A McKinsey analysis found that luxury brands might benefit from exploring the fast expanding resale market, which not only provides a new source of money, but also has the potential to increase brand loyalty and customer desire. During the next decade, the worldwide luxury resale market is predicted to rise at a pace of 10% to 15% per year, according to this projection.
According to the survey, certain luxury companies have decided to enter the market. Online resale site The RealReal has teamed with Gucci to recycle and upcycle its items, while Swiss luxury watch marketplace Watchfinder and French luxury major Kering have.
Although many firms are still confused of how to handle the issue, concerns about brand identity and the possible impact on profits arise. McKinsey, on the other hand, argues these organisations about missing out on an exciting growth opportunity.
Brand entrance result in relatively minor cannibalization if handled properly, according to the analysis. It is evident and those firms who choose not to engage risk missing out on a big potential. According to McKinsey, it is possible that luxury companies entering the secondhand market might actually improve consumers’ impressions of the firms, exclusively purchase new clothing.
Reselling a luxury item is a significant consideration for firms considering resale, since nearly purchasers are also resellers. 41 percent of resellers sell their pre-owned stuff in order to clear up closet space, while 36 percent say they’ve evolved.
There are a number of ways luxury brands looking to expand their market share into resale could do so: by focusing on a particular customer segment, organising the market more effectively for collectors, or facilitating consumers who want to trade in their old items for new ones.