How luxury brands are reclaiming their vintage
36 billion dollars: that’s the expected worth of the second-hand luxury market in 2021 . This makes the segment very interesting and presents opportunities, for consumers and brands alike. And it might be just the tip of the iceberg.
By Aymeric Mantoux27 mai 2020
An old Louis Vuitton handbag, auctioned on eBay for a handful of euros? That might have happened five years on the online auction platform that pioneered person-to-person resale of second-hand goods online. Was it certified or counterfeit? Impossible to know. In those days, the platforms refused to take responsibility and in fact took very few precautions with regard to consumers and brands. Eventually, eBay ended up in court with LVMH, battling it out over this issue, until eBay finally agreed to "combat the sale of counterfeit goods online" and "protect intellectual property rights". How did this happen? By cooperating to create "a safer digital environment", to distinguish between vintage items and counterfeits in a market that represents more than 10% of their turnover, according to Comité Colbert, the organization that brings together the largest French luxury brands .Global luxury market 2019: 281 billion euros for personal goods according to Bain & Company, 2020
The boom in second-hand platforms
Now, with the rise of online marketplaces for second-hand products over the last ten years, players in it have to sign charters and agreements with the brands. Most were initially reluctant to do so, but the major brands pulled out all the stops to take back control as online commerce gradually upended traditional practices, including those in the second-hand luxury market. Collector Square, Vinted, and Vestiaire Collective are just a few of the more or less specialized online resale platforms (leather goods, fashion, watches, etc.) where today’s customers can go to for pre-owned luxury brand products. An example: Vestiaire Collective, founded in France in 2009, today has a presence in 58 countries, total turnover of 140 million euros (79% of which from international sales), and sells more than 40,000 items from 3,500 brands every week. As for Collector Square, the platform grew by 25% in 2019.
"We see the second-hand market as an alternative way for luxury brands to reach new targets and broaden their customer base," explains Joëlle de Montgolfier, an expert at Bain & Company. “It helps to provide new market entry points for certain consumers, the younger generations or those further away from physical stores, both geographically and socially.” Luxury brands have long viewed the phenomenal growth of the second-hand market as a threat. In the automotive sector, for example, the biggest brands have long been extremely cautious, until a few like Ferrari decided to go on the offensive. Italy’s venerated prancing horse has produced a sort of "le classiche" identity booklet for collector cars, without which the brand does not guarantee the authenticity of the car or the restorations carried out, thus de facto decreasing its value. Strongly inspired by the world of classic automobiles, watchmaker Richard Mille contributed to the development of second-hand boutiques in Japan with Tokyo Watches and has adopted a certificate of originality for its vintage watches that it has serviced and resold. In both cases, new behaviors have emerged: customers wanting to acquire a new model from the brand and asking the "dealer" to take back the old one at a discount, and new customers, often younger, accessing products that they could not or would not have wanted to buy new or at a higher price. "New consumers are shaping the market, driving brands to innovate constantly," says the annual Bain & Company luxury report. "The profile of consumers is changing rapidly: younger generations are demanding a continuous dialogue with luxury brands, which drives them in turn to innovate their business model and added value of their offers.
The vintage opportunity for luxury brands
We see the second-hand market as an alternative way for luxury brands to reach new targets and broaden their customer base
Joëlle de Montgolfier, an expert at Bain & Company
The steep growth of the vintage market illustrates this shift in mentality quite clearly. The second-hand market offers many opportunities for brands, but it still requires careful strategic analysis. The Swiss brand Breitling, for example, decided not to enter the second-hand market because the margins were not large enough. At the same time, watchmaker Bucherer, which has a presence in Switzerland, France, the UK and the USA, went the opposite way. Bucherer has created within each flagship store a space for pre-owned pieces, a salon/gallery specially conceived to welcome this new clientele, reflecting a new image rooted in lifestyle. This new salon space has been be unveiled in Paris last March, with 80sqm space adapted to different formats around the world depending on the layout of the boutiques, and will be run by a team that will set the framework for the purchase and resale of pre-owned pieces.
For the brands, the stakes are high. The payoffs: to create a stronger bond with consumers and to generate emotion through experiences, services and products. Distribution channels have to evolve to attract new types of customers. In this respect, one of the most interesting recent innovations comes from Parisian shoemaker Weston, which launched "Weston vintage" in November 2019 to offer second-hand luxury footwear bought back from customers and then hand-restored in the brand’s workshops in Limoges. On the Champs Elysées and in Aoyama, Japan, "objects from the past return to life under the authority of J.M. Weston", explained Olivier Saillard, the brand's artistic, image and culture director, who in January 2020 took this approach to the next level by presenting a fashion show exclusively devoted to vintage models
Prices through the roof
Within ten years, second-hand purchases will have doubled
Marine Martinetti at Vide Dressing
This new narrative also allows brands to appeal to new consumers, those who are more sensitive to the integrity and durability of the products they consume (yes, even luxury products) as well as to their recycling. It is also an opportunity for manufacturers to prove the quality of their pieces, and to show the greatest care for them throughout a life cycle which is deliberately designed in a sustainable way and respectful of the consumer from the start. Of course, collectors who are crazy about shoes or watches know that the second-hand concept is nothing new. What makes this different, however, is that the brands themselves are becoming players in this market. A leader here is watchmaker Vacheron Constantin, which, at the inauguration of its Parisian boutique a few years ago, was the first in Paris to integrate a showcase offering vintage models guaranteed by the brand. What was once rare is now becoming increasingly in demand. New business can be built on the practice of going back to basics, which is expressed both through the re-release or makeover of old models (Porsche 911, Rolex Oyster). This also attracts new customers. Timeless style, vintage inspiration in new collections, and revisited versions of iconic armchairs, watches or handbags are now perceived as signs of authenticity and part of a true heritage. What is more, re-releases of successful models generally revive interest in vintage versions and boost prices there, too.
A few examples: a Birkin Hermès bag that used to sell for €6,000 in 2013 on the vintage market, has skyrocketed in value, and today can command up to €12,000. A 1968 Saint Laurent dress that was worth €14,000 in 2015 might sell today for €120,000. And in the watch world, the average price of the classic Cartier Tank has risen by 30% in the last ten years.
Consumers associate values of craftsmanship, quality and authenticity with brands that adopt these approaches. More than a fad, it is becoming the norm. "Within ten years, second-hand purchases will have doubled," predicts Marine Martinetti at Vide Dressing. At a time of sustainable development, customers have also become aware of the importance of the timeless dimension of the objects they buy, to pass them on, keep them for a long time or resell them. The luxury brands that are going to last are those that have understood and built on this lesson
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