Luxury Circular Economy
The Rise of Luxury Resale
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1st August 2023
3 Minute Read
There are new ways and business models to help luxury companies grow.
The luxury circular economy is a business model that is being used by savvy luxury brands to grow revenue and profitability.
Luxury customers increasingly want to purchase products that are good for the planet and are made ethically.
This has led them to purchase products that have been preowned. Luxury companies are creating new revenue streams by selling their returned, pre-owned products through luxury resale, websites like The Real Real.
Luxury department store Selfridges' luxury circular economy business model (Reselfridges) which resells, rents & repairs luxury products generated £13 million in revenue in 2022.
This is only 2% of their total revenue (£653mil) however they have benefited in many other ways from this new business model.
Diversified Revenue Stream
Firstly they have a new revenue stream and have diversified away from the traditional luxury revenue streams which allows them to grow with more protection if one or more of the other streams suffers.
Enhanced Brand Image
Their strategy is very aligned with demand and changing customer spending behaviour which enhances their brand perception.
New Customers & Enhanced Brand Loyalty
Luxury Resale attracts higher spending customers because the prices ,especially with rare handbags and watches, are much higher than retail and are considered investments.
Luxury Resale and Rental can add £millions to your companies revenue and is a smart growth strategy
Luxury Resale is a good growth opportunity
Resale has been growing faster than new luxury sales for the last 3 years.
It's also a very large market.
The luxury resale market is worth an estimated $50 Billion in 2023.
Luxury resale is helping to increase the demand and cost of Hermès Bags.
Hermès Handbags are the most in demand luxury fashion product.
They are the most sought after handbags by luxury Customers and the most valuable.
This is partly due to their demand on the luxury resale market.
It is very difficult to purchase rare Hermès bags new; with some customers on waiting lists for up to 6 years.
Because of this some Hermes bags are 500% more expensive on the resale market than they were new.
Luxury resale websites like Sellier & Rebag are helping customers who missed out on these bags new to buy them pre-owned.
Auction houses Sotheby's and Christie's have also been selling preowned Hermes bags.
Hermès have been increasing the prices of their handbags by double digit percentages consistently over the last 3 years.
The demand from customers on the luxury resale market is allowing them to increase prices, profit and helping to make their handbags highly desired by customers.
Luxury Resale can increase the value and price of New Luxury.
