Resale is a taboo in the luxury industry. While brands have mostly remained out of the pre-owned or resale conversation, the general approach to such a prestige and perception driven industry has been to ignore the elephant in the room or to speak up against the spectre of counterfeit goods and products of question provenance. But earlier this month, Gucci became the latest to join luxury brands like Burberry and Stella McCartney to confront that which should not be discussed head on. The Kering Group marque teamed up with luxury consignment dealer The RealReal.

“The inherent longevity of luxury products support a circular economy and, by joining forces with The RealReal, Gucci is promoting this avenue to extend the life of its products even further,”

Gucci breaks with luxury tradition and adopts Sustainability with The RealReal Pre-owned Goods

The debate around pre-owned couture had once included conversations about whether women would even want to wear someone else’s “cast-offs” but when businesses like Rent The Runway and Covetella arose in the circular economy to serve untapped demand, the question became one of sustainability and potential to reduce one’s own carbon footprint. Gucci’s deal with The RealReal aims to do just that – make a real impact on sustainability, something which critics of the fashion industry have argued that was a practical impossibility.

According to the release, the San Francisco-based resale site will be teamed up with Gucci through to the end of the year, launching an online shop featuring pre-owned Gucci items, sourced directly from Gucci, as well as from its own consignors. Not only is Gucci one of the most sought-after brands on The RealReal’s pre-owned marketplace, it is also Gucci’s biggest luxury partner to date.

According to RealReal data, the demand for Gucci scarves is up by 31%, while women’s tote bags are up by 26% and the demand for Gucci jewellery is up by 47%, making it number one in category growth.

The resale market is currently valued at $28 billion but consulting groups have projected the whole resale market to grow up to $64 billion by 2025. The RealReal currently has more than 17 million users, and Gucci is currently The RealReal’s most in-demand luxury brand.  In a statement, The RealReal dropped some serious numbers: “Gucci continues to see strong growth in resale demand (up another 19% this year”, and “commands strong resale value for consignors, with clothing resale value 2.3x stronger than average compared to all brands sold on The RealReal.”

“Gucci is raising the bar not only for the fashion industry, but for all companies by continuously innovating to make its business more sustainable. Together we’re shining a global spotlight on resale that we hope will encourage all consumers to support the circular economy and join us in reducing fashion’s carbon footprint.” –  Julie Wainwright, founder and CEO of The RealReal

For the remainder of 2020, Gucci and The RealReal will plant a tree every a customer buys or consigns Gucci products with The RealReal. Gucci ultimately hopes to make fashion more sustainable by encouraging its customers to consign and shop resale. According to The RealReal, the consignment of Gucci clothing on its platform has already “saved” 230 metric tons of carbon and more than 10 million litres of water, in comparison to the environmental costs of manufacturing those items for the first time.

Why Luxury Brands have Kept Resale market at an Arms Length

The luxury industry is built upon prestige, perceived value and perception. In order to maintain carefully nurtured brand image and goodwill, brands avoided resale because having their goods available at significantly lower prices had the psychological effect of reducing prestige and exclusivity; while the research is muddy on whether pre-owned goods cannibalise sales of new products to a significant degree, the reason online platforms like The RealReal exist is because there is such a huge global demand that what used to be the purview of mom-and-pop local resale stores have become an eCommerce phenomenon, long before covid.

Premium tier luxury brands like Chanel have filed lawsuits against resale sites like What Goes Around Comes Around (WGACA), a competitor of The RealReal. The Paris-based luxury brand accused the luxury resale company of counterfeiting, false advertising, and unfair competition and alleged that the site was selling 63 counterfeit items without providing any “evidence that the bags [at issue] would be ‘counterfeit’ as defined by the Lanham Act,” the federal trademark statute in the U.S. 

It’s a tenuous inter-industry relationship made increasingly hostile as third-party marketplaces on the internet continue to break the monopoly of control on a brand’s image, distribution network and price positioning. Truth is, the opportunity to buy highly desired branded goods at half or a fraction of new products has been a clarion call for many consumers, not just the younger ones who couldn’t afford it.

An analogy: Swiss watch secondary markets

When it comes to luxury goods, there are many details and varieties that anyone who is not a brand specialist will eventually fall prey to gaps of knowledge and end up buying a fake or “franken” (etymology: Frankenstein’s monster – a composite creature from random parts). To wit, it’s hard for any marketplace that isn’t owned by the brand with its storehouse of product knowledge, to have the expertise to eliminate fakes. To wit, I had once purchased an authenticated 1972 Omega Seamaster Geneve in steel from a reputable auction house but upon servicing, it was discovered that my watch, while bearing all the hallmarks and serial numbers of an authentic Omega product, actually bore the movement of a similar 1956 Omega Seamster Geneve model in gold; while not a fake, the watch was ‘franken’ – knocking significant value off its potential resale price because of questionable provenance.

What some watch brands have done, to deal with issues such as the one I faced was to co-opt the pre-owned watch industry. Richemont has acquired Watchfinder, Omega runs a pre-owned boutique out of Somlo, England, Richard Mille opened its own official pre-owned shop in Singapore’s Ngee Ann City recently: These are solid long-term solutions to the question of fakes, brand specialists with the knowledge of intricate details and tells to set apart the real from the fake. When brands are involved, much in the same way luxury car marques Aston Martin, Jaguar and Land Rover run “certified pre-owned” programs, the added benefit is that the brands themselves gets to own the pre-owned conversation and manage the aftermarket brand message as well. That said, not all luxury goods are equally desirable and while pre-owned auctions have raised the cachet and value of Hermes, Chanel and Bottega handbags significantly, large swathes of the pre-owned leather accessories market are still trading at fractions of their initial retail price.

Luxury conglomerate Kering has been among those at the forefront of applying sustainability-centric initiatives to the luxury model, from the adoption of greener materials to shifting flagship brands like Gucci away from a seasonal model of fashion, the partnership with The RealReal, albeit a temporary one till end 2020, is a step in the right direction or perhaps a grand experiment to gauge demand and market dynamics in a low-risk environment before launching its own in-house buy-back and resell operation which would allow them to solve authentication and control resale prices.

But for now, the announced partnership is just good marketing. Other brands will be put on notice and as more get involved, the surrounding taboos will not only dissipate but as it becomes an industry norm, the processes to ensure that only authentic luxury goods get traded in the market will fall into place and that can only mean good things for the pre-owned luxury goods industry.

Suffice it to say, there’s still one key advantage than brand new has over resale, you won’t be able to find Gucci’s recent spring 2020 collection on The RealReal’s site yet.

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