The luxury resale economy is booming. Growth is reported to be 11 times faster than traditional retail, according to experts at the National Retail Federation’s (NRF) Big Show, with many retailers angling for a piece of the pie.
Emily Erkel, cofounder of pre-owned luxury marketplace LePrix, moderated a panel discussion featuring Sarah Davis, president and founder of high-end consignment boutique Fashionphile, and Molly Taylor, chief merchant of retailer Saks Off 5th, going behind the curtain of luxury resale, covering the ins and outs of building a successful marketplace.
Several factors are behind resale’s outsize growth.
“I would say it’s really about the value proposition,” Taylor said. “Customers are really looking for coveted brands, one-of-a-kind items, but all at a value. That’s really contributed to the growth. We asked customers at Saks Off 5th [on] their thoughts about resale, and we learned that 80 percent of our customers want the opportunity to purchase resale at Saks Off 5th as a trusted destination.”
Accessibility combined with that intersection of luxury and value, Taylor continued, has contributed to resale’s growth, a factor in why Saks Off 5th is selling pre-owned Rent the Runway clothes on its website. And what’s different about resale today than what it was, say, 10 years ago, is that the younger consumer is conscientious of sustainability, Davis added.
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“Seventy percent of consumers think about sustainability when they shop,” Erkel said. “Resale in itself is expected to growth 11 times faster than tradition retail; it was a $36 billion industry in 2021 and by 2023, $77 billion. It’s not just a trend, it’s a lifestyle.”
But how does resale impact the luxury sector? Well, 90 percent of North American consumers view secondhand luxury as either a positive or a neutral impact on the brand, according to Taylor, who points to an evolution in how brands now see resale as additive to their brands, rather than reductive.
“In the ultra-luxury category, brands were concerned about supply and demand, really thinking about cannibalization before getting into resale,” Davis said. “That’s just not true today anymore. I would say in five years, most of the [luxury] brands will be participating in [resale].”
As brands evolve, many are thinking about how the future dynamic between retailers and resellers will change. Both Saks Off 5th and Fashionphile believe that this relationship is complimentary.
“Our customer trusts us to be in this space and we really wanted to make the decision [on] how we could deliver on that trust and, for Saks Off 5th, we really thought about partnering with partners like [LePrix] that are experts in authentication and sourcing and can really deliver on that trust that the customer already has with us,” Taylor said. “In addition to that, we’re able to create this speed to market and this footprint that will allow us to grow and scale as well.”
But in the face of economic uncertainty and fears of an impending recession, where does luxury—resale or not—fit in?
“Well, we were actually in resale in the last recessionary period, which is interesting, and what we saw is that people actually will need to sell things, that’s something that people turn to during a recessionary period, [so] we were able to get more inventory coming in steadily,” Davis said. “And the thing about secondary marketplaces is that we don’t have MSRPs. So what the market prices that we’re going to give you today might be different than it was a year or two ago. But our margins stay the same.”
Plus, the value of these potentially liquidated luxury goods amplifies during a recession, Taylor said.
“The off-price sector really does well during good times and challenging times as well, and that value really becomes amplified,” she continued. “But I would also say it’s that emotional purchase when times are tough. You want to feel good. And I think that resale and luxury off-price really kind of lean into that.”
All signs point to go for the luxury resale market, panelists agreed. What does a new-to-the-game retailer need to know as it approaches resale for the first time? Don’t go it alone.
“[Saks Off 5th] had a lot of debate internally as to how we should approach [resale] and thinking about the idea of building it yourself versus using partnerships. At the end of the day, it really made a lot of sense to leverage [LePrix’s] years of experience and authentication and sourcing, that just made a lot of sense to enter this space more quickly. And then we have the opportunity, by utilizing more than just one partner, to curate and really be customer-driven and listen to the customer as their preferences evolve.”