Selfridges becomes latest luxury player to endorse resale

By guest author Maghan McDowell from Vogue Business

Secondhand is becoming a primary focus for luxury brands and retailers, who are experimenting with ways to benefit from the surging circular economy.

Key takeaways

  • Selfridges London will host Vestiaire Collective’s first permanent concession for customers to buy and sell luxury goods.
  • Secondhand luxury is growing four times faster than the primary luxury market, with expected global revenues of USD 36 billion by 2021.
  • Luxury brands and retailers, including Burberry and Farfetch, are beginning to test how partnerships with secondhand marketplaces can benefit their businesses.

Young shoppers want limited-edition or sold-out items, millennials want sustainability-minded brands, and secondhand consignors want to buy more new products: these are among the findings of a Boston Consulting Group report on the resale market — and Selfridges got the message.

Starting October 30, 2019, customers visiting the high-end department store in London will be able to buy rare vintage pieces and sell pre-owned luxury goods through resale platform Vestiaire Collective.

That Vestiaire would open its first permanent location in a 111-year-old department store demonstrates how much the resale market has changed since the French e-tailer was founded 10 years ago. Secondhand luxury is growing four times faster than the primary luxury market, with expected global revenues of USD 36 billion by 2021, according to BCG. Meanwhile, online platforms, which have added technology and scale to the equation, now account for 25 % of these sales.

Luxury players have begun testing how they might benefit. Earlier this month, Farfetch partnered with clothing donation service Thrift+ and Burberry with resale platform The RealReal on programmes that incentivise customers to give up old pieces in exchange for credit, or to receive styling sessions, so that they can buy new products. In September, Harvey Nichols began selling services from The Restory that help customers preserve luxury accessories that they can later resell; earlier this year, Neiman Marcus took a minority stake in luxury reseller Fashionphile.

“It is a huge opportunity to innovate, both in terms of design and product but also from a business model perspective,” says Selfridges sustainability consultant Alex McIntosh. “We see our role as giving our luxury brand partners a space to experiment and explore how circular business models might work for them and to see how our customers respond.”

All captions courtesy by Vogue Business and Vestiaire Collective

Responding to customer behaviour

In 2018, Selfridges hosted two two-week-long Vestiaire pop-ups, one for men and one for women. “We learned that resale can be part of a luxury experience, that it is something our customers want and that it has significant commercial potential for our business,” McIntosh says.

Vestiaire Collective CEO Max Bittner says that sales were “good”. He also observed that customers treat secondhand shopping as a “treasure hunt”, and was surprised at the level of historical fashion knowledge among customers.

To cater to those customers, the Selfridges Vestiaire boutique will open with 200 accessories and ready-to-wear womenswear pieces that are exclusive to the boutique, including a Mugler rainbow jacket from Spring/Summer 1990 (GBP 2650), an Azzedine Alaïa “Mon Coeur est à Papa” dress (GBP 3685) and an Yves Saint Laurent Rive Gauche cape (GBP 495).

The partnership is a permanent concession, suggesting that Vestiaire pays for the retail space, but neither would share financial details.

The boutique helps customers sell pieces, either through a drop-off concierge service, where pieces are evaluated and processed by Vestiaire, or by listing the item directly through the app using a white photo backdrop available on-site.

Secondhand sales benefit primary sales

Luxury brands have largely refrained from taking part in secondhand sales, partly out of concern that it would cannibalise primary sales and risk entry from counterfeit goods. But the contrary is true, says BCG managing director and partner Olivier Abtan.

“As is the case with cars and video games, the secondhand market helps or supports the development of the firsthand market,” Abtan says. “There are many ways to participate, and each brand is going to find a way that fits its DNA.” In the case of Selfridges, he says, the Vestiaire boutique is a way to recruit new customers, extend the lifetime value of existing clients and to encourage customers to buy more expensive pieces.

BCG found that 71 % of pre-owned buyers bought items they could not afford firsthand, suggesting that these customers are not stealing market share from the primary market. But, they might turn in to primary market customers; 62 % said they bought a brand for the first time on Vestiaire and would consider buying that brand again. More than half of those said they would consider buying the item firsthand.

“Maybe they will buy luxury goods at your store, but six months later, if you don’t offer the opportunity to consign it, they will go somewhere else,” Abtan says, pointing out that 32 % of those who consign items are doing it because they want money to buy new goods, and 44 % say they buy more expensive items than they would if they couldn’t resell it. Bittner says this increases the likelihood that customers will buy more adventuresome pieces, rather than buying “safe” items.

Bittner says partnerships between luxury brands and resale companies — which stand to help fight counterfeits and can provide data on purchasing patterns to luxury brands — will become the new normal. Abtan adds, “It’s a new world we are living in. It is moving very fast. You have to test, and sometimes it doesn’t work — but sometimes it’s a success.”