographs, videos, and scrupulous product descriptions in lieu of the traditional white-glove inspection at the salon. How the metaverse will lead to further developments is an area to watch with curiosity, but it is clear that enhanced online sales channels, and the opportunities that these present for luxury brands, are mounting.

Secondly, accelerated advances in technology enable greater buyer and seller trust when it comes to authentication. Year on year, counterfeits become ever more sophisticated, which deters customers from parting with their pay cheques, and the onus falls on sellers to provide assurance. When authenticating a bag, Fashionphile founder Sarah Davis [2] explains that it is not enough nowadays to judge by sight and feel alone. Expert authenticators have to be educated on the history and lifecycle of the brands that they are reviewing.  That is, they have to know precisely how the design intricacies of the items have altered and transformed across the years in order to validate genuineness. Technology is also key, and Fashionphile “uses alloy detectors to identify certain metals; X-rays to examine a bag’s interior hardware; and textile scanners that create a ‘fingerprint’ of each fabric used in luxury bags… It’s scientific”. One of the original reseller platforms, eBay, now offers an authenticity guarantee that helps buyers shop for eligible categories of high-end or collectible items with the confidence that the goods are subject to an expert inspection before  delivery. eBay reported that four million luxury watches were sold on its platform in 2020 (including Rolex, Omega, and Breitling) and that there was a further 12% increase in searches for these items after the introduction of the authenticity guarantee [3]. Platforms, marketplaces and resellers alike must be diligent to ensure that their online legal notices are sound, with savvy consumers looking to lean on authenticity guarantees, representations and warranties to safeguard their investments.

Thirdly, the wider use of blockchain technology to trace product journeys in fashion and textile industries, alongside the consumer demand for more meticulous reporting in these areas from companies, has provided enhanced transparency in terms of sustainability and impact. Gone are the days of resale being the shopping avenue for customers who simply could not afford to buy new. Statistics are progressively indicating that high-earners are some of the biggest second-hand purchasers; some being die-hard fans of brand-hunting for collectibles, and others being dedicated to more sustainable buying and lifestyle habits.

However, even with the demonstrable rise in luxury resale, the fashion industry is still showing a slower uptake when compared with resale initiatives in other industries. According to Vogue Business, “just 15 per cent of [luxury fashion] brands have publicly involved themselves in resale” [4]. One rationale for the reticence is that designers are fearful of the possible brand dilution often associated with second-hand sales. Whether or not this concern is valid, given the progressive spending habits of higher-end shoppers, third-party platforms are nevertheless free to sell and resell pre-owned luxury products without any brand involvement at all. Some of the popular players in the market include the likes of HEWI, Vestiaire Collective, The RealReal, Fashionphile, Collector Square, Farfetch, and Rebag. Even Gucci has launched Vault Gucci; an online concept store where high-end, pre-owned, vintage items are sold after being selected from suppliers and auction houses globally.

In any event, the reservations around luxury fashion resale are not shared by all brands. Valentino and Mulberry are among the luxury brands who have chosen to dive in and launch their own dedicated resale portals.

Given the accelerated growth in this area, as of February 2022, the British Retail Consortium announced that they are holding conferences to discuss potential guidelines on the resale of second-hand clothing. It remains to be seen what the guidelines would entail; in particular, whether the guidelines will address the particular concerns that luxury brands specifically encounter, and more generally whether sellers will be held to consistent standards in terms of authenticity guarantees, product tracing, or otherwise.

Nicola Conway is an associate in Bird & Bird’s Retail & Consumer Group.  She can be reached at Nicola.conway@twobirds.com.

[1] Source: The Future of Luxury: Bouncing Back from Covid-19 | Bain & Company (January 2021)

[2] Source: Episode 2: Ensuring authenticity in ultra-luxury resale | Vogue Business (February 2022)

[3] Source: In search of pre-owned luxury: The rise of resale in the US | Vogue Business (September 2021)

[4] Source: Resale, rental and NFTs: Vogue Business Index reveals top trends in innovation | Vogue Business (December 2021)