Second hand luxury market could thrive despite Covid-19
While the world’s luxury goods market is expected to fare poorly in 2020, thanks to the economic havoc wrought by coronavirus, the luxury resale could well thrive. Perceived increases in quality control and a predominantly online sales profile mean that demand for second hand luxury items may maintain similar levels in the months ahead.
The global luxury market reached a value of $1.38 trillion in 2019. Despite a contraction in fine art sales and fluctuations in jets and yachts, demand for luxury continued to be buoyed by a new generation of middle class consumers in China and many of the world’s emerging markets. Thanks to the mounting coronavirus crisis of 2020, however, much of that growth could be about to be wiped out, as $650 billion worth of sales could be lost this year.
Despite that, the situation may benefit the second hand luxury market. A report by Boston Consulting Group (BCG) originally published in 2019 suggested the second hand luxury market was already growing faster than the wider luxury market before the economic turbulence caused by the present pandemic – and the fact second hand goods are increasingly regarded as being of a similar quality to first hand goods, while ultimately being cheaper, it will likely pull further away from the wider personal luxury market in the following year.
BCG found that in 2018, the personal luxury market was worth an estimated €330 billion, and was growing at a rate of 3%. Meanwhile, the second hand luxury market accounted for 7% of that at €22 billion, but that is expected to grow to 9% by 2021, when it will be worth an estimated €31 billion.
While those figures may well change as the situation regarding the global lock-down continues to develop, the second hand luxury market may well be insulated from some of the worst impacts of the coronavirus economic storm, due to the fact it is heavily centred on e-commerce. BCG’s researchers revealed that 80% of purchases for pre-owned luxury items came online – meaning the current state of non-existing footfall that is imperilling so many bricks-and-mortar brands may not impact resale goods sellers in the same way.
As of 2018, some 60% of consumers were found to be interested in purchasing pre-owned luxury items. Of these, 32% said the main draw was the perceived price-quality ratio, a point which many more consumers are likely to be enticed by amid an economic downturn. At the same time, 17% said online platforms had helped improve transparency and authenticity in the second hand market, building trust and improving their willingness to buy resold goods.
