4 silver balls for retailers
A disproportionate demand for five-digit watches would seem to mark a good time for the economy, until one follows the chain of realization.
Take the Rolex. A second-hand market for it and other luxury watches is rapidly generalizing as, despite growing global demand, timepiece makers keep production levels tight.
Consider then that many of the buyers of these items are young collectors who, thanks to new wealth in stocks and cryptocurrencies, are trading these coins online, aided by a proliferation of collector and news sites.
The result is a sort of Wild West market for high-end second-hand goods. McKinsey estimates that used watch sales alone could reach $ 30 billion by 2025, up from $ 18 billion in 2019.
But it’s not just watches
All kinds of indulgent luxury goods, from the Gucci Jackie bag (demand is up 50% from 2020) to preppy clothing maker Casablanca, are enjoying a second-hand revival, according to luxury consignment site The RealReal’s 2021. Luxury Resale Report. Some used Birkin bags are even more expensive than new ones.
It’s no wonder then that the total luxury goods resale market is expected to reach $ 68.5 billion by 2028, when the Boston Consulting Group estimates it is now worth between $ 30 billion and $ 40 billion. .
But how much of those dollars will be spent on the real thing? Much of the resale market, especially online, is unregulated and therefore teeming with the risk of counterfeiting and stolen goods, not to mention recreated “Frankenwatches” like Toby Bateman, CEO of the watch collector site. Hodinkee, told CNBC. The fact that luxury goods tend to retain their value makes them attractive not only to buyers but also to con artists.
All of this could compromise the attractiveness of luxury brands. It doesn’t help that many don’t operate their own resale platforms – their careful consideration of crucial factors, such as provenance and quality, can make the process awkward and arduous.
Meanwhile, the number of dedicated luxury retailers is growing to include Rebag, The Luxury Closet and Vestiaire Collective. These platforms make luxury much more accessible to average consumers, but buyers can switch from these authenticated sites to unauthenticated sellers, without detecting a difference.
So how do brands protect themselves?
A distinct threat from inauthentic pre-owned luxury, for Rolex, Gucci and other brands, is that it could lead to market saturation and tarnish exclusivity. This in turn could reduce sales of first edition items, as Birkin knows.
Retailers and luxury brands can protect themselves and prepare, if they’re investing in the same kinds of digital platforms that make recycled luxury possible. Certainly, confirming the authenticity of products will take some work, but given the information these platforms would generate, these sites could protect brands from scammers while helping them anticipate and market buyers’ future preferences.
Some ideas :
Configure authentication sites. Like digital fact sheets, these sites would provide details confirming what makes a luxury piece a real bargain – as well as telltale signs that an item is counterfeit. Companies that offer these “real or fake” services already exist online, Real Authentication among them, and can provide a model. Disclaimer: These sites are likely to attract illegitimate traders as well as honest buyers and sellers, so two-source ID registration should be required. Bonus: the data provided should help the merchant to detect harmful patterns in buyer behavior.
Add luxury to the record books. Brands and retailers can set up digital ledgers where owners can register their products, as well as look up serial numbers of parts to ascertain their origin. Alexander McQueen’s label and MCQ platform are a good source of ideas. The site, which collaborates with emerging designers, partners with blockchain accounting firm Everledger to provide basic information about every product it sells, including where and when the item was made and how many were produced, all by swiping the product label with a smartphone.
First class education. Listen, with luxury comes privileges, like concierge valuation services. But young, newly wealthy consumers are probably not as savvy as the “experienced” wealthy when it comes to genuine products. Retailers and brands can provide this information more proactively through social media and other targeted outlets. There are entities, like Authentic First, which operate their own Facebook pages. And some luxury brands, including Bulgari and Channel, attach Near Field Communication (NRC) labels to their products to ensure authenticity. These NRC tags or chips should be standard, as should the easy to find credentials on their websites (which are not always easy to find).
Line up shiny objects with an expert partner. Reputable sites, such as The RealReal, offer authenticated shipment of luxury goods and engaged customers. In April, The RealReal partnered with eight luxury brands, including Stella McCartney and Balenciaga, to authenticate and recycle their products through a circular fashion initiative called Atelier & Repairs. Such partnerships are simply a matter of vision. If luxury brands can sell side by side on Saks Fifth Avenue and Nordstrom, why not join forces and resell their products together online, globally, on a single platform?
The factors contributing to the creation of new wealth in the world should not be reversed. Luxury demand will continue to expand into new markets, triggering the need for further forays into fulfillment. Luxury brands themselves should chart these paths; this will reduce questionable origins and authenticity issues.
But time is running out and each tick can be worth thousands.
Bryan Pearson is a featured contributor to The Wise Marketer and is currently a director and strategic advisor for a number of loyalty-related organizations. He is the former CEO of LoyaltyOne.
This article originally appeared in Forbes. Make sure to follow Bryan on Twitter to learn more about retail, loyalty and customer experience.