Resale is a taboo in the luxury industry. While brands have mostly remained out of the pre-owned or resale conversation, the general approach to such a prestige and perception driven industry has been to ignore the elephant in the room or to speak up against the spectre of counterfeit goods and products of questionable provenance. But earlier this month, Gucci became the latest to join luxury brands like Burberry and Stella McCartney to confront that which should not be discussed head-on, teaming up with luxury consignment dealer The RealReal.
The debate around pre-owned couture had once included conversations about whether women would even want to wear someone else’s “cast-offs” but when businesses like Rent The Runway and Covetella arose in the circular economy to serve untapped demand, the question became one of sustainability and potential to reduce one’s own carbon footprint. Gucci’s deal with The RealReal aims to do just that – make a real impact on sustainability.
According to the release, the San Francisco-based resale site will be teamed up with Gucci through to the end of the year, launching an online shop featuring pre-owned Gucci items, sourced directly from Gucci, as well as from its own consignors. Not only is Gucci one of the most sought-after brands on The RealReal’s pre-owned marketplace, but it is also Gucci’s biggest luxury partner to date.
According to RealReal data, the demand for Gucci scarves is up by 31%, while women’s tote bags are up by 26% and the demand for Gucci jewellery is up by 47%, making it number one in category growth.
The resale market is currently valued at $28 billion but consulting groups have projected the whole resale market to grow up to $64 billion by 2025. The RealReal currently has more than 17 million users, and Gucci is currently The RealReal most in-demand luxury brand. In a statement, The RealReal dropped some serious numbers: “Gucci continues to see strong growth in resale demand up another 19% this year”, and “commands strong resale value for consignors, with clothing resale value 2.3x stronger than average compared to all brands sold on The RealReal.”
For the remainder of 2020, Gucci and The RealReal will plant a tree every a customer buys or consigns Gucci products with The RealReal. Gucci ultimately hopes to make fashion more sustainable by encouraging its customers to consign and shop resale. According to The RealReal, the consignment of Gucci clothing on its platform has already “saved” 230 metric tons of carbon and more than 10 million litres of water, in comparison to the environmental costs of manufacturing those items for the first time.
Why luxury brands have kept the resale market at arm’s length
The luxury industry is built upon prestige, perceived value and perception. In order to maintain a carefully nurtured brand image and goodwill, brands avoided resale because having their goods available at significantly lower prices had the psychological effect of reducing prestige and exclusivity. While the research is muddy on whether pre-owned goods cannibalise sales of new products to a significant degree, the reason online platforms like The RealReal exist is that there is such a huge global demand that what used to be the purview of mom-and-pop local resale stores have become an eCommerce phenomenon, long before COVID.
It’s a tenuous inter-industry relationship made increasingly hostile as third-party marketplaces on the internet continue to break the monopoly of control on a brand’s image, distribution network and price positioning. Truth is, the opportunity to buy highly desired branded goods at half or a fraction of new products has been a clarion call for many consumers, not just the younger ones who couldn’t afford it.
When it comes to luxury goods, there are many details and varieties that anyone who is not a brand specialist will eventually fall prey to gaps of knowledge and end up buying a fake or “franken” (etymology: Frankenstein’s monster – a composite creature from random parts). The truth is, it’s hard for any marketplace that isn’t owned by the brand with its storehouse of product knowledge, to have the expertise to eliminate fakes.
To eliminate the proliferation of fakes and franken products, some luxury timepiece brands have co-opted to work with the pre-owned watch industry. Richemont has acquired Watchfinder; Omega runs a pre-owned boutique out of Somlo, England; Richard Mille opened its own official pre-owned shop in Singapore’s Ngee Ann City recently. These are solid long-term solutions to the question of fakes: brand specialists with the knowledge of intricate details to set apart the real from the fake. When brands are involved, much in the same way luxury car marques Aston Martin, Jaguar and Land Rover run “certified pre-owned” programs, the added benefit is that the brands themselves get to own the pre-owned conversation and manage the aftermarket brand message as well. That said, not all luxury goods are equally desirable and while pre-owned auctions have raised the cachet and value of Hermes, Chanel and Bottega handbags significantly, large swathes of the pre-owned leather accessories market are still trading at fractions of their initial retail price.
This doesn’t seem to be the case for Gucci, however. Its parent company, luxury conglomerate Kering has been among those at the forefront of applying sustainability-centric initiatives to the luxury model; from the adoption of greener materials to shifting flagship brands like Gucci away from a seasonal model of fashion. The partnership with The RealReal, albeit a temporary one till the end of 2020, is a step in the right direction or perhaps a grand experiment to gauge demand and market dynamics in a low-risk environment before launching its own in-house buy-back and resell operation which would allow them to solve authentication and control resale prices.