The luxury industry has been infamous for being wasteful and extravagant since antiquity. It is heartening to see that there is a rapidly evolving change in the global luxury landscape that has stipulated luxury brands to pivot towards more sustainable models. Evidently, this industry is no longer immune to the growing chatter around green consumption and under the close scrutiny of “sustainability pundits”. Fortunately, the newer consumption models that are sustainable in their core are gaining momentum and are embraced by younger generations. One such form is pre-owned luxury.
Charm of “pre-owned” luxury
The fascination for pre-owned, also referred to as second-hand or pre-loved luxury, is reflected in a booming market pegged at $37.2 billion by Bain and Company, 2021. This is a 65 percent jump from 2017. This relentless growth is shared by luxury brands, consumers, and investors alike. Luxury conglomerates like Moët Hennessy Louis Vuitton (LVMH) and Kering are reconsidering their stance towards this earlier eschewed channel by signaling interest and formulating broader retail strategies. A few independent luxury houses like Prada are also in the running by building resale into a business model. Consequently, reselling luxury is setting a culture of circularity and presenting brands with an opportunity to signal a promise towards sustainability.
At par with brands, luxury consumers are also demonstrating a paradigm attitudinal shift in embracing pre-owned luxury. A Boston Consulting Group survey from 2019 revealed that more than half of “true luxury” consumers showed an inclination to buy from resellers, and 45 percent are willing to sell on these platforms. Most importantly, the younger generation is becoming more participative and making this mainstream as they want to express their identities with ‘people like me’.
Indulging in pre-owned luxury is certainly lucrative for investors also, and their numbers are on the rise. They are bullish about the demand drivers for luxury reselling. They are also optimistic about luxury conglomerates and the brands being meandered to adopt this channel.
Eccentricity of Generation Z
Experience-seeking, digitally-native, and eco-conscious – these three traits aptly define the most influential generation of luxury consumers – Generation Z (Gen Z) or iGeneration. This consumer set is on the cusp of adulthood, possesses distinct characteristics, and seeks distinguishing experiences compared to any of their older counterparts such as millennials and Gen X. It is no secret that these consumers are now at the heart of every luxury brand’s strategy, and they leave no stone unturned to communicate the values these consumers solicit.
Gen Z shares many traits with millennials; however, confusing both generations in terms of their luxury consumption habits might not be rewarding for brands. Gen Z is not just a younger version of millennials, rather they demand hyper-personalization, curated offerings, and unmatched experiences. And these experiences are not just limited to physical stores anymore but have transitioned to brands’ online presence. Little do these consumers differentiate between online and offline, instead, they seek seamless ‘omnichannel’ encounters. Thus, they have certainly transformed the luxury industry by asking questions about ethical transparency, production traceability, and environmental sustainability.
India differs from its western cousins
Pre-owned luxury is a well-established phenomenon in Europe and the US. Consumers embrace buying from pre-owned retailers, both online and offline, which has given a dramatic boost to this sector. A report by Vogue Business highlights that 69 percent of luxury consumers in the US turned towards pre-owned luxury during the pandemic. Interestingly, 45 percent of them make a purchase at least once a month.
Consumers in the east, however, are yet to experience this market and indulge in pre-owned luxury as a lifestyle. Indian consumers, specifically, are hesitant to adopt this regime mainly because the notion of second-hand is stigmatized, and they care a little too much about their status in the social strata. Even the few active pre-owned luxury buyers like to keep their purchases discreet. But would this behavior experience a shift as Gen Z overtakes the luxury market? The answer is in the affirmative, and here’s why:
Younger generation more receptive
The younger generation of consumers is definitely more receptive to this idea, and with their rising purchasing power, they are ready to experience luxury through alternative consumption forms. A psychological shift towards de-stigmatization of second-hand and its perceived readiness is visible, which empowers them to signal their identities and social status.
Rise of 'aspirational' middle class
The democratization of luxury has paved the way for aspirational middle-class consumers to dream and aspire for the finest things in life. In emerging economies, such consumers engage with luxury to signal status in their enlarged communities of reference. Pre-owned models give these consumers better and affordable access to luxury and present them with an opportunity to dissociate with the middle class.
Variety is spice of life
Gen Z consumers are experience-seekers and want to get their hands on as many unique products as possible to keep their wardrobes fresh. Aside from saving money and contributing to a noble and socially accepted model by being eco-conscious, pre-owned luxury answers to their need for novelty without compromising the future of our planet. In fact, a recent McKinsey research highlights that Gen Z is eco-conscious as long as they don’t have to pay extra for sustainability. Pre-owned luxury bridges this attitude-behavior gap.
Thus, these aspirational young buyers, who are value-conscious, not only make a clever choice of buying from resellers but also send out a meaningful message on sustainability while reducing a burden on their wallets.
(Chakraborti, writer is Dean, School of Engineering & Technology & Dean, Research, BML Munjal University. and Rathi, PhD Scholar, BMU.)
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