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June 14, 2016

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Home » Opinion » Foreign Views

Attractive opportunities in used luxury market

By Kunal Sinha | June 14, 2016, Tuesday | Print Edition

FOR her friend’s wedding, Zhang Xiaocui was in a bit of a quandary. As a shop assistant, she hardly had the money to splurge on a new designer dress.

But, as Zhang was also a bridesmaid, this was an occasion for her to shine and be noticed — especially since many prospective male suitors, including her friend’s boss, were expected to attend the party.

When she posted her dilemma to a group of former classmates on WeChat, two of her friends suggested she look up Ms Paris. Later, as Zhang basked in the compliments she received at the wedding for her expensive Vera Wang gown, she could hardly suppress her glee.

All she spent on renting and fitting out the dress from Ms Paris — a flourishing luxury rental website and store — was 400 yuan (US$61), a fraction of the garment’s original price. If she wanted, she could have chosen a matching handbag, shoes and jewelry to go with the dress. And there was no need to dryclean the dress before returning it.

It’s stores like Ms Paris and Dress Up that are tapping into the massive opportunity in China’s unused, idle luxury goods market — which is estimated to be worth a whopping 500 billion yuan.

There are several factors that have contributed to the availability of these goods. For one, the government’s anti-corruption crackdown over the last two years has meant that many people who received expensive gifts quickly parted with them. Meanwhile, the nouveau riche — who wouldn’t have been caught dead wearing or carrying someone else’s bling until recently — have realized that buying used dresses and handbags allows them to change styles faster than ever. These are consumers whose love of logos is matched only by their love of a good bargain. Even those who once considered themselves “too rich” to buy second-hand are being swayed, as they travel overseas and are exposed to stores selling “pre-loved” luxury not very far from the glitzy showrooms.

At the same time, fashion conscious women in those markets are rapidly shedding their own inventory as they know there are many waiting to snap up the bargains. Shoppers at Ju Feng, a second-hand luxury store in Shanghai’s former French concession, revel in the choices. Business is booming at the store, and at similar chains. With their lower prices, these stores often attract younger shoppers, such as students and white-collar workers starting out in their careers. This trend is an expansion of the luxury market, which does not necessarily cannibalize sales from the brands’ showrooms, while pushing fakes out of circulation.

P2P platforms

Online, Secoo offers thousands of pre-owned items for sale. The website employs professional appraisers who verify if the items being sold are authentic. They then determine an item’s sales price depending on wear and tear, and how rare or common the item might be. By cooperating with investment forums and wine clubs, it has become China’s leading used luxury trading platform.

Apart from these businesses, the social network Youni has become very popular as a second-hand peer-to-peer buying and selling platform. Using its free P2P fund-transfer feature, sellers can publish information about the products they are selling — including price, product details, photos and also a 12 second long video, which are all visible within their social circles. Many women use social media to keep track of friends who might become buyers, or sellers.

Experience is one of the defining characteristics of luxury goods. This encompasses everything from purchase to ownership to use. That notion is being redefined. While some people will continue to seek exclusivity and great service when they buy, for others second-hand luxury lowers barriers and provides them access to the experiences that might otherwise be inaccessible. To this latter group, it is authenticity which matters more than anything else.

So the question for the owners of luxury brands is: how do they maintain the desirability of their marques while not missing out on a market that simply keeps growing?

 

Kunal Sinha is a freelancer who has been based in Shanghai for nearly a decade.

Foreign Views


 

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