Luxury Goods Go Up In Price, And Second-Hand Market Ushered In Spring?

The cause of the epidemic is affected by all industries, and since this year, the assets of LVMH and Kering groups have shrunk dramatically. Sales of luxury goods have begun to show a marked downward trend. But luxury brands still choose to go against the trend at this time.

After Louis Weedon's price rise in May 5th, Prada's product price has quietly raised nearly 10% in recent days, while another luxury brand giant Chanel has also announced news of price increase.

This price increase was dubbed by netizens as a retaliatory rise in price. From the trend of public opinion, few people identify with it. Instead, under the multiple benefits of direct seeding, the luxury online business in China is on the rise.

Then, in the period of excessive consumption, especially in the economic downturn, will the second hand luxury industry take this opportunity to usher in a new spring?

Second hand luxury goods usher in the eve of the outbreak

Recently, global consultancy Bain and Italy luxury goods association Fondazione Altagamma released the spring edition of the 2020 global luxury industry research report. The report points out that China is leading the economic recovery after the epidemic: it is estimated that by 2025, the contribution rate of Chinese consumers to the total global luxury consumption will reach about 50%, which will become the key engine of the global luxury industry's rebound growth.

Luxury traders seem to have put their treasure in the Chinese market.

For two consecutive years, Chinese consumers have contributed more than 40% of the world's luxury sales, but the second-hand circulation rate is far below the world average of 20%, just around 3%.

During the epidemic period, income from work can not be reduced, and many people "tighten their belts" will also reduce the demand for luxuries. Now is a tough time to buy luxury goods, but it is an opportunity for second hand luxury goods.

On the one hand, the excessive price increases of luxury brands lead to negative disputes. On the other hand, the reduction of consumers' income may lead to the demand for resale of luxury goods. In the past two years, the second-hand luxury market may be a new blue ocean in the consumption field.

The prosperity of the secondary market is also closely related to the economic downturn.

In the bubble economy era, the luxury market began to develop in Japan. At that time, the national economy of Japan was developing at a high speed and the consumption power of the whole people was stronger. The latest and limited amount of the global luxury brands would be launched in the Japanese market. But later, the Japanese economy entered a downward stage. The sellers of excessive consumption of luxury goods and buyers who paid attention to purchasing price performance quickly contributed to the vigorous development of the Japanese second-hand luxury market.

Although China and Japan are facing different situations and markets, many people still believe that China will probably follow the prosperity of the second hand luxury market in 90s. China's luxury consumption will shift from excess impulse consumption to cost-effective consumption.

Compared with the mature development of the second hand luxury market in Japan, the second-hand luxury market in China is still in its infancy. According to the Research Report of "China second-hand luxury report" quoted by the Chinese pawnshop, the total amount of luxury goods that domestic consumers can circulate for two times can reach 300 billion yuan, and the total volume is still growing at a high speed. However, the volume of second-hand luxury goods in China is less than 1% of the market, and the market imagination space is very large, which will also attract continuous capital injection.

In the great draught of live broadcast, some people have taken advantage of this new form to seize the opportunity. Direct broadcast with goods has become a major trend in the second hand luxury industry. The second hand trading platform for the head is only two. Red brin has launched live broadcasting business this year. The blowout of sales has been realized through live broadcast during the epidemic.

Xu Wei, founder of red Brin, and CEO, believe that second-hand luxury goods are suitable for live goods. Second-hand luxury goods are non-standard goods. The price of customers is relatively high. They can display the old and new details of the products in an all-round way, and interact with consumers instantly.

In a sense, live goods have accelerated the upgrading of the second hand luxury industry.

Now, how can we leverage this business in China's second hand luxury market, which is backed by economic recovery?

Luxury industry "wave" attack

"Post wave" has become the backbone of luxury consumption. In 2019, 35% of the total consumption of luxury goods was contributed by them. Nowadays, consumers and consumption concepts are migrating. Young people care more about experience than themselves, and the psychological threshold for buying and selling second-hand is decreasing.

McKinsey used "maturing old ways" to describe young consumer groups. In other words, they are not just impulsive consumption, and their cost performance is equally important in their consumption considerations. At the same time, the lower actual cost of second-hand luxury consumption is also in line with the overall consumption level of young people.

In addition, young people are also considered environmentally conscious consumers. "China's luxury industry market demand and investment forecast analysis report" shows that young consumers pay more attention to eco friendly and sustainable development when buying.

