Pre-Loved Luxury Items Are Now Worth Billions of Dollars

The hand-me-down trade is something luxury brands have been wanting to clamp down on, but it seems to be harder than anticipated. In turn, investors and fashion enthusiasts are reaping the rewards of this thriving business, reports The Wall Street Journal.

In just the past four years alone, shoppers have splurged $1.3 trillion on brand-new luxury clothes, handbags, watches, and jewelry. Some of these purchases will make their way onto secondhand websites.

In the past, luxury items that people bought but did not use would just be put in wardrobes to collect dust. However, with the rise of online luxury resellers such as Vestiaire Collective and TheRealReal, an opportunity has opened up for consumers to cash in on goods they no longer want.

Bain & Company estimates that $49.3 billion worth of secondhand luxury products were sold across the globe in 2023. There has been significant growth in the resale market, doubling in size within four years and now constituting 12% of the value of the new personal luxury goods market.

However, as luxury resale becomes more popular, brands are concerned that imitations could be passed off as the real thing on secondhand websites, as some don’t have strict checks. Brands are also not happy about how easy it has become for consumers to identify which items keep their value and which ones don’t.

Sasha Skoda, The RealReal’s senior director of merchandising, said, “I think brands are watching their resale value very closely. They are curious to figure out how they can get more data around it.”

Some high-end brands experienced sky-high resale values as consumers bought used items to avoid waiting lists. Data shows that on average, used Hermès handbags are 25% more expensive than brand-new ones.

On the flip side, according to data from The RealReal, most labels show wear and tear when sold again. Handbags made by Louis Vuitton dropped in value by 40% on average when they were resold, and Christian Dior bags dropped in value by around 50%.

The data shows that the resale value for Burberry products has dropped by 17%, which isn’t a good indication for the brand. Toward the end of 2022, the company brought on board creative director Daniel Lee to improve unhealthy sales.

Investors are leveraging detailed data that they can purchase from platforms like WatchCharts to give direction on what stocks to buy and avoid. Even though Rolex, Patek Philippe, and Audemars Piguet are all privately owned businesses, “strong resale values are usually a good omen for Watches of Switzerland. The U.K.-listed luxury watch retailer gets 60% of its revenue from sales of the three coveted brands,” the WSJ reported.

According to The RealReal, leading brands under Paris-listed luxury group Kering, which include Gucci, Balenciaga, and Bottega Veneta, also show weak signs, as their secondhand values dropped 10%, 14%, and 23% respectively during 2023.