The devil isn't wearing Prada anymore. She's dressed head to toe in Louis–and so is everyone else, apparently.
Luxury giant LVMH which owns Louis Vuitton and Fendi, reported $71.5B in revenue last year.
For context, that's up 44% YoY and 20% higher than the brand's previous 2019 record of $59.8B.
But LVMH wasn't an outlier. Last year, the personal luxury market did $325B in sales, putting it back on track for pre-pandemic growth.
However, unlike the toilet paper and sourdough starters that people also bought during the pandemic, luxury goods tend to retain their value. (Investors should think of it like fine wine you can wear.)
This makes luxury fashion, mainly leathers and metals, an ideal investment as the "re-commerce" or secondhand market grows.
By 2025, the ecommerce market is projected to double. That would put this market at $77B, and resale is expected to be the primary driver:
- Growing 11x faster than the apparel industry
- Occupying 61% of the secondhand market
More than 40% of GenZ and millennial consumers already buy used clothes and accessories. But 42% plan to spend more on secondhand within the next 5 years.
As these demographics' pockets grow, so will their spending. But with the generation's emphasis on sustainability, many will likely focus on quality over quantity, opting for luxury goods over fast fashion donations.
Luxury brands could start monetizing this trend now.
Many higher-end DTC brands are holding onto items that would sell fast in the ecommerce market. Why? Because many of them are returns that no longer meet the company's standards.
Brands that aren't precious about their reputation (like Amazon) often sell these goods to liquidators. But for luxury brands, reputation is everything.
So, they'd rather rack up expensive holding costs than re-sell defective that might damage their brand's "premium" nature.
But as the secondhand market for luxury goods becomes more profitable, holding onto these products to "preserve the brand" doesn't make sense. Not when resale shoppers are a different type of customer than those buying new.
DTC brands are stitching together resale strategies, and there are a few ways they're going about it:
- Lower-end luxury brands like Levi's and Allbirds have launched their own resale brands.
- Treet helps higher-end labels like Boyish facilitate re-commerce sales without diluting their own equity.
- Comeback Goods buys and sells "charmingly imperfect" goods, allowing luxury brands to distance themselves from the resal
But whatever retailers decide to do, one thing's for sure: you'll likely see the devil start shopping secondhand.