A year ago, none of French luxury group Kering’s brands had dared dip a toe into the fast-moving waters of online fashion resale.
Even as luxury resale sites like The RealReal and Vestiaire Collective became increasingly popular, the platforms’ rise was greeted warily by an industry that thrives on strictly controlling the distribution, price, and perception of its items.
But the sector’s attitude seems to be evolving. Since 2018, Burberry and Stella McCartney have entered into partnerships to collect, curate, and sell items on The RealReal. LVMH executive committee member Antoine Arnault said in December that the group, luxury’s biggest company, is looking at resale opportunities. And since October, Kering brands Gucci and Alexander McQueen have both announced partnerships with consignment sites.
Now, Kering has acquired a 5 percent stake in Paris-based Vestiaire Collective, in the clearest sign yet that luxury’s attitude to the second-hand model could be thawing.
The group stepped up as a leading investor in the platform’s latest funding round, announced Monday. The €178 million ($215 million) financing pushed Vestiaire Collective’s valuation above $1 billion for the first time. Existing shareholders including Vogue publisher Condé Nast and French private equity firm Eurazeo reinvested alongside Kering.
The shift reflects broader market trends as luxury players seek to burnish their sustainability credentials and secure a seat at the table in the luxury resale sector, amid a pandemic slump in the primary market. Secondhand fashion is expected to grow as fast as 15 to 20 percent per year through 2025, according to Boston Consulting Group.
Whether the partnerships will stick, or grow to a meaningful scale, remains to be seen. But brands are likely hoping they could win back some control over how they are presented on the sites, as well as exploring a new channel to monetise their own unsold inventories and returned products. In the near term, buzz around the initiatives could help to clean up their reputations among environmentally-conscious shoppers.
The luxury sector’s new-found embrace of the resale market is a drastic shift, and it’s not universal. Chanel’s opposition to the space is well established: that brand remains embroiled in a lengthy court battle with The RealReal, whom it has sued claiming that its own stores are the only places qualified to sell authentic Chanel.
The suit is reflective of the sector’s early resistance to the market. Successful luxury labels usually seek to tightly control where products are sold and for how much. The rise of resale has forced high-end brands to cope with decades worth of their old items resurfacing on the internet, providing a very tangible record of past trends, past designers, past licensing agreements and diffusion lines, not all of which the brands are proud of. Houses like Hermès and Chanel still refuse to sell their most iconic leather goods online, but they’ve seen their control slipping away as Birkins and quilted flap bags became top sellers on resale sites.
It’s a shift that could shape the luxury industry for decades. So this is about playing an active role in that.
But amid rising concern over fashion’s environmental impact, and as fast-rising prices made splurging on a new designer bag unjustifiable for many people, standing in the way of resale has become a trickier position to maintain. For luxury brands eyeing the next generation of consumers, resale offers an entry point to build brand loyalty at more accessible prices, and with an eco-conscious message that resonates powerfully with that audience.
“Our youngest clients are including circularity in the way they think about their fashion purchases, and they are very aware of the sustainability commitments of brands,” Kering’s client and digital director Gregory Boutté said. “It’s a shift that could shape the luxury industry for decades. So this is about playing an active role in that.”
Momentum in resale has born out elsewhere: The RealReal bagged a $1.6 billion valuation in its 2019 initial public offering. The thriftier (but much larger) site Poshmark saw its valuation soar to over $7 billion in its first day of trading in January.
While a 5 percent stake will provide influence — not authority — for Kering at Vestiaire Collective, forging closer ties with one of resale’s biggest players could have perks on both ends.
Alexander McQueen is already engaged with the platform, after announcing a collaboration last month. The high-fashion label will curate a selection of brand-approved resale items, helping to put its best foot forward on the site.
The project could make it so “brand approved” items from McQueen are more prominent, while less flattering propositions would be buried deeper in the selection. That’s an outcome that could be favourable for all Kering’s brands, should the partnership expand.
There’s also an opportunity to build consumer loyalty. Luxury brands partnering with resale sites have offered sellers store credit in return for their pre-loved handbags and high heels. That appeals to environmentally-conscious shoppers while also tempting them back to the store.
Brands also see a silver lining in the way resale highlights their products’ enduring value: the sticker shock for a Chanel flap bag, now priced at over $6,000, is reduced when clients keep in mind the part of that investment they could recoup should they want to sell the item later.
For Vestiaire, closer ties with luxury labels could help dispel concerns over counterfeits as well as increase its inventory of desirable items. Chief executive Maximilian Bittner says the site will use the new funds to upgrade its website and app, to more effectively use customer data (improving, for example, its product recommendations), and add functions to “gamify” shopping on the site and make it more social.
McQueen’s collaboration with Vestiaire is currently only for select clients whose fashion archive the brand knows it might want to help them resell — anyone can’t just pop into the store and drop off their old McQueen sneakers.
“Not yet,” Bittner said. “But in an ideal world, you should be able to.”
For now, luxury brands are still testing the waters.