With the popularity of customers and the spread of sustainable concepts, the consumer market has begun to accept new recycling economy, such as overcoming cleanliness and accepting secondhand clothing and accessories.

In addition, in recent years, the influence of Japan has caused an outbreak of medieval fever, which has also become one of the influencing factors. Medieval Japan, originally used for second-hand, is now widely defined as a classic with over 20 years of history.

For example, in the little red book, it is also shared by people. The matching of medieval coins will be easier to get the favor of netizens than the popular counters. Medieval means small group tastes, which will match and have style; for young consumer groups, some personalized fashion appeals and unique needs can also be well satisfied.

Luxury brands have been trying to avoid the secondary market, worried that second-hand transactions will reduce their brand's high-end positioning and affect their sales. But now, under the general trend, luxury brands are beginning to embrace the secondary market.

LVMH group's private equity fund invested in Stadium Goods, a fast developing US second-hand shoe retailer, with a total transaction volume of more than US $100 million in fiscal 2017. The group has also responded quickly, and has recently handed down its second hand wrist watch trading platform Watchfinder. Designer brand StellaMcCartney has also established a cooperative relationship with The Real Real, a second hand luxury website in the US. It has held a special activity called "The Future of Fashion is circular (recycling is the future of fashion").

The market of second hand luxury goods is more like a relay game. The two ends of baton are actually two circles of people, and this market is the two ends match together.

Big hole that is difficult to bypass in secondary market

Although luxury brands have begun to embrace the secondary market, it is a contradictory process for the luxury brands to shake hands with the second-hand market. Luxury brands always have a strong attitude towards counterfeiting, while the second hand luxury market is a hotbed of fake products.

In the market of second hand luxury goods that are difficult to distinguish between real and fake, fear of buying fake goods is the reason why most people dare not buy second-hand luxury goods.

Earlier, luxury brand Chanel filed a counterfeiting lawsuit against The Real Real, a second-hand luxury website, accusing the resale website although it claimed that the product was 100% authentic, but actually sold fake Chanel handbags.

Brand value has always been a luxury brand can not take risks. So far, Chanel has only sold some make-up in Tmall's flagship store, and luxury goods such as Gucci and Hermes are not co operating with Alibaba. Fakes are their concerns.

Perhaps selling fake goods is not the original intention of the second hand luxury market, but fake products have always been a chronic disease of second-hand platforms.

Because of its own control over product channels, and the development of China's second hand luxury market is not yet mature, lack of senior identification personnel, lack of system specifications, and lack of recognition in authenticity, can be called the "ceiling" which hinder the development of the industry.

If counterfeit goods are the pain point of the industry, the source of supply is the pain point of businessmen.

In the second hand luxury transaction, buyers are never a problem, but sellers' consciousness has not yet been awakened, resulting in a larger gap on the supply side.

"At present, the main problem of China's second hand luxury market is how to revitalize the stock of consumers. The market has not been fully activated." Zhou Ting, Dean of the Research Institute, said.

Many luxury goods owners, though most of them are idle, feel that they do not need to sell or sell.

At present, there are many problems to be solved in the second hand luxury market, but this is also an opportunity for start-up companies. The coming of the crisis also means the advent of opportunities, which may lead to the birth of new unicorns.

C2B2C is a common entry mode for second hand luxury platform. Some platforms buy directly, some provide services for buyers and sellers, such as identification and care, pricing and consignment, etc.

In May 12th, the 175 million yuan B financing of second-hand luxury goods distributor "fat tiger luxury" is to rely on this model.

Hu Bin, founder and partner of this round of financing, said that there is still much room for luxury goods, especially second-hand luxury goods. In mode, I think toBtoC's model can get better growth, because the biggest barrier of all secondhand businesses is trust barriers. Then, the business has been established in the middle service, including recycling, identification, valuation, shared inventory, etc.

Unfortunately, if we do not see investment news, few people pay attention to the current situation of the second-hand luxury platform, the fat tiger luxury goods want to go out of the circle is still a long way to go.

Now the potential of China's second hand luxury goods market is limitless, but to really make the market surfaced, it is necessary to achieve the blue ocean of China's second hand luxury market in order to ensure that the real products can be guaranteed, the regulation can be in place, the market can be standardized and the supply of goods can be enough.

But now, what they need most is to seize the opportunity of a rare market recovery.