In recent years, a new shopping trend has emerged among younger generations: thrifting. Thrifting, or purchasing secondhand goods, has entered the mainstream and has become increasingly popularized as Millennials and Gen Zers look for sustainable alternatives to previous purchasing habits.
This trend has recently amplified, and in 2019, resale grew 25x faster than the broader retail sector.
What does all this mean for your brand? To begin with, it means that your customers are already buying your used products—just not from you.
Not only that but gone are the days in which the secondhand market was limited to only in-person thrifting of random goods. In fact, the luxury secondhand market is growing at four times the speed of the primary luxury market. To contrast numbers, the secondhand luxury market is growing at 12% per year while the primary luxury market is only increasing by 3% yearly.
Online marketplaces are taking over the used goods market. A cultural shift is underway in which purchasing luxury goods pre-loved no longer has a negative connotation.
For businesses looking to adapt, entering the secondhand market while offering an omnichannel customer experience is key.
A Circular Economy of Luxury Goods
First outlined in 1976, the concept of a circular economy is founded in a desire to keep goods in circulation longer with a focus on cutting down on waste. Today, younger generations are focused on sustainability more than ever before, with 75% of millennials willing to pay more for sustainable products, and they aren’t alone. Following millennials in their path to a sustainable future, one in every three Gen Zers will have bought second hand in 2019. Together, these two generations are 2.5 times more likely than previous generations to purchase secondhand goods.
This concept of a circular economy is driving the luxury resale market, powered by younger generations who want to enjoy the top brands more sustainably.
Understanding the Product Life Cycle
With the data showcasing how focused younger generations are on sustainable options, luxury brands need to reconsider their products' life cycle. Once upon a time, it was simple. A luxury brand created exclusivity through a limited edition product and moved on to the next new trend.
Today, product life cycles must include consideration of future resales and the concept of pre-loved commerce. Ignoring this trend means missing out on a rising demographic.
Not only that, but luxury brands are facing an alarming decline in overall sales. According to the consulting firm Boston Consulting Group, there is an expected decline in luxury sales between $85 and $120 billion in 2020, equating to 29.2% of the $350 billion luxury market.
This means that product life cycle management is more important now than ever before. Luxury brands looking to compensate for this decline in sales should pay attention to and form a strategy around the resale omnichannel customer experience.
Controlling Your Secondhand Market
In addition to a declining luxury sales market, brands need to consider a strategy around secondhand sales to protect their own brand. Your premium goods will be resold at some point. How these goods are displayed should be controlled by your brand.
By strategically entering the secondhand market, luxury brands are poised to choose how their pre-owned goods are represented.
Positioning Your Brand Sustainably
As the data above demonstrates, younger generations are increasingly concerned about sustainability when making purchases. According to a recent report, 62% of Generation Z prefers to buy from sustainable brands, equivalent to Millennials.
Entering the secondhand market is a prime opportunity for luxury brands to position themselves as a sustainable option, which is an important component of the expected user experience.
Increasing Sales of Firsthand Goods
While the above points are enough in and of themselves to drive any brand to the secondhand market, a report by Luxe also points out that those who can sell their used luxury goods on the secondhand market are then more likely to make another firsthand purchase.
For brands that control their own resale market, this can be impactful in driving up sales. Providing your firsthand buyers with the option to recoup some money will often lead to their next firsthand purchase.
Putting Aside Myths
Luxury brands interested in creating a sustainable, long-term future need to put the myths of old to bed. Many brands were historically concerned about embracing resale for fear of cannibalizing their own sales. Not only that, but these same brands often worried that resale would weaken the strength of their brand’s exclusivity.
With younger generations trending toward purchasing used goods and the social stigma falling away, brands need to put aside the fears of the old and embrace where secondhand shopping is headed.
Where Recommerce is Headed
Dubbed “recommerce,” the reselling of goods is on the rise in the US. In fact, recently, India and China have become notable players in the recommerce scene, with massive amounts of investment being poured into platforms reselling everything from cars to luxury watches.
Recommerce trends even inspired Cartier owner Richemont to buy the secondhand platform Watchfinder.co.uk. Richemont, like many others, is adapting to the increasing trend among younger buyers to have access to a sustainable version of luxury shopping.
This all means that luxury pre-owned commerce is poised to create a whole new online marketplace.
AI to Power Meaningful Experiences
Traditionally, thrifting took place in a physical store where consumers browsed racks of random goods—a treasure hunt of sorts.
The beauty of taking this experience online, or even to a mobile device, is that Artificial Intelligence can now fuel this hunt. Harnessing the power of real-time data and audience segmentation, online retailers can make the process of browsing used goods tailor-fit to each consumer. While the thrill of the treasure hunt remains, the efficiency of shopping is improved, targeting consumers with the goods they are most likely to purchase at the perfect moment.
Looking to Brands Already Taking Part
While recommerce is a rising trend, there are already big names that have entered the arena. Luxury brands interested in positioning themselves in the secondhand market should consider those that have already started down the path.
For example, The North Face launched its online marketplace “Renewed,” where consumers can buy previously worn, returned, damaged, or defective goods. The brand “refurbishes” the items and sells its renewed goods through its online store.
Patagonia, another leader in sustainability branding, has an entire online marketplace called “Worn Wear” with the slogan, “Why extend the life of gear? Because the best thing we can do for the planet is cut down on consumption and get more use out of stuff we already own.”
This carefully crafted message is designed to draw in the sustainability-focused generations of today.
The Dangers of Being Left Behind
While luxury resale is becoming widely accepted, many luxury brands don’t control their aftermarket. The used product market is growing 21 times faster than traditional retail and is expected to increase by 500% in the next five years. Fueled by Millennials and Gen Z shoppers who desire a sustainability-focused shopping alternative, sites like Poshmark and Depop continue to gain popularity.
In addition, in 2019, the online consignment shop The RealReal went public and immediately raised $300 million, showing that luxury resale is here to stay.
There is no time to waste for luxury brands that are serious about optimizing their customer experience and tapping into the future of resale.
Take Control of Your Brand’s Resale Presence Today
The good news is that creating a quality omnichannel customer experience that embraces the resale market is becoming easier. At Vaimo, we help clients utilize the latest technology and tools to create seamless experiences where customers can purchase both firsthand and secondhand goods.
If you are interested in learning more about building a data-driven recommerce strategy for your luxury brand, reach out to our team today. We will be happy to help you tap into this booming marketplace.