THE PANDEMIC’S IMMEDIATE IMPACT

At the beginning of the pandemic, the retail industry was forced to make quick decisions, shift away from traditional in-store shopping, and move almost entirely online in the blink of an eye. Stores immediately built up their online presence with new websites, increased their social media reach, created virtual appointments, and gave shoppers the option to buy online and pick up in store. But then came supply chain issues, which in part fueled inflation and affected other economic forces.

Stuck at home, consumers finally had a chance to take stock of their closets, sell pieces worth something or donate items that weren’t worth consigning, and make tough decisions about their closets full of Chanel bags, Gucci belts and Tiffany & Co. jewelry.

Consumers also continued to shop a lot, especially certain categories including handbags. Feeling the impact of supply chain issues and seeing the unprecedented demand for the world’s most popular brands, the big designer houses like Louis Vuitton, Gucci, Dior, and Chanel dramatically raised their retail prices. True to form, customers continued to shop these brands and also turn to resale to find better deals on designer goods and be more sustainable.

The businesses that are able to shift their focus and adapt their business models to fit the demands of the new normal, are able to adjust and transform in every economic stage.

GLOBAL LUXURY SALES CONTINUE TO GROW

While retail companies large and small were forced to reevaluate their strategies and investments at the same time they made structural changes internally and externally, the demand for luxury goods skyrocketed.

The biggest brands in the luxury space like Hermés, LVMH and Chanel already had a strategic advantage during the pandemic as they were able to rely on the deep pockets of their wealthy clientele and the aspirational set too. This allowed the brands to continue to invest in branding, which included communicating to and building an emotional connection with people around the world.

And despite taking a hit in 2020, the luxury market was able to grow exponentially in 2021 and came back bigger than ever. In fact, the luxury sector’s resilience stemmed from their customers’ desire to return back to their pre-COVID lives, and eat out or take vacations, it was one of the only places where they could still spend money.

According to Bain & Co., luxury sales have rebounded in a V-shaped curve since the pandemic, recovering to $301 billion in 2021 and rising 7% above pre-pandemic levels with Chanel and Hermés climbing up to 30%. This year, the market is projected to grow up to 15% percent, but if it is impacted by the economy, it might only grow by 5%. Either way, the good news is that the luxury market will continue to grow which is great for the luxury resale industry as well.

LUXURY RESALE IS BOOMING TOO

The majority of luxury customers today are still shopping for brand-new items, but it’s predicted this number will shift drastically within the next couple of years. As top luxury brands continue to raise prices on their retail stock, consumers will shop more resale to find the best deals on the most-wanted designer bags, jewelry, clothing, and accessories.

Bain & Co. estimated that the secondhand luxury market soared to reach $33 billion in 2021, which was driven by increased demand and offerings of pre-owed products online and in store too. Overall, the secondhand luxury market grew by 65% between 2017 and 2021, and meanwhile there was only a boost of 12% for the purchase of brand-new items.

Driven by the pandemic, people across all generations, but especially millennials and gen-Z, view luxury goods as a way to share their status, shop sustainably, and own unique, high-quality designer items for less. Luxury resale is now so mainstream, it’s completely changed the way the world shops.

Online resale is the easiest and fastest growing sector of the secondhand industry, and, while millennials in larger urban locales make up the biggest portion of luxury resale shoppers right now, the middle class and those located in suburban areas are suddenly contributing to the high demand, too.

Now, we’re seeing more, large luxury brands create partnerships with resale businesses, selling pre-owned designer items alongside brand-new ones and offering discounts to those who exchange their older luxury items for new. These further raises awareness of the opportunities in resale and propels the virtuous cycle forward.

HOW TO CONTINUE TO THRIVE

The good news is that consumers are resilient and both resale and luxury continue to prove recession proof. According to Kathy Bostjancic, the chief U.S. economist at Oxford Economics in New York, “While consumers are feeling the burden of still-elevated prices, they remain resilient. The combination of the strong labor market and sturdy consumer spending looks to keep the economy out of recession territory.”

If we were to head into a recession, it could very well have a positive effect on the secondhand industry as it would strengthen consumer’s desire to score bargains and continue to make a positive environmental impact. After all, resale emerged from the pandemic stronger than ever.

So, what should your business do now to adapt and continue to thrive?

• For starters, remain optimistic. No matter what’s happening in the world, all industries will see fluctuations and prices will fluctuate too.
• Ensure you are meeting your customer’s needs and have the top sellers in stock.
• Choose items that are more investment pieces and have already proven to hold or gain value over time. Investment pieces like Chanel Classic Flaps, Louis Vuitton Neverfulls, etc. are always going to be in high demand and increase in value.
• Continue to offer a breadth of small, leather goods and accessories that prove popular no matter what the economic situation. A Louis Vuitton wallet is our version of the Lipstick Effect, which is the phenomenon in which purchases of small indulgences such as premium lipstick increase during periods of uncertainty.
• Unleash the power of social media and social commerce to promote and sell your goods and services. Use social media platforms like Facebook, Instagram, TikTok, Pinterest, LinkedIn, Twitch and Twitter to engage and influence the community to hopefully complete a sale. And while Facebook and Instagram have been incredibly popular and successful the past few years with their shoppable posts, live-selling options are taking the retail industry by storm.
• Give live selling a try. Use it to introduce products to the viewers and demonstrate how they work. Take the opportunity to interact, engage and answer questions. Create a sense of urgency to catalyze purchases in real time, and make it easy to do so by using tags and links to your site. It’s easy, it’s fun, and it’s a great way to reach shoppers who are located all over the world.
• Work with local influencers and partner with businesses in your community to help expand your reach.
• Stretch your dollar farther with a strategic combination of stock and auction to find the best core and fashion pieces for your inventory. If you buy items in auction, all the costs are included in your maximum bid, which means you’ll never pay customs or shipping fees. Oftentimes, you will win lower than your max bid placed